How Payoff is shifting the conversation about consumer debt to financial wellness

payoff healthy financial habits

Scott Saunders is CEO and Founder of Payoff

What is Payoff?

Scott Saunders, Payoff
Scott Saunders, Payoff

Payoff is a leading financial wellness and empowerment company leveraging technology, science and personalization. We are working to change the status quo in consumer finance and help people cross the chasm from borrowers to savers, investors, and givers. We’re excited to have support and significant industry leadership from our impressive Board of Directors, including: Joe Saunders (former Visa CEO), Arianna Huffington (Huffington Post Founder), Mohamed El-Erian (former Pimco CEO), Sean Park (Anthemis Group Founder) and Jim Lane (former Goldman Sachs partner).

Why do you believe it’s a “next generation financial company”?

By taking a more personal and holistic wellness approach to their finances with Payoff, our Members gain insights to connect their behaviors, feelings and aspirations to an empowered path forward. For example, at Payoff we:

  • Use science to empower our Members: Our Chief Scientist, Dr. Galen Buckwalter, helped to develop the matching algorithms at eHarmony as their Chief Scientist Officer, and  he’s bringing psychology to finance, ultimately facilitating positive behavior change and helping people make better financial decisions. Payoff has taken the hundreds of questions you might answer in a typical psychometric assessment and compressed them into a three-minute “gamified” online version that gauges your financial personality. Our assessment provides insights into “why” you spend vs. just focusing on “what” you spend (information you can already get from traditional credit reports).
  • Treat underwriting like a first date: Payoff doesn’t want to issue multiple loans to one person. Instead we want to understand people’s levels of motivation to really pay off their debt. As a result, Payoff has a significantly lower default rate than the industry average of 4%-5%. We’re also actively researching and building resources and tools to support motivated Members who don’t currently qualify for a Payoff Loan.
  • Offer Member Advocates: Based in Payoff’s Costa Mesa, Calif., headquarters, our Member Advocates provide personal support, guidance and a listening ear to our Members via a call, email or online chat. 86% of Payoff Members have opted in for 90-day check-ins following the initial welcome call from their Member Advocate.
  • Are the first marketplace lender to provide Members with free FICO® Score updates: Starting this month, Payoff will provide Members with complimentary monthly access to their FICO® Score (which are used in more than 90% of lending decisions in the U.S.). Members will see trending information impacting their score and educational resources. In a recent study, Members who paid off $5,000 in credit card balances using a Payoff Loan saw an average increase in their FICO® Score of 40 points.
  • Are a growing community: With a Net Promoter Score (NPS) of 80, Payoff Members are showing their desire to join our financial wellness movement and help us continue to build an even better and growing community. Payoff has been very positively reviewed within the industry’s leading sites, such as Magnify Money (A+ Transparency Score), NerdWallet (Best Customer Experience), ekomi (4.8 out of 5 stars), CreditKarma and the Better Business Bureau.

What is the biggest challenge you’re finding growing a company in consumer finance?

Breaking the status quo. Financial wellness is a new concept. The status quo is delivering traditional financial products and services that don’t help customers achieve success. At Payoff, we put our Members first and have their best interests at heart. We meet them where they are today, take the time to listen and understand them, and develop products and services that support their needs. For example, we focus on their most costly problem today  – past credit card debt – and offer a refinance loan to help eliminate it instead of offering multiple loans to encourage new debt. We also offer our complimentary online Lift program that’s a hub of useful financial tools and tips.

How does Payoff balance the friction between “wanting users to become free of debt” vs. building a consumer credit card company that monetizes such debt?

We have a solid foundation and business model designed around the idea that when the customer wins, we win. If it were up to us, we wouldn’t call it a loan, because it’s really their goal to eliminate the credit card balances that they currently have, and we’re partnering with them to achieve that goal. The loan is really just one part of that relationship — and we issue a single loan to Members to pay off their debts, not second and third loans. Along their journey with us, our goal for our Members is to get them on their personal path from borrower to saver, investor and giver, and help them achieve their dreams.

How do you think about distribution? What does your funnel look like?

Our focus is currently on serving the U.S. market. We have an integrated marketing approach that includes direct response with supporting paid ads, social engagement, and direct mail. We’re also building a vibrant community of partners who share our values and want to introduce Payoff and our solutions to their own community members.

What’s in store for Payoff in 2016?

This will be the most exciting year ever in the journey of Payoff. Last year we helped thousands of Americans to begin their paths from borrower to saver as we refinanced credit card debt. We’ve also helped our Members improve their FICO® Scores by an average of 27 points. This year we’ll launch new solutions to help them continue that journey, understand themselves better and develop the level of peace that we should all be able to have with regard to money in our lives. We’ll also continue to innovate and explore opportunities that extend our reach and impact in support of our mission.

We are all Greece

I have this recurring nightmare.

Actually, I’ve got a lot of frequent bad dreams but this one’s particularly chilling. Things were O.K. at work.  I was growing my responsibilities, my authority. I was getting promoted quickly. I was making money. So, like a financial optimist, I bet on the future and started borrowing.

It started small and harmless — I took a large mortgage on a house — but then, I started borrowing more money to finance a rich lifestyle.

Soon, it was like ballooning like Bono’s ego.  I had to borrow just to pay off my old loans.

It took so much financial engineering, I didn’t even have time to work  – I was so busy.

But then, out of the blue, people didn’t want to keep lending to me.

I was coming up short, compounded by the fact my work slacked and earnings were dropping as a result.

Crap, I was stuck.

I had been Greece-d.

Continue reading “We are all Greece”

Strapped for Cash, Do’s and Don’ts (Financial Literacy via Music)

I find that I use music a lot to explain issues to my teenage children.  Not surprisingly, many tough issues are dealt with via music, rhythm, and lyrics.  Pop music has become a form of modern-day poetry for the masses — much like epic poetry for the Greeks.  While my kids flinch at memorizing anything for school, they have an ENORMUNGOUS repository of songs/lyrics resting under the hood.

Fountains of Wayne: Strapped for Cash

Lessons in debt management

Fountains of Wayne (Wikipedia) has “Strapped for Cash”, a fun yet serious song about debt and the vicious cycle that can envelop a person, company or country.  Debt can take its toll on us, not only monetarily but also psychosomatically.  Feeling trapped, many investors turn to short-sighted activities that only increase the velocity of the debt cycle.

Well it was Saturday night, I was sitting in the kitchen
Checking out the women on Spanish television
Got a call from Paul who was just let out of prison
He said hey listen, there’s something I’m missing
I said I’m on it, honest, it’s on its way
You’re gonna get your money in a couple of days, okay?
I’m just a little strapped for cash
Take it easy baby, cut me some slack, I said (most of the time, creditors are willing to negotiate terms of debt and would rather see some return on their loans than a total zero.  Don’t be afraid to negotiate)

I’m just a little strapped for cash
Very temporary, don’t you worry ’bout that
Strapped for cash

So I headed out west to invest in the races (‘invest’ in races?  C’mon, this is a very dangerous strategy that involved betting/trading/investing in something else in order to win back money lost — bad idea and compounds the problem.)
All the goddamn horses kept falling on their faces (investing requires patience, time horizon and a way to better your changes via value investing, dividends, etc.)
Didn’t fare much better at the Taj Mahal
Chalk it up to bad luck and free alcohol
And now I’m laying low, you know I’m trying to stall (stalling just increases the anxiety — better to be proactive about debt and meet it head-on. Try negotiating and finding other ways to bring in some money via part-time jobs, hobbies, etc.)
But I don’t know how much longer I can dodge the calls

I’m just a little strapped for cash
Don’t you know I wouldn’t do you like that
I’m just a little strapped for cash
Give me a minute you know you’ll get it back

Strapped for cash
Strapped for cash

Six bodybuilders pulled up in a Pinto
Next thing I know they’re coming through the window (at some point, debt has to catch up to a person, company or society and payback can be harsh)
Hate to keep you waiting, I know times are hard
Now would you prefer a Visa or a MasterCard (quick word of advice: don’t use credit cards to pay off debt.  It’s extremely onerous debt and works to increase the velocity of the debt cycle — better to pay off credit cards first)

Because I’m just a little strapped for cash
Take a seat, I’ll be back in a flash, I said
I’m just a little strapped for cash
No need to have a heart attack (debt and the struggle to free oneself from it has definite effects on our health and psychological well-being)
Bop shoo wop, bop bop shoo wop