34 months of effort wiped out in 10 minutes

It sounds like an Olympic dream dashed by a fall.

It was actually our mortgage principal balance backing up almost three years due to one brilliant marketing piece, and one bad decision. And yes, caveat emptor – Latin for ‘buyer beware’!

What better example to share than one where you are the principal player? I know the circumstances perfectly. It feels like it was yesterday, but it was actually 16 years ago. I remember the mindset I had, and the look and feel of the direct mail package. And for me, there would be no excuses since I had been in the financial services industry for 10 years at the time. And yet I was taken.

Our mortgage had been with this big bank for 5 years, and apparently we were primed for a marketing piece that would be too tempting to pass up.

It was a one page letter from our bank, simply positioned as a friendly update on our Mortgage Cash Account balance. What?! I didn’t even know we had a Mortgage Cash Account. According to the letter, we had built up a cash balance that could be accessed at any time without any penalties. And we could use it for whatever we needed – the letter listed some good ideas like a trip, a home renovation or medical expenses.

It just so happened at the time we “needed” new windows for our home. We hadn’t saved anything for the project, and didn’t want to put it on a line of credit or credit card. This was the windfall we needed to finally get the windows done. So without asking any questions, and without wondering where this windfall was actually coming from, we signed back the letter requesting that the cash be deposited in our chequing account.

The $8,220 landed in our account just a few days later, and we booked and installed the windows within a few weeks.

The shock came a month later when we received our mortgage statement. Apparently the cash that we had accessed without penalty was the principal portion of all our mortgage payments from the previous 34 months. Yes, our mortgage principal had just backed up almost 3 years. And we hate debt – all forms of it – including our mortgage.

I felt sick to my stomach. I felt stupid and embarrassed. And I should have known better.

And yes, caveat emptor: buyer beware. We had the opportunity to ask questions and undergo some due diligence, but we decided against it so there was no reversing the decision. The windows had been purchased and installed. And the bank had adjusted the mortgage balance up, to account for the Mortgage Cash Account depletion.

I know now we’re not alone. Just about every person I know has made a decision that has hurt their financial position at one time or another. Sometimes it’s people who seem trustworthy who coerce us into doing something we shouldn’t. Sometimes we’re just plain duped. Maybe we don’t ask enough questions or we’re afraid of the answer we’ll get back. And other times it may simply be a matter of not getting a second opinion (and not knowing where to go for that second opinion). Whatever it is, I have sympathy for those who find themselves in a position of loss and regret, because I’ve been there.

Why does suffering need to be a part of our learning journey? It certainly helps with memory retention, but enduring pain is hard to accept, especially at the hands of slick marketing pieces or sales people. Beware the intentions of large and profitable financial institutions – your best interests are not always their primary concern.

Take control of your finances today.

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