Dirty Little Secret, Part 2

There’s a dirty, little secret we all share but no one talks about unless s/he feels s/he has been charged unjustly.  Then, oh then, the whole world’s gonna hear about it.  And that secret is being hit with penalty fees: late fees, overdraft fees and over-the-limit fees.  This week we’ll discuss overdraft fees and how to avoid them.  If you missed last week’s article regarding late fees and over-the-limit fees, you can find it here.

If you’ve ever had a checking account you know what overdraft fees are.  They’re the fees the bank or credit union charges you for not having enough in your account to cover the ‘draft’- either a paper check or electronic debit.

I remember when I got my first checking account, and I kept getting hit with the overdraft fees.  I couldn’t understand it, so I started paying attention to the balances on my ATM receipts…and I still kept getting them.  I even got a letter from my credit union that said if I didn’t fix this problem, they were going to close out my account.  What??  I didn’t understand. (And this was way before they started printing instructions on the backs of monthly statements to show you how to balance an account).  I know I checked my balance before I made my purchase!?  And finally…it dawned on me: I have to have enough money in my account for both checks I’ve written and what I’ve withdrawn from the ATM.  Ohhhh.  Du-uh lol.  I started writing checks for almost everything after that, and actually used the checkbook to help me keep track of my balance.  I can laugh at my uninformed self now because it seems so simple…now.  But, like with anything, I didn’t know what I didn’t know…ya know?

I think learning to balance a checkbook requires its own article so we’ll cover that next week.  So for this week, I suggest that you STOP throwing away your money on overdraft fees.  If you’re getting hit with overdraft fees ‘every time you turn around,’ chances are you’re doing like I did: writing checks and spending cash and not keeping good records of it all. 

To make any positive change in our lives, we must first STOP what we’re currently doing.  That makes sense, right?  So…just STOP.    Go simple.  Use either a completely cash system or a completely debit card (or check) system for paying bills and other expenses.  Don’t mix the two for now, because it’s obviously not working for you .  And I say that with Love and understanding…because I’ve been there.   Because if you don’t STOP, you could very well be paying $37 for that cup of coffee.  And we know that’s just a crazy price to pay for coffee.

 Next, LOOK at your statement to learn how you most often spend your money (cash vs. check/debit card).  Don’t skip this LOOK step because it’s possible that you actually spend money much differently than you think you do.  Most of us have a picture in our minds of ourselves and our actions that is quite different from what reality shows us, or even how our friends and family see things. 

And finally, LISTEN to what I’m tellin you lol.  Just kidding…kinda lol.  You should LISTEN to what your statement shows you, and go with the system you use most frequently.  If you use the system you already use most often, it will make the transition to one form of payment that much easier I think.  So…cash your check and leave in your account only the amount needed to pay your recurring bills if that’s what you need to do, and spend cash for everything else.  Or…resist the urge to hit the ATM and simply use a check or your debit card for all of your expenditures, and check your balance online or by phone.  Whatever works for you.  The key to managing your money is to find what works for you. 

Because the Truth is if it doesn’t work for you, you won’t do it…and you’ll stay in the same financial mess you’re currently in. 

 As you go through this next week, ask yourself these questions:

1. Have I been paying unnecessary fees because I haven’t been keeping good records of all of my payments?

2. What works best for me- cash or checks/debit card?  Is that consistent with what my bank statement shows?

3. Starting today, what system will I use so I can avoid overdraft fees?

You can do this!  Take it one step at a time, one choice at a time, and you will see your finances and your life just getting better and better!  I guarantee it.

Decide today that you are tired of being a casualty of disorganization and of being broke, and do something about that.  You can do this! 

Live Victoriously!
Olivier M. Verne
MyMoneyMaster@ymail.com

(c) 2011, Olivier M. Verne.  May be used with permission.  All other rights reserved.

About the author: Olivier M. Verne, an author, editor, speaker, consultant and former Debtor Education instructor and monthly newsletter contributor, is single and lives in Miami, FL.  Additionally, being a consumer bankruptcy paralegal for nearly 14 years and a writer for over 20 makes Olivier uniquely qualified to write about this area of expertise and passion: personal financial management.

Olivier humorously shares this knowledge in a positive, fun, plain-English way that makes everyone want to learn and make the changes necessary to succeed financially.  Olivier’s readers learn how to conquer their fears about money, gain tools for responsible money management, and dispel the myths which keep them broke.  And Olivier is always just an email away, regardless of where you live.