Personal Finance Mistakes FAQ: Part 1By Caitlin in Money
Money mistakes happen to the best of us and it’s not always the end of the world as long as you know how to fix your mistakes quickly and efficiently. We’ve put together a list of frequently asked questions and given you the advice and answers you need to correct your financial situation so you can get back on track.
What do I do if I missed a mortgage payment?
If you have missed a mortgage payment it is extremely important that you contact the bank or lender who you received your mortgage from immediately. Your mortgage should be treated like your most important monthly bill because it is, a mortgage is a secured loan which means you can legally have your house taken away from you.
Contact and communication is key!
First contact your lender and explain the situation, whatever it may be. Every lender is different and will act differently to missed payments, so make it a priority to communicate with them and do not pretend the issue doesn’t exist.
If you missed your payment because of an issue with your bank, fix the issue right away and let your lender know that the problem is fixed and that they will receive your payment right away.
If you simply forgot to make your payment then first contact your lender and explain what happened and send them the payment as soon as possible. Then figure out a way to remind yourself to make the payments on time, set an alarm on your phone, write in it on your calendar or leave yourself a note.
Remember that your lender doesn’t really want to foreclose on you because they want you to pay them every month, so communicate with them and you’ll likely come to an agreement that is good for the both of you.
What do I do if I maxed out my credit cards?
First and most importantly stop using your credit cards right away and do not get a new one with a new balance; this will only make your situation worse.
Next you need to make a personal financial budget so that a good amount of your income is going towards paying off your credit card debt. This might be hard but it’s the only way you’ll make any dent in your debt.
Interest rates matter!
If you have more than one credit card that is maxed out then you need to work on paying off the ones that have the highest interest rates first as those cards are costing you the most. But don’t forget to continue to make the minimum payments on your other cards.
You can also look into transferring the balance of a credit card with a high interest rate to a card with a lower interest rate. You definitely need to do your research though because credit card companies are businesses that want to make money so there could be hidden fees and fine print that could increase your debt.
Be careful to double check for introductory rates that change after the introductory period is over and transfer fee rates, most credit card companies charge a 3% transfer fee so depending on how large your balance is the transfer fee could be pretty big.
Finally, you can work with a credit counsellor who will help you to consolidate your debt into one easy payment. This way you won’t have to worry about making several different payments to several different credit card companies and will be less likely to forget a payment.
For more information, check out this article on carrying too much credit card debt.
What do I do if my cheque bounces?
If you bounce a cheque the first step you should take is to call the person or company that the bounced cheque was meant for and explain your situation and reassure them that the next phone call you make will be to the bank to fix the problem.
Call the bank that you do business with. The person that you speak with will be able to help you with your situation, but beware that there will be fees.
Be prepared with overdraft protection!
Basically the bank will set up overdraft protection for you so that if you were to ever bounce a cheque again the bank would pay the amount of the cheque for you. There are of course overdraft fees and the protection should only be used in case of an emergency. There is always a limit to overdraft production so you shouldn’t rely on it to cover all your expenses.
Finally, if you frequently bounce your cheques even though you know exactly what day they will be cashed you need to take a look at your finances and think about making a budget so that you can fix the problem on your own. Taking control over your own finances and fixing the issue yourself is always the best choice and one that will benefit you the most in the long run.