Sparking memories of my childhood was Troutbirder’s post here yesterday about the neighborhood of his younger years in St. Paul, Minnesota. His adventures of traveling alone at a young age on the city’s trolleys reminded me of the city buses I grew up with.
A bus of my memory (Photo credit: Detroit Transit History)
The freedom that allowed him to travel alone is rarely available to young children these days. Even though my childhood home of Hattiesburg, Mississippi, was a tiny city compared to Troutbirder’s St. Paul, it had a robust bus service in the 1950s and early 60s.
My use of that service the summer I was about 12 years old sticks with me. Once a month during that summer, my father entrusted me with a meticulously organized packet of bills and CASH. He sat me down and carefully explained what each bill was and where to pay it.
He told me that he was saving money by paying me 10 cents a bill instead of paying by mail with the associated cost of stamp, envelope and check. I didn’t realize then that the 10 cents per bill was really no bargain for him. The bargain was financial training for his clueless daughter.
Familiar seating (Photo credit: Detroit Transit History)
On my bill-paying trips I boarded the bus at the end of our street and rode all the way to the stop in the center of town. That was about 1959, and at that time our vibrant commercial center was fairly compact and well within my ability to walk to all the places where I needed to transact business: power company, City Hall to pay the water bill, a bank to make a deposit.
My father had several rental houses, and on my first outing I successfully made the month’s payment for one of those little houses at a mortgage company. The next bill was a payment on another rental house at a different financial institution.
There I ran into a snag. My father had not mentioned that the amount he gave me for that month’s loan payment was more than the amount due. I had no idea what I was supposed to do.
The young lady taking my payment suggested I put it into the escrow account. I realize now that she was young, probably in her 20s or early 30s. At the time I thought she was quite ancient and a font of financial wisdom.
My father was not pleased when I reported back about putting the extra cash into escrow. He pulled out a long, printed list of dates and columns of figures. He proceeded to introduce me to the amortization schedule for the loan on that property.
His explanation necessary to enlighten the 12-year-old me took a lot longer than this one below that I borrowed from Investopedia:
“Amortization schedule: A complete schedule of periodic blended loan payments, showing the amount of principal and the amount of interest that comprise each payment so that the loan will be paid off at the end of its term. Early in the schedule, the majority of each periodic payment is interest. Later in the schedule, the majority of each periodic payment is put toward the principal.”
By the end of Daddy’s Mortgage 101 session, I had grasped the fact that in the early days of paying off a home mortgage, a little bit of extra money applied regularly to the principal could make a huge reduction in the total cost of the home.
Putting that extra cash in escrow had been totally superfluous, and I understood why my father was so adamant about applying the extra to the principal.
Note: It seems I remember a little more green on the buses of my childhood, but maybe not. My memories are good, but my memory . . . not so great!