I witnessed someone learn a "life lesson" a day or two ago, and, I am happy to say, that person was not me THIS time. I have learned plenty for myself, and I in fact had been through a similar situation years ago when my marriage was young. The lesson (spoiler alert!) is when you are in a desperate situation and someone offers you an alternative to a terrible outcome, even if the offered alternative is not all that "good," you should 1) listen carefully to the proffered solution; 2) think carefully about your response BEFORE you make the response; 3) don't burn a bridge you may need to recross!; and 4) you can neither "unsay" thoughtless things nor "unburn" the bridge that you just burned and now you need to RECROSS that bridge.
Many young people, especially those starting out as young, married adults, have grand plans and big dreams, and that is all good, and as it should be. But many young adults don't know as much about the world, about finances, and about all life may throw at them even in their youth. Maybe parents and teachers bear some responsibility for that, but the young adults also share some of the blame. My parents warned me about some things the world might throw at me, but they could not explain everything to me. Neither could they save me from my own mistakes. Now, thirty years later, I see that young adults still make the same errors that young people from my generation made.
The life lesson that this young adult learned was that she and her husband needed to understand the contracts they signed, including ALL of the fine print. They learned what it meant to "finance" a new car. Sadly, they also learned to understand the consequences of surrendering the car to the dealership when they could no longer afford the payments. And most importantly, they learned the value of thinking before speaking, listening to others before acting, and not acting rashly, thereby alienating the very person who could have helped them.
The young couple in question "bought" a new car in 2015 because the husband had landed a great job in the oilfields of West Texas. Now rolling in the money, the young family not only bought the new car, but spent their money on many other things, leaving little to either save or to pay "extra" on their car loan. Worst of all, this couple did not fully understand what it meant to "finance" a car, and they had paid little more down than tax and license fees. But they were happy in their new and somewhat luxurious car.
Months went by, money went out, expenses came in, and soon the couple realized they could no longer afford the new car. Just over a year after buying the car, they turned it in to the dealership and signed some important looking papers, although they were not sure what these papers said. With what money the couple had, they purchased a used car, then went on with life.
Fast forward to February, 2018. The bride, now a mother of three children, opens the mail one morning and finds a letter from XYZ Collections (not the company's real name) asking for $21,000 to settle the "repossession." It turned out that the dealership had auctioned off the young couple's car and only recovered about a third of the "retail" value. Since this little family no longer lived at the address where they had lived when the car was purchased, they did not receive the final bill for the car, nor did they receive the "dunning" notices the dealership sent to their old address.
LESSON ONE: Buy a car you can AFFORD even if something bad happens!
Two years after the car was auctioned, the couple got a "note" from XYZ Collections, which stated that they owed XYZ Collections a total of $21,000. The young lady was very confused. She knew that she and her husband had returned the car over two years ago, and that they had not missed a payment until they turned in the car. How, she asked the bill collector, did they owe any money at all? After all, they had voluntarily turned in the car. How was it a "repossession?" And, most important, they had not "borrowed" money. All they did was sign papers and drive off in their car. The dealership had not given them any money.
The collector patiently (I have to be honest, the lady was VERY polite!) explained that when the couple had signed the car loan papers, they had agreed that they were borrowing money from X Motor Company. When they later voluntarily surrendered the car to the dealership, they had signed papers stating that X Motors would auction off the vehicle and apply all money earned from the sale of the vehicle to the loan. The young bride told the collector that, regardless of how much money she might owe the car dealership (and she did not believe she owed ANY), she owed NO money to XYZ Collections. The collector explained that X Motors had attempted to collect the balance the couple owed, but had not been able to locate them. After a year of failed attempts, X Motors "sold" the debt to XYZ Collections. So, as the collector explained, the couple now owed XYZ Collections the entire debt that X Motors had tried to collect from them earlier.
The distraught young bride told the collector that she and her husband could not afford the car, that is why they had turned it in. Now they were somewhat better off, but there was no way they could pay $20,000. The collector asked about setting up a monthly payment plan. The young bride told her that she could not really afford monthly payments, and would not pay $20,000 for a car they no longer had, anyway.
After the above discussion, the collector placed the young lady on "hold." Now back on the line, the collector said she had a proposal that could save this family thousands of dollars. First the young bride said, "If you are going to ask for more than $50 I will not pay it." But the collector asked her to just "listen" to the proposal, and she agreed. The collector then offered to close the collection process if the young lady and her husband could pay a "lump sum" of $8,000. That was quite a discount! But the young bride immediately and irately told the collector that she was going to deal only with X Motors and not pay a dime to XYZ Collections. The collector remained very calm. She asked if the young bride realized that she was offering to accept less than fifty percent of what the couple actually owed. The young bride said she DID realize this, but she was not going to pay a dime to the collection company. The collector then quietly asked if she should note that the "debtor has refused the settlement offer." The young lady snapped, "Yes, you SHOULD!" and hung up the phone.
LESSON TWO: Think carefully before you speak!
The young lady then called X Motors and spoke with the financial manager there, asking the same questions she had ask the collector, namely, why was she only now being contacted for collection, and why did she and her husband owe $20,000 on a car they had voluntarily returned to the dealership over two years ago? The financial manager, a lot less politely than the collector, explained to the young lady that she and her husband had signed a contract in which they had borrowed over thirty thousand dollars to buy a new car. The young lady protested that they had not received any money, only agreed to pay monthly payments until the car was paid off. The financial manager explained, as had the collector, that the papers they had signed constituted a contract in which the couple received thirty thousand dollars, but the money went to X Motors to pay for the car, not to the couple. Further, the financial manager explained that X Motors had not auctioned the car for a couple of months, then received only about a third of the car's value at auction. This meant the family owed the remaining two thirds, or about $20,000. When the young lady told the manager that she could not pay this amount, the manager told her that her account with X Motors no longer existed, as the company had sold her account to XYZ Collections. With that, he told her goodbye and hung up.
Now distraught, the young lady called her husband and explained all that had transpired. Her husband told her to quickly call back to XYZ Collections and accept the settlement offer! The young lady did so, and (luckily?) spoke to a different collector. The young lady was very polite this time, telling the new collector that the young lady and her husband had talked it over and wanted to settle with a lump some payoff. The collector put her on hold for a few minutes. When she came back on the line, she told the young lady, "If you can make a lump sum payment, I am authorized to settle for substantially less than the $20,000 you owe. We will accept only $14,000...saving you $6,000!"
The young lady was visibly shaken and became irate, once again. She told the collector that, not fifteen minutes ago, she had talked to another collector who told her the debt could be settled for only $8,000! The collector told her that she could not accept any amount lower than $14,000, and that would have to be in a "lump sum." The young lady asked the collector how the final settlement could have nearly doubled in only fifteen minutes!? The collector told her, "You told the other person that you would not pay the $8,000 and that we would need to proceed with collections. When you said that, the other collector noted that in your account file, and the offer was rescinded. Now if you want to settle, the amount we will accept is $14,000. But that is still $6,000 off your total debt." The young lady, irate again, said "Fine! We aren't paying anything!" She hung up, ending the call, but not the debt.
LESSON THREE: Don't burn bridges you may have to IMMEDIATELY recross!
The young lady, nearly in tears, called her husband again and told him what had happened with the collections agency. I was not privy to what the husband said, but I can imagine that he might have been horrified when he learned that they had lost the chance to pay off a $20,000 debt with only $8,000. Maybe horrified is the wrong word. Maybe really upset is closer...maybe ANGRY is MUCH closer. This couple was seeking to make another large purchase for which they would need a substantial loan. Now, without the ability to settle the debt collection account, it is very doubtful that they will receive approval for said loan. But this couple has learned a couple of "life lessons" as result of this situation.
LESSON FOUR: You can neither "unsay" thoughtless things nor can you "unburn" the bridges you burned behind you but now need to recross.
I am certainly not trying to belittle this young couple. Many people have learned these same lessons, and some of those people certainly did not learn these lessons "the first time." I hope that someone may profit by learning from this young couple's mistakes.
May God bless you all
And may God Bless America
Many young people, especially those starting out as young, married adults, have grand plans and big dreams, and that is all good, and as it should be. But many young adults don't know as much about the world, about finances, and about all life may throw at them even in their youth. Maybe parents and teachers bear some responsibility for that, but the young adults also share some of the blame. My parents warned me about some things the world might throw at me, but they could not explain everything to me. Neither could they save me from my own mistakes. Now, thirty years later, I see that young adults still make the same errors that young people from my generation made.
The life lesson that this young adult learned was that she and her husband needed to understand the contracts they signed, including ALL of the fine print. They learned what it meant to "finance" a new car. Sadly, they also learned to understand the consequences of surrendering the car to the dealership when they could no longer afford the payments. And most importantly, they learned the value of thinking before speaking, listening to others before acting, and not acting rashly, thereby alienating the very person who could have helped them.
The young couple in question "bought" a new car in 2015 because the husband had landed a great job in the oilfields of West Texas. Now rolling in the money, the young family not only bought the new car, but spent their money on many other things, leaving little to either save or to pay "extra" on their car loan. Worst of all, this couple did not fully understand what it meant to "finance" a car, and they had paid little more down than tax and license fees. But they were happy in their new and somewhat luxurious car.
Months went by, money went out, expenses came in, and soon the couple realized they could no longer afford the new car. Just over a year after buying the car, they turned it in to the dealership and signed some important looking papers, although they were not sure what these papers said. With what money the couple had, they purchased a used car, then went on with life.
Fast forward to February, 2018. The bride, now a mother of three children, opens the mail one morning and finds a letter from XYZ Collections (not the company's real name) asking for $21,000 to settle the "repossession." It turned out that the dealership had auctioned off the young couple's car and only recovered about a third of the "retail" value. Since this little family no longer lived at the address where they had lived when the car was purchased, they did not receive the final bill for the car, nor did they receive the "dunning" notices the dealership sent to their old address.
LESSON ONE: Buy a car you can AFFORD even if something bad happens!
Two years after the car was auctioned, the couple got a "note" from XYZ Collections, which stated that they owed XYZ Collections a total of $21,000. The young lady was very confused. She knew that she and her husband had returned the car over two years ago, and that they had not missed a payment until they turned in the car. How, she asked the bill collector, did they owe any money at all? After all, they had voluntarily turned in the car. How was it a "repossession?" And, most important, they had not "borrowed" money. All they did was sign papers and drive off in their car. The dealership had not given them any money.
The collector patiently (I have to be honest, the lady was VERY polite!) explained that when the couple had signed the car loan papers, they had agreed that they were borrowing money from X Motor Company. When they later voluntarily surrendered the car to the dealership, they had signed papers stating that X Motors would auction off the vehicle and apply all money earned from the sale of the vehicle to the loan. The young bride told the collector that, regardless of how much money she might owe the car dealership (and she did not believe she owed ANY), she owed NO money to XYZ Collections. The collector explained that X Motors had attempted to collect the balance the couple owed, but had not been able to locate them. After a year of failed attempts, X Motors "sold" the debt to XYZ Collections. So, as the collector explained, the couple now owed XYZ Collections the entire debt that X Motors had tried to collect from them earlier.
The distraught young bride told the collector that she and her husband could not afford the car, that is why they had turned it in. Now they were somewhat better off, but there was no way they could pay $20,000. The collector asked about setting up a monthly payment plan. The young bride told her that she could not really afford monthly payments, and would not pay $20,000 for a car they no longer had, anyway.
After the above discussion, the collector placed the young lady on "hold." Now back on the line, the collector said she had a proposal that could save this family thousands of dollars. First the young bride said, "If you are going to ask for more than $50 I will not pay it." But the collector asked her to just "listen" to the proposal, and she agreed. The collector then offered to close the collection process if the young lady and her husband could pay a "lump sum" of $8,000. That was quite a discount! But the young bride immediately and irately told the collector that she was going to deal only with X Motors and not pay a dime to XYZ Collections. The collector remained very calm. She asked if the young bride realized that she was offering to accept less than fifty percent of what the couple actually owed. The young bride said she DID realize this, but she was not going to pay a dime to the collection company. The collector then quietly asked if she should note that the "debtor has refused the settlement offer." The young lady snapped, "Yes, you SHOULD!" and hung up the phone.
LESSON TWO: Think carefully before you speak!
The young lady then called X Motors and spoke with the financial manager there, asking the same questions she had ask the collector, namely, why was she only now being contacted for collection, and why did she and her husband owe $20,000 on a car they had voluntarily returned to the dealership over two years ago? The financial manager, a lot less politely than the collector, explained to the young lady that she and her husband had signed a contract in which they had borrowed over thirty thousand dollars to buy a new car. The young lady protested that they had not received any money, only agreed to pay monthly payments until the car was paid off. The financial manager explained, as had the collector, that the papers they had signed constituted a contract in which the couple received thirty thousand dollars, but the money went to X Motors to pay for the car, not to the couple. Further, the financial manager explained that X Motors had not auctioned the car for a couple of months, then received only about a third of the car's value at auction. This meant the family owed the remaining two thirds, or about $20,000. When the young lady told the manager that she could not pay this amount, the manager told her that her account with X Motors no longer existed, as the company had sold her account to XYZ Collections. With that, he told her goodbye and hung up.
Now distraught, the young lady called her husband and explained all that had transpired. Her husband told her to quickly call back to XYZ Collections and accept the settlement offer! The young lady did so, and (luckily?) spoke to a different collector. The young lady was very polite this time, telling the new collector that the young lady and her husband had talked it over and wanted to settle with a lump some payoff. The collector put her on hold for a few minutes. When she came back on the line, she told the young lady, "If you can make a lump sum payment, I am authorized to settle for substantially less than the $20,000 you owe. We will accept only $14,000...saving you $6,000!"
The young lady was visibly shaken and became irate, once again. She told the collector that, not fifteen minutes ago, she had talked to another collector who told her the debt could be settled for only $8,000! The collector told her that she could not accept any amount lower than $14,000, and that would have to be in a "lump sum." The young lady asked the collector how the final settlement could have nearly doubled in only fifteen minutes!? The collector told her, "You told the other person that you would not pay the $8,000 and that we would need to proceed with collections. When you said that, the other collector noted that in your account file, and the offer was rescinded. Now if you want to settle, the amount we will accept is $14,000. But that is still $6,000 off your total debt." The young lady, irate again, said "Fine! We aren't paying anything!" She hung up, ending the call, but not the debt.
LESSON THREE: Don't burn bridges you may have to IMMEDIATELY recross!
The young lady, nearly in tears, called her husband again and told him what had happened with the collections agency. I was not privy to what the husband said, but I can imagine that he might have been horrified when he learned that they had lost the chance to pay off a $20,000 debt with only $8,000. Maybe horrified is the wrong word. Maybe really upset is closer...maybe ANGRY is MUCH closer. This couple was seeking to make another large purchase for which they would need a substantial loan. Now, without the ability to settle the debt collection account, it is very doubtful that they will receive approval for said loan. But this couple has learned a couple of "life lessons" as result of this situation.
LESSON FOUR: You can neither "unsay" thoughtless things nor can you "unburn" the bridges you burned behind you but now need to recross.
I am certainly not trying to belittle this young couple. Many people have learned these same lessons, and some of those people certainly did not learn these lessons "the first time." I hope that someone may profit by learning from this young couple's mistakes.
May God bless you all
And may God Bless America
Lessons my Daddy sought to teach all of us, never borrow more than you can pay back on the poorest day of your life, which would be now for nearly all of us.
ReplyDeleteIt took me a time or two, to learn that. But still the only advice I can give my offspring is to do the OPPOSITE of what I have done financially and you will do great!
ReplyDelete