A few warnings here, I will be making up words, I believe our situation needs new words to describe it. And in no way is this financial advice. To take financial advice from me, well, that would just be stupid. This is also not a sob story, there is no blame, it’s just how things happened. It was a way for us to learn a lesson.
A quick recap on how this all started…
About four years ago, two things happened. I got pregnant, a little earlier than planned, but as with all things child related, nothing is predictable. And Mr T got a great paying job, on the other side of the country.
Our response? Let’s get a bigger house for our family; soon to be two big people, three little people, two dogs and two cats. Hey, and because we now have a great deal of money coming in, lets borrow more than we need to and build a house three times bigger than our current one. Oh, and while we’re at it, let’s increase our living standard to use up the rest of the money not going to the mortgage. But we were a little bit smart, we didn’t borrow as much as the bank was willing to lend us. In our defence, we did look into adding an extension to our current home, but the bank wouldn’t lend us the money to do that, they did however lend us three times what that would have been to build a new home.
All was going well until Mr T was made redundant. Long story short, here we are. Up shit creek.
When I last wrote about this, we went to see the financial counsellor, and that’s pretty much where it stopped. I couldn’t put anything down in writing at the time. We had a plan worked out with the counsellor, but we had to wait and see how it played out before I could put it here.
With me working part-time and Mr T’s new normal paying job, we were able to pay the mortgage and buy food or pay the mortgage and pay bills or buy food and pay bills, but we couldn’t do all three things at the same time. We weren’t even looking at the extras like clothes and vodka. So we spoke to the bank. And they were great, and I will say that through this entire process, they’ve been really good. The good side of my brain tells me they were doing this because they’re nice people and genuinely wanted to help us out. The cynical side of my brain tells me they were doing this because the longer they strung us out, the more interest was accruing and the more money they were making from us.
We first approached the bank in December 2013 and told them we were in trouble. They gave us three months where we didn’t need to make payments, after that, our payments would resume and we would have to look at paying back the amount that was in arrears. During the three months of no payments, interest would still be accruing. After buying food and paying our bills, we used the left over money to pay outstanding debts that had built up.
In April 2014, the bank increased our payments to cover the arrears that had built up. By about June 2014, we were in trouble again. We contacted the bank and this time they waived our payments for one month. Again, interest continued to accrue.
Come September 2014, guess what? So we contacted the bank again, this time they reduced our payments by about 40% and suggested we speak to a financial counsellor. Full payments resumed in December. At this point the arrears had grown to a fairly hefty amount.
Our first goal was to get rid of the arrears. Enter our retirement fund…