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Living the good life–before primerica


I let Primerica into my home. I gave Primerica my trust. This is how Primerica responded.

In July of 2005, a Primerica rep sat at my kitchen table. I didn’t know it then, but this was the beginning of a very interesting and challenging journey–for both of us.

It all started when the phone rang one evening:

“Hello, Mr. Wondra. My name is Rob Larson and I represent Primerica Financial Services.”

“Who?”

“Rob Larson, sir.”

“No. What company?” I’m not known for my phone etiquette–especially on cold calls.

“Primerica. We’re a financial services company. If there were a way for me to save you money by lowering your monthly payments, would you be interested?”

Now, he had no way of knowing, but at that time, I felt like we were in a financial crisis. Looking back, this may not have been true. We were paying our bills on time. Our credit score was very good. We were in no danger of losing our home. But I felt like our debt was eating us alive. Almost weekly, we juggled credit cards, balance transfers, bank accounts and what my teacher’s salary provided.

I’m telling you it was icky.

We we met our basic needs: bought groceries, payed the mortgage, the utilities, the taxes, got most of our clothes from garage sales and Goodwill (still do).

Every morning Lisa got up at 4:30 to deliver papers before coming home to help Emma and I off to school. The rest of the day she stayed home with our 2-year-old, did any sewing that she had from people, and built our Shaklee business.

Every night I went to my second job.

So if a mortgage company like Primerica were looking for someone to take advantage of with some big promises, we were definitely in a vulnerable position.

Primerica and the kitchen table

Then one evening, out of the blue, Primerica called. I’m not sure how Rob got our number, but he said he might be able to help.

I wasn’t optimistic.

I tracked economic indicators like the GDP, prime rate, energy prices . . . Lisa and I are both college graduates, professionals—as best I can figure, we’re not stupid—and we’re not easily scammed.

We’d already used equity in our home to consolidate debt and refinance our mortgage at a lower interest rate once. And at less than 6% I was very happy with it. I understood the amortization tables. I understood equity, compound interest, and the tax benefits of lumping debt into a mortgage (as compared to paying credit card companies).

I watched the mortgage rates at our bank and its competitors, and I kept track of other economic indicators like GDP, the prime rate, energy prices, and was keenly interested in what the Fed was up to. Lisa and I are both college graduates, professionals—as best I can figure, we’re not stupid—and we’re not easily scammed.

Did I really want Primerica anywhere near my mortgage?

Yet if you know me, you also know I pride myself on keeping an open mind.

So we had him over.

The most interesting thing about that first visit was that he didn’t try to sell us anything. Basically all he did was introduce himself and Primerica as a branch of Citigroup whose mission it was to help people get out of debt and strengthen their financial situation. Then he drilled us for information. He was pleasant but efficient. He didn’t make any pitches. He didn’t tell any jokes. He didn’t brag about his company. And he promised nothing.

All he did was ask for information.

Since we were uncomfortable and already paying keen attention to our cash flow at the time, we had most everything he wanted at our fingertips—all the monthly payments and interest rates, time remaining on these debts, other bills, savings, etc. . . Some of it we had to dig for—like retirement savings and stuff like that.

The first meeting might have taken an hour.

You can’t keep consolidating and refinancing just to keep payments low. You may give yourself some breathing room, but you’ll never get to the reality of your debt.

What he promised to do with all this information was create a free report that outlined our entire financial picture. He called it a Financial Needs Analysis (or FNA) and said we could keep it whether we did business with him or not. His manner was professional. There was no pressure or expectation of any kind. Other than the report, I didn’t get the impression that he even thought he could help us. I think he had to wait for the report himself.

I appreciated that he seemed to understand family finances can be somewhat complex.

I made it clear I wasn’t interested in increasing the term of our mortgage. He knew the rate we had, and even if he could match or beat it, I really didn’t want to refinance again. Every time you do that, it costs you. Even if you go from 18 years to a 20-year term. You can’t keep consolidating and refinancing debt just to keep payments low. You may give yourself some breathing room (for the moment), but you’ll never get to the reality of your debt.

And you’ll never get out from under it.

Anyway, like I said, Rob wasn’t making any promises. And I was interested in this “report”.

Primerica’s Financial Needs Analysis (or FNA in Primeri-speak)

About a week later, he came back, Financial Needs Analysis (FNA) in hand. Now I understand that Rob Larson is a representative of Primerica and not a financial planner. I understand that he was in my house hoping to sell me something. I understand that I could have probably gotten more information from a “real” financial planner. Still, the information in the FNA was interesting. I’d never had our financial picture organized so well.

The most interesting thing for me was the analysis of our cash flow. It showed that our debt to income ratio was 34%. That is, for every dollar we made, $0.34 was going to pay our debts. The report said that 21%-35% debt to income was “Fair” as compared to:

  • “Excellent” 15% or less,
  • “Safe” 16%-20%,
  • “High” 36%-50%, or
  • “Dangerous” 51% or more.

More specifically the report stated, “Based on your current income, your debt is at a fair level. But you may be finding a sizable portion of your income going towards paying off debt. Consequently, you may not have enough to reach your other goals.”

Tell me about it.

Primerica’s debt elimination strategy: the s.m.a.r.t loan

Rob then took us through a few options that he thought would help—starting with a debt elimination program aimed at systematically eliminating the highest interest debts first and then moving on down the line. As a number cruncher, I had fun looking at the charts and tables, the strategy was nothing new.

I wasn’t impressed.

Next, he showed us an option involving our equity, consolidating debts, and refinancing with Primerica. He called it the S.M.A.R.T. Loan, and it caught my attention for 4 reasons.

  1. It involved simple interest,
  2. Included a bi-weekly payment plan,
  3. Let us keep the same number of years remaining on our current mortgage. In other words, at that time, we had 18 years left on our mortgage. Rob said we could run the numbers and stay with an 18-year term. And,
  4. We could do all this and decrease our monthly payments!

Primerica: scam or savior? My findings.

I was so excited about the potential for the S.M.A.R.T loan, I told him I’d have to think about it.

The last thing I want to do with my money is trust someone trying to sell me something.

I had to do my own research.

The last thing I want to do with my money is trust someone trying to sell me something.
I didn’t understand simple interest—and quite frankly, the more research I did, the more confused I got. I did understand how bi-weekly payments accelerate debt elimination. But I got confused when simple interest was involved.

As much as I respected Rob’s approach, I still didn’t trust him– or Primerica for that matter. Like I said, I had to do my own research.

So I scoured the internet, the library, called the Better Business Bureau, talked to our bank, called references, ran dozens of amortization tables, went back and forth with Rob asking him specific questions and making him do a fair bit of research. He didn’t know everything—and to his credit, he never pretended too.

He didn’t know everything, but to his credit, he never pretended too.

But he always called me back when he had the answer.

And I continued to pour over dozens of scenarios involving our own financial numbers.

Bottom line? It took me 6 months to be comfortable enough to pull the trigger. By that time, I’m sure Rob had long forgotten about me and was surprised when I called him back for another visit. A couple weeks later, we signed on the dotted line and haven’t looked back.

Primerica’s S.m.a.r.t. loan: a quick analysis after two years experience

That was two years ago now. How time flies. And I’m happy to report that (hallelujah) Primerica hasn’t screwed us over. Everything with our mortgage is going according to plan.

Interestingly enough, Rob gave us another call late this September. He was wondering if he could come out and run another FNA–just to see how things were going. So we had him out again. I’m happy to report that our debt to income ratio has dropped to 27%. Hopefully we can keep it going.

This visit we looked at our retirement savings and life insurance policies. Here’s what was most refreshing with Rob’s visit this time. He looked at the performance of our many and scattered mutual funds, and instead of trying to convince us to transfer them to Primerica, he said he recommended we leave them alone. They are all performing at a pretty high rate of return (and have been for some time).

He didn’t think his funds could beat them–and he was honest about that.

But he still wants to sell us Life Insurance. That was in October. I’m researching it. Maybe I’ll have it figured out by April or May.

Stay tuned until then for another report.

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If you’re interested in learning more about Primerica, be sure to read the other posts and the outstanding comment threads on this blog (comment numbers are as of this posting).  Just type “Primerica” in the search bar above, or follow the links below:

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UPDATE 10/30/09: I have refinanced my SMART loan. Did I get another SMART loan from Primerica? Or did I go with a conventional loan from my local bank this time? To find out, click on over to this post.

UPDATE 5/8/09: If you’re here in search of even handed information about other aspects of the Primerica experience (like the opportunity), please visit the first of a series of guests posts written by experienced financial professionals with insider knowledge about Primerica. The second, in this series is found here. As you will see, one of these posts is hot on Primerica, and one of them is cold. These folks know of what they write and have been gracious enough to share that with the rest of us.

UPDATE 3/20/09: If you currently, or have in the past, worked for or represented Primerica, please visit Primerica Opportunity Stories and share your story. People need to here the truth about this company through your experience.