Happy Financial Literacy Month…the month where we shine a spotlight on financial education and the importance it plays in our lives. I talked last month about my financial bounceback and received a few messages from readers about how that story showed them that anyone can have financial hardships.
Now it’s time to be even more transparent. To kick off Financial Literacy Month, I want to share my biggest financial mistake to date in hopes to further inspire people.
Whenever I want to accomplish something, I start with a plan and follow it no matter what. Some people called it stubbornness, but I like to call it persistence. One day, my persistence bit me in the ass-et, causing all kinds of grief and hardship. Having a plan can be great, until it’s not.
At one point in my life, I decided to leave a great-paying job to become a full-time entrepreneur. I was on a quest to follow my dreams. I knew the pitfalls and risks that came with my decision, but I felt like I was immune because, well it was my calling. Within a few months of taking the leap, I fell behind on my mortgage and almost lost my home.
Letters from the bank — and ultimately, their lawyers — came pouring in. In no time, my family was facing foreclosure. This was the first time anything of this magnitude had ever happened to me. I didn’t know where to start or what to do.
My family and I braced ourselves for what seemed like the inevitable: we packed our bags with nowhere to go. Just when I thought all hope was lost, I learned about less extreme ways of handling and resolving missed mortgage payments.
One option was a short sale. I could sell my home for less than I owed on the mortgage, if my lender would approve the transaction. The outstanding balance would then be forgiven. Another option was a deed in lieu of foreclosure. This would allow me to voluntarily give up my rights to the property instead of going through the stressful and costly legal foreclosure process.
Ultimately, I didn’t have to do either because I found one more option. At the time there was a federal government program called the Making Home Affordable Program which helped homeowners avoid foreclosure. I was able to do a loan modification where my lender changed the terms of my loan to allow me to make lower payments so my family could stay put. It made staying in our home a reality.
The loan modification began with a three-month trial period. After I successfully made the first three payments on time, the modification became permanent. While that was great news, the delinquent payments remained a blemish on my credit report. However, time does heal all. As I continue to make on-time payments toward my mortgage, the delinquencies will eventually fall off. Lesson learned. The next time I follow a dream, I’ll do it a lot more carefully.
Now that I put all my skeletons on the table, what is your biggest financial mistake? Use the form below to tell us about your biggest financial mistake, what you learned from it and how you overcame it and receive a BankMobile Swag Pack. Complete all four challenges throughout the month and you could win you a one-on-one financial counseling session with me! No purchase necessary. See official rules for details.
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