A Heap O’ Debt: Household Indebtedness Records Broken

To you, oh faithful readers, I suspect I am beginning to sound like a broken record.  You remember what a broken record sounds like, right?  Perhaps not.  Well, so you know, the ‘needle’ (or stylus) of a record player would sometimes get caught on a scratch on the record and skip back to a previous part of the recording and play over and over and over again. Pretty annoying if you were in the middle of the album versions of “Free Bird” or “In-A-Gadda-Da-Vida.”

Gosh if that does not make me feel like a ‘man of a certain age…’

At all events, I am beginning to think the repetitive messages of ever increasing, historic levels of household debt may have become a normalized part of everyday life.  That is, this data is no longer a surprise, or a source of alarm.  In fact, I rarely see any alarming headlines about it in the financial press, or if so, the stories fade to the background pretty fast. We may simply have become used to the fact that heaping debt onto our lives is a normal thing and no big deal.

Until it isn’t.

So, here is some data from the last quarter of 2019 courtesy of the New York Federal Reserve (read the press release here):

  • Total household debt increased by $193 billion (1.4%) to $14.15 trillion.
  • This is 22 consecutive quarters with an increase in household debt.
  • This new mark is $1.5 trillion higher than the previous peak of $12.68 trillion in the third quarter of 2008.
  • Mortgage balances rose by $120 billion in Q4.
  • Auto loans increased by $16 billion
  • Credit card debt increased by $46 billion
  • Student loan debt increased by $10 billion.
  • Of particular note is that transitions into delinquency for credit card debt deteriorated again in Q4, a trend that has been ongoing since 2016.
  • The Fed noted in particular a jump in credit card delinquencies owed by younger borrowers.

These numbers are significant, but when we look at the total increase in 2019 the trend is breathtaking:

  • For the year, the aggregate increase in household debt was $601 billion. That is the largest annual gain since 2007!
  • The main component in this increase was a $433 billion increase in mortgage balances.
  • Credit cards and auto loans increase by a $57 billion each.
  • Fortunately, student loan debt showed a smaller rate of growth, but it was still a robust $51 billion.

Often a picture is worth a thousand words (or in this case about 700!).  This is a chart provided by the Fed showing the growth in household debt since 2003:

Really a pretty astounding picture when we look at it like this. Yes, much can be credited to the improving economy beginning in 2013.  As we went back to work, and wages increased, it was only natural that we could take on more debt and pay for it.  Yet this trend simply cannot continue forever.  Economic expansion has its limits, particularly when unemployment is so very low.  Global events can trip things up very quickly, as we have seen recently with the Coronavirus outbreak.

What to do?  As always, we urge our clients to use their best judgement when issuing credit.  When receivables increase, and aging of debt increases, we encourage you to turn your debts over to us at the earliest possible moment to begin the collection process.  Now is the best time to do so as it is tax season and tax refunds are a great source of debt recovery.

And, as always, we are here to help. Let us know how we can help you!

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 15 years.

Image provided by: Nick Ares –  https://www.flickr.com/photos/aresauburnphotos/   

Time is Money When it Comes to Effective Revenue Recovery!

“Do not put off until tomorrow what can be put off till day-after-tomorrow just as well.” –Mark Twain

Do you procrastinate? Ok, you don’t have to answer that. I will for you. Of course you do. We all do. I certainly know I do. Just ask my wife about the paint job for our master bath! And the drippy kitchen sink. And the weeds in the lawn…well, you know.

Yet, isn’t it a great feeling to finally face that not so fun task that has been on your ‘do’ list for months, complete it and cross it off? The reward of a feeling of accomplishment—a job well done—is terrific. Of course it is usually followed by the realization that had we simply done it sooner the building stress that comes from putting things off would have gone away much sooner and in its place we could have been doing things which we find much more pleasant.

There are lots of definitions for procrastination, none of them particular complimentary to us who do. I am partial to Twain’s quote, but let’s face it that won’t feed the bulldog!

Generally speaking, procrastination is when we substitute one activity we prefer for one we do not. As a result the one we like gets done fast while the other, perhaps even more important task, is moved farther and farther away. Like blog posting when the sales forecast is due! And there are certainly no limits to the distractions we all have right here on our desktop.

To maximize the effectiveness of revenue recovery and delinquent account collections procrastination can be costly. There is an old saw in the business which goes: “The older they are the farther they go.” There is much to that, and may impact your recovery rates dramatically if you are not able to manage your delinquent placements on a timely basis.

We realize delinquent account recovery is a serious business, but sometimes it is easier to believe if the accounts just sit there sooner or later the debtor will pay directly without third party intervention. The fact of the matter is that even with the most optimistic perspective that does not happen very often. There is a direct and inverse proportion between age of an account and prompt debt collection.

So what do you do?

• If the elephant is big, just take one bite. Even if it is just a single account send it on! That takes one more thing off your desk and starts our process of recovery right away.
• Prioritize your day and make those less desirable tasks something you handle first thing. That way, you have a fresh perspective and fewer interruptions as the day goes on.
• First things first: Keep a manageable and organized task list. When our ‘do’ lists get too big or too detailed it is easy to get disorganized, discouraged and distracted. Review your list early in the day and rework your daily priorities focusing on the top three to maximize your use of time.
• Make sure your delinquent accounts are turned over as soon as possible. The sooner we get them, the sooner we start the process and the higher probability you will receive timely collection of your debt.
• Things don’t change unless you recognize there is a problem. If your priorities keep getting pushed off for the next day, take a close look at how you use your time. Are there unnecessary distractions which get in the way of tackling the hard ones?
• Reward yourself when a task you don’t like is done! There is nothing wrong with patting yourself on the back when you get something done, especially if it is a task you were not looking forward to handling. Take a break, or spend a few minutes on those other more pleasant tasks which would have normally been distracting you.

At A. Alliance we strive to make your interactions with us as easy and straightforward as possible. In an increasingly complex world, keeping things simple is a goal we strive for every day. Can we help? Let us know. We are here to serve you.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.

Time is Money When it Comes to Effective Revenue Recovery!

“Do not put off until tomorrow what can be put off till day-after-tomorrow just as well.” –Mark Twain

Do you procrastinate? Ok, you don’t have to answer that. I will for you. Of course you do. We all do. I certainly know I do. Just ask my wife about the paint job for our master bath! And the drippy kitchen sink. And the weeds in the lawn…well, you know.

Yet, isn’t it a great feeling to finally face that not so fun task that has been on your ‘do’ list for months, complete it and cross it off? The reward of a feeling of accomplishment—a job well done—is terrific. Of course it is usually followed by the realization that had we simply done it sooner the building stress that comes from putting things off would have gone away much sooner and in its place we could have been doing things which we find much more pleasant.

There are lots of definitions for procrastination, none of them particular complimentary to us who do. I am partial to Twain’s quote, but let’s face it that won’t feed the bulldog!

Generally speaking, procrastination is when we substitute one activity we prefer for one we do not. As a result the one we like gets done fast while the other, perhaps even more important task, is moved farther and farther away. Like blog posting when the sales forecast is due! And there are certainly no limits to the distractions we all have right here on our desktop.

To maximize the effectiveness of revenue recovery and delinquent account collections procrastination can be costly. There is an old saw in the business which goes: “The older they are the farther they go.” There is much to that, and may impact your recovery rates dramatically if you are not able to manage your delinquent placements on a timely basis.

We realize delinquent account recovery is a serious business, but sometimes it is easier to believe if the accounts just sit there sooner or later the debtor will pay directly without third party intervention. The fact of the matter is that even with the most optimistic perspective that does not happen very often. There is a direct and inverse proportion between age of an account and prompt debt collection.

So what do you do?

• If the elephant is big, just take one bite. Even if it is just a single account send it on! That takes one more thing off your desk and starts our process of recovery right away.
• Prioritize your day and make those less desirable tasks something you handle first thing. That way, you have a fresh perspective and fewer interruptions as the day goes on.
• First things first: Keep a manageable and organized task list. When our ‘do’ lists get too big or too detailed it is easy to get disorganized, discouraged and distracted. Review your list early in the day and rework your daily priorities focusing on the top three to maximize your use of time.
• Make sure your delinquent accounts are turned over as soon as possible. The sooner we get them, the sooner we start the process and the higher probability you will receive timely collection of your debt.
• Things don’t change unless you recognize there is a problem. If your priorities keep getting pushed off for the next day, take a close look at how you use your time. Are there unnecessary distractions which get in the way of tackling the hard ones?
• Reward yourself when a task you don’t like is done! There is nothing wrong with patting yourself on the back when you get something done, especially if it is a task you were not looking forward to handling. Take a break, or spend a few minutes on those other more pleasant tasks which would have normally been distracting you.

At A. Alliance we strive to make your interactions with us as easy and straightforward as possible. In an increasingly complex world, keeping things simple is a goal we strive for every day. Can we help? Let us know. We are here to serve you.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.