Mortgage Payment Error
Banking errors happen and they are much easier to accept when they are corrected quickly and at no cost to the customer.
Earlier this month I submitted an online form to my mortgage lender with a request to make a prepayment of $500. It is pretty easy and I have never had any problems in the past. A couple of days later I was woken from a nap my my better half because our joint account was in over draft because the mortgage lender had taken $12,500.
After transferring funds from our line of credit I tried to figure out how that could happen. I was 99.9% confident that I submitted the right amount, but had a little self doubt because I could not see how the bank could confuse $12,500 from $500. On the other side of that doubt was the fact that I knew we had enough money to cover a $500 mortgage prepayment but an amount of $12,500 for a mortgage prepayment would cause all kinds of havoc.
This happened over the weekend so nothing could be done and the end result was a NSF change for $40 as the bank had reversed the mortgage prepayment.
I contacted my mortgage lender and explained what had happened. They were able to see the $12,500 being withdrawn from and then put back into our account. The were not able to explain how a $500 mortgage prepayment could turn into a $12,500 mortgage prepayment. They asked for a bank statement to refund the $40 NSF fee.
I faxed in the bank statement and the $40 was back in our account within 2 days. I followed up with a phone call to see how that may have happened and they didn't know. I was advised to phone in to make prepayments rather than completing the online form.
At the end of the day their mistake cost me about 20 minutes of my time to correct, but I was very happy with how quickly it was corrected.
Youth and Money
I was cleaning out some old boxes the other day and reminiscing about my youth when I came across a letter I had written my grandmother over 22 years ago. Reading this letter I realized that I had a desire to read and learn about money at a fairly young age. This desire was likely somewhat hampered by the education system at the time.
I remember learning how to make a pair of shorts from a pattern in Home Economics, make a plastic dish in Industrial Arts and the value of pi. I am confident that there was a purpose to learning these things, but looking back why did they not teach me anything about money? I am happy to report that things have changed in the last 22 years.
Government of Alberta Education has a mandatory program that provides some financial education to high school students. This is definitely a step in the right direction. I would be interested to see if the students get something out of this program or just see it as being necessary to graduate.
Like most things, if you want it done well do it yourself. Educate your children about personal finance.
Net Worth
We are into the New Year and looking back at 2009 I realize I spent a great deal of time crunching numbers and tracking how we are doing in paying down our mortgage. It is definitely motivating.
In spite of all of the number crunching I do, I have never looked at our net worth or bothered tracking it. Just like everything else, it cannot be managed if it is not being measured. We don't have a great number of assets or liabilities so keeping track of our net worth should be relatively easy. For simplicity I have combined our information. Our assets and liabilities as of January 1, 2010 are as follows:
Assets:
House: $396,000
Two Rental Properties: $420,000
Pension Plans: $223,000
RRSPs: $135,000
Bank Accounts: $8,000
Two Vehicles: $30,000
Total Assets: $1212000
Liabilities:
Mortgage on House: $249,500
Mortgages on Rentals: $358,000
RRSP Loan $7,300
Total Liabilities: $614,800
NET WORTH: $597200
We are going to concentrate on paying down the mortgage on our home, and tracking our net worth will be secondary. We will look at it again in a year and project there will be a 10 - 15% increase.
Balancing Financial Goals and Living for Now
As I sit on our newest purchase, an entertainment style couch watching the B.C. Lions play the Montreal Alouettes I realize how far I have come in the last couple of years, balancing financial goals with the lifestyle.
Coming from an 8 - 9 year stretch where I put earning money at the top of my priorities I have learned that you must enjoy life now. I am nearing the two year anniversary with my wonderful common law spouse and realize the positive influence she has had on me. I no longer accept overtime shifts on a weekly basis. She has taught me to enjoy my life now and find a balance.
Looking back over the last two years I am very grateful that I have "loosened up" the wallet and enjoyed numerous weekend road trips to the mountains and to visit relatives. Our biggest journey was our trip to the Dominican Republic in the spring of 2008. It was an incredible experience and gave us ample opportunity to recharge our batteries. You need reward yourself occasionally.
Back to the new couch. Earlier this year we realized that we were on track with our financial goal of paying down our mortgage and decided to reward ourselves with a home entertainment center. We purchased a big screen TV and surround sound system for our bonus room. We have continued to aggressively pay down our mortgage so this month we decided to add some home theatre seating. This purchase completes the bonus room and gives us a very nice room for our enjoyment and the enjoyment of our guests.
We have set a lofty goal of retiring a $316K mortgage in 5 years and we are on track. We do look forward to being mortgage free and will continue to work towards this goal. We will not however sacrifice enjoying life in the present. I believe that we are achieving a good balance and if the B.C. Lions can achieve some balance with the score with the Montreal Alouettes I will enjoy our bonus room much more.
Financial Perspective
Paying for our summer of fun and a couple of unexpected bills will leave us short of cash in September. We will not be able to meet our monthly goal of a $4700 extra mortgage payment. It is looking like we will only be able to prepay $1500 instead. I was originally stressed about this situation, but have since put things into perspective.
The last three months have been very busy and fun. A vacation to Kelowna, two weekends in the mountains and another three weekend road trips to other cities. Pricey, but well worth it.
My other half helps me put things in perspective and I am hoping I can get her to do some posts on my blog. She reminds me that we have to have some fun in the "now" and she is right.
We are fortunate enough to be debt free with the exception of our mortgage. We have a beautiful home, two reliable vehicles, two well paying jobs with defined benefit pension plans and the bonus of some business income on the side. Looking at the big picture there is no need for me to stress and it is time for me to be thankful for what I do have.
Remember, you can't take it with, and you do need to enjoy life. I have to be reminded of both sometimes.