I have no idea how the whole blog thing works, but my web guys says to “just write” so I will. This is strange for me since I pay an amazing person (www.kelleynpc.com ) to do all of my writing for the business because, after all, I am a finance person and we’re not known for our writing skills. I’m not quite sure what my focus for this blog will be. I want to share information and stories to further the financial literacy movement, but will this going to interest an online crowd? I’d also like to inspire people. I know very cliché, but I love what I do and I’d love to help others do the same. I created the position I’m in and the organization I work for and it has far exceeded my expectations. Still, I’ve gone through a lot to get to where I’m at so maybe sharing some of my struggles along the way will help too. So where to start? I guess I’ll start from the beginning and how Financial Beginnings (www.financialbeginnings.org ) came to be.
I grew up in this little manufactured home in the middle of the woods the younger of two kids. When I was young we were poor, though I didn’t realize it at the time. My mother was going to college and working nights while my dad worked during the day. It’s funny now looking back on when my family had more money, the only thing that sticks out in mind as changing is the food got a lot better around the house. Suddenly we had bagels and juice on hand, which we never had before.
It was a combination of have less when we were younger and being fifth generation cheap, which helped my parents to instill some very valuable financial habits into my brother and me. I knew when it was appropriate to ask my parents for money, such as if my shoes were falling apart or there was a field trip at school I wanted to go on. I would never go up to my parents and ask for money if I was going out to the movies with friends. We were given an allowance and expected to work if we wanted money to go out. Which, I did. I babysat, house sat, and worked at the local Dairy Queen.
When I turn 16 and got my driver’s license I remember my dad saying that I could use his car whenever I wanted. Still, that came at a price. He took the average gas price by the average miles per gallon the car got and charged me for my mileage. He had a book in the car that I had to write down the mileage on when I entered and left the car. Then at the end of the week when it came time for allowance he’d give me my $10 and then take it right back to cover my mileage expenses. Within about two months I bought my own car.
At 16 I reached another financial milestone. I got my first credit card, now I’ll pause for the gasps. A credit card company sent out an advertisement to get a credit card before the legal age of 18 by having your parents co-sign. I convinced my parents this was a good idea and then entered the world of debt. The credit card came conveniently right before prom; needless to say I ended up looking awesome with a new dress, shoes, hair done, the works. And needless to say my parents and I had a talk when they opened up the first credit card statement. That month I also learned about late fees. I got my bill sent it out a week before it was due and it gets there after the due date and I get a $25 late fee. I was so mad when I got my next statement; I called my attorney uncle to verify if this injustice was legal. He assured me it was.
When I was legally able to be held to a contractual obligation at 18 I went out and financed a car. I was very proud that I got out of the dealership thinking I hadn’t been taken. I went in there telling them I wanted a car under $10,000, he showed me a car, I fell in love when to sign the documents and the price showed as 12,000. I told them this was unacceptable and they agreed to drop it down to the $10,000 but would only give me $100 for my trade it. I ended up leaving with both cars, a loan at 13% and a $2000 warranty because “the lender said I had to have one”. Yah, I wasn’t taken. It wasn’t until I later worked for that finance company that I learned the dealer forced the warranty on me and that 13% was not a good rate to be paying.
Remember that car I was going to trade in for $100, well I kept it and sold it the next day for $1000. Yah for me right? Well when I called to get my first insurance policy on my own the first six months of insurance conveniently ended up being $1000. When I called and got my first insurance policy I just called and said I need “full coverage” and they told me how much to pay. It wasn’t until a couple of years later that I met with a financial advisor and he told me I was crazy for being married with a house and only carrying the state minimums and I immediately bumped up my insurance. My insurance agent never took the time to explain to me what the limits meant and the importance of them.
It was this same agent who did not tell me about renter’s insurance until I asked about after getting a call from the maintenance man at my apartment asking me if he could enter because they heard water running in my apartment.
From the time I left high school I realized that I could not accept being a poor college student. So I went to school full time and worked part time. At first I found that I was not interested in college and my grades suffered because of it. So I dropped school to part time and increased my work to full time.
My work experience in the finance industry was working for Meier & Frank collecting on their department store credit cards. Imagine me, not yet legal to have my own credit card, calling people to collect on an outfit they bought last year and now don’t want to wear because it’s out of style. You can imagine with all of the bills people had, paying their M&F card was not high on the list. I heard every excuse in the book.
I then upgraded and moved onto collecting on auto loans. I found this to be much easier as cars are higher on people’s priority list to pay. I was assigned a group of accounts and found that the same people delinquent time and time again. The customers came to know me quite well. I recall getting a call from a customer one time telling me that his Audi A8 was stolen. I let him know he should call the police. He said he was worried about the payment though and I told him he would need to file an insurance claim. I then discovered the reason for his worry…his insurance policy had lapsed and he had no coverage. A $38,000 vehicle was stolen and he still owned the full amount.
I also recall one customer that had two vehicles financed and both were severely past due. I had to send both cars out to be repossessed. The customer called me and worked out a way to keep the vehicles. He then sent a letter to my manager tell him how great I was to work with. I think this is what must customers do not realize. If they just work with the finance company there are ways to make the situation work out for both parties.
I recall my friend and I talking at work about how uneducated the customers were. How they did not realize how their credit was affected by their slow payments. How we were asked multiple times if they could just give back the car and call it even. He came up with a wonderful idea…. Finance companies hiring individuals to go into the classroom and teach about credit! They would be creating good consumers and in turn lowering their exposure to loss. I loved the idea and told him that I was going to work on how to make it happen. But, life goes on and so do the bills that go with it so this had to take a back seat to everything else.
Newly married my husband and I went to a financial advisor and learned the amazing concept of compound interest. This was an eye opening experience. He informed us that the state insurance requirements were not enough to protect ourselves, our homes and our assets. Who knew? When I got my car insurance I told the agent I wanted “full coverage” I didn’t understand that just meant the minimum liability requirements and collision coverage to protect the finance company. We immediately increased our liability insurance and purchased and umbrella policy.
We also discussed investing with the advisor. At the time $2000 was the maximum amount one to contribute annually towards an IRA. The advisor turned to my husband who was seven years old than me and told my husband if he were to put $2000 away each year until he was 60 he would have $800,000. Wow! He then turned to me and said with you getting a seven year head start you will end up with over 2 millions. Wait a minute! Seven years younger at $2000 a year, that means I only put away $14000 more and I end up with over double. Compound Interest!
I was so excited by what we had learned from our financial advisor that I decided this was the career for me. I was focused and needed to return to school to obtain the education I needed. Obviously, majoring in finance seemed like the natural path. I went back to school full time and with this new focus I found that I was a model student. I was driven to become a financial advisor. I obtained by BS in Business Administration focusing in Finance. Still I never had to take personal finance as a required course. My finance courses were all focused on being a financial analyst.
While finishing up school I obtained my insurance and securities licenses with ease. I was ready to go out and help people prepare for retirement. Still nobody had ever told me this was actually a sales job! Since I had gone seeking this information when I got married I just assumed everyone else did too. I did not realize that most people actually have to be sold on the concept of preparing for retirement. And they definitely did not was to be sold by a 22 year old blond. I quickly left this field unable to accept the negative salary I was earning.
I entered the job market and found this to be a very hard time to find a job. The economy was slow and there were not enough jobs to go around. I found a job as a liability claims adjuster. It was a great job because of the flexibility that came with it. It also was similar to the collections industry because I had to deal with people in hard situations. I excelled at the job and moved up very quickly. I was repeatedly amazed by how people failed to properly project themselves. There were multiple times where the people I worked with did not have enough insurance to cover the loss leaving themselves open to large debt obligations.
Throughout each of the different parts of the finance industry I worked in I found a lack of financial literacy among customers and how this lack of knowledge ledge to heartache. I increased my research in providing finance education to youth. I originally planned on proposing the idea to a credit card company, but after my experience as a financial advisors and insurance claims adjuster I realized that providing credit education was not enough. Students needed a comprehensive program to provide them the foundation they need in personal finance. Students need to know about banking, insurance, credit and savings & investing. And that is how Financial Beginnings was born.