Sometimes I could just kick myself for the foolish mistakes I make when it comes to personal finances. If I took the time to monitor my accounts and stay on top of my account balances as well as have a firm handle on when money is coming in and out, I could probably save a decent “chunk of change.” In particular, I have been known to repeat the same mistakes repeatedly. It is time to change.
I was shocked last week when I saw that my bank had charged me a $34.00 overdraft fee. When I called to inquire why, I was told by a customer service representative that this was because a check I had written was presented to my account, yet at the time I did not have enough funds in the account to cover the check. When I explained simply that it must have been a timing issue, a matter of hours in fact, my plea fell on what seemed to be deaf ears. I knew that things might get tight and unfortunately, my check posted to the account much quicker than I had anticipated. Instead of playing it safe and transferring money from my savings into my checking to avoid this issue, I was foolish and ended up incurring a $34 penalty as a result.
What bothers me so much about mistakes like this is that I was truly the only one to blame. It was not as if I did not have funds in savings that I could have simply moved to my checking with the click of a button, rather it was laziness on my part. This entire debacle made me think that opening an overdraft line of credit with my bank would not be such a bad idea after all. As far as I understand, an overdraft line of credit may be obtained through one’s bank and will “kick in” if a situation like the above presents itself. Instead of bouncing checks and paying large fees, you can borrow a few bucks and pay interest. The amount of credit and interest rate will vary depending on the consumer’s credit history and the annual fee for this service, if any, will depend on the banking institution.
Tapping into a line of credit will cost you interest and repayment of principal, but if you use it as a safety net in times of uncertain cash flow, it can serve as a quick fix. In my case, paying interest on a small advanced amount for one day would have certainly been less than the $34 penalty. Inquire with your local bank as to what is involved with opening a line of credit. The only caveat here is that some of us may find it easy to abuse an overdraft line of credit. There’s nothing wrong with having a safety net to catch you when you make a mistake, but abusing it will become costly and lead to financial troubles. If you are averse to doing this then ensure you stay on top of account balances and ALWAYS, ALWAYS leave enough in your account to cover outstanding checks and/or obligations.
Another personal finance mistake that I have the tendency to continue repeating is my failure to discontinue automatic withdrawals from my account when I am no longer using a particular service. For example, membership fees to Netflix or to the local gym may be withdrawn from your account automatically if you enroll for this feature. When no longer in use, the service provider cannot read your mind and discontinue payments. Although having automatic withdrawals is a wonderful benefit, as you don’t have to make manual online payments or write checks monthly, some of us, including myself, may forget to cancel the withdrawals when we stop using a particular service. All cancellation requires is a simple call or click of a button (a penalty or cancellation fee may also be involved). Additionally, staying on top of your finances is critical. If you are monitoring your accounts and finances you will be able to spot when money is being taken out of your account and cancel an automatic withdrawal if necessary.
At the end of the day, I prove to myself time and time again that personal finance blunders may be avoided if I stay on top of my finances. A few extra minutes every day or every other day can save you a lot of money in the long run.
Published or updated December 13, 2010.
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I guess it takes alot of discipline to monitor our finances and track where our monies have gone too. I meant, if asked, how many people wouldn’t wish they can afford a professional accountant to help them with the chores. Boring, boring details. But, until we get into the wealthty league, we somehow got to get up from the couch and get going with those…yuks….if we want to stay in top of our finances!