Saturday, September 6

Overdrafting whiners

I was halfway through leaving a comment on Living Almost Large's post, "Overspending cash?" when I realized I had to blog about it.


The post is about recent "Woe is me" attitude of people toward overdraft fees. By and large, they act as though they had no part in getting into this situation. Given the title of this post, I probably don't have to state my feelings about this. But for the record: Puh-leez!


The bank doesn't make you spend more money than you have. And you knew when you signed up for an account (and when you made purchases without keeping careful tally) that overdraft fees were a possibility. So what gives you the right to complain now about the rules?


It's also just maddening when people make themselves out to be the victims. You weren’t duped. You were careless. The bank isn’t playing three-card monte or a shell game. It’s telling you: If you take out more than you put in, you are penalized.


That’s it.


You just have to be able to keep track of your spending. You know how much you put into your account and you can know -- if you bother to do the math -- how much you're taking out.


Before we go any further, let me staunch a few indignant comments in advance. I have overdrafted. At some points in my life, I've done it quite a lot. And while it's gotten better in the last couple of years, I still slip up from time to time. In fact, this June I dialed in to the automated system and found out I had been charged 6 overdraft fees: $210. (Tim convinced the bank to get rid of 3, saving us $105. Proving once again that you should always ask.)


So I’m not speaking from some high pedestal. I’ve been there, done that. I realize most people will make the mistake at some point. But here's the key: I don't think we should get to blame the bank for our money mistakes.


Because, really, that’s what overdraft fees are: mistakes. We make a mistake in math and think we have more money in our account, or we make the mistake of not checking our account often enough. Either way, these are things that we do, not the bank, not the retailer. Just us.


And, for most of us, the solution is really quite simple: Cut back on spending and keep track of expenditures. If you know how much you've spent at all times, you don't have to worry about confusion about "pending" transactions or other bank mysteries.


But there are some people for whom this rule isn't enough. Tim, for example, has tried and tried to keep focused on his spending, avoid impulse purchases and keep track of his account balance. It doesn’t end up working. Not because he’s lazy, but because he has ADD.


Turns out, the condition has a major impact on financial skills – something none of his counselors ever mentioned when they were teaching him coping skills for focus and concentration. (Incidentally, I will be doing a post soon about ADD & finances because it's an interesting phenomenon.)


For the first year or so we were together, Tim was regularly overdrafting. And I was regularly livid.


As I said, a lot of this was that he couldn’t be consistent in his attention. But there were other factors, too. I was even one. I tended to ask him to cover a bill or some groceries, since he had money in his account. Except that those requests took care of that. (Nowadays, he speaks up when I pull this.)


At the time, though, the fees kept rolling in. I was at my wit's end. We had mounting debt and at least $100 a month was going to the bank!


Finally, we hit on a solution. It works great. I bet you’re wondering what it is. And why I’m not telling you. In particular, why I’m stalling.


Okay, here’s the deal: This works for us. But I still hate to admit to it. I’m a frugal/debt-reduction blogger for crying out loud! And the way we get around overdraft fees goes against every grain of my financial common sense.


But I can’t stall forever. So. I’ll just take a deep breath and say…


We... put all possible expenses on a credit card.


I know, I know. It sounds like the worst financial idea you’ve ever read. You’re probably rethinking any advice I’ve given.


But you know what? It works. And we still pay less in interest than we did on our overdraft fees.


Obviously, this isn’t ideal. It definitely isn’t something I want to keep doing forever. But so far, it’s the only thing we’ve found that keeps us from overdrafting. And, as I’m so fond of saying, sometimes personal finance is about what works best for you.


Please understand, I’m not advocating this system. I don’t think most people should do this. I’m not even thrilled that I’m doing it. But I’m slowly learning that not everything has to be perfect. It just has to work while you figure something else out.


Also, don’t think that Tim gets to use ADD as a crutch. It’s not an excuse, it’s a mitigating factor. The same way that sometimes I can’t wash the dishes in a timely fashion.
The need doesn’t go away, but we have to allow each other some room to be human.


The fact is that he can’t get rid of his ADD. He can only try and figure out how to deal with the symptoms.


I hope that one day we’ll be in a situation where we have enough in our accounts to avoid worries like overdrafting.


But that’s the future. Here, in the present, we have something that keeps overdraft fees at bay. For now, that may be the best we can do.


Do you think we're making some horrible mistake? Should we have just tried to be more careful about overdrafts? Is there another solution that we've missed? Am I the most hypocritical debt-reduction/frugal blogger ever? (And if so, is there some kind of award I can get?)

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9 Comments:

Blogger Living Almost Large said...

LOL, I have never overdrafted. I have gotten a bounced check.

But it's a simple matter of tracking your spending.

September 6, 2008 at 12:21 PM

 
Blogger Kay said...

I work at a credit union as a loan officer/member service representative in a call center and you wouldn't believe the guilt trips I get over fees. As someone who's personally began her climb out of debt starting in January (involving tracking my spending penny for penny over seven months), it's really frustrating to see people who won't accept responsibility for their errors and insist on giving you a hard time to have the problem reversed. I've asked several of our members if they're keeping up with their checkbooks and it never fails to surprise me when the answer I get is "I don't write checks." Not too long ago I saw a woman who had rented DVDs for $4.00 but because she overdrew, it ended up costing her nearly $60.00.

September 6, 2008 at 12:22 PM

 
Blogger Abby said...

Kay,

Ouch, that's a pricey rental! But you're right. People want someone to just take it away and whether it's their fault or not, they feel like they should be excused.

With my overdraft scenario, the supervisor took half of ours away; but I'd been a customer for 12 years and Tim played the low-income/debt card. But very politely. I don't think it's ever okay to harangue the customer service people for your own mistakes. I get awfully sick of people's attitudes lately. I think my temper is shortening as I get older.

September 6, 2008 at 2:07 PM

 
Blogger Jackie B. said...

I do not want to come across as a jerk but I have never overdrafted an accout and do not feel sorry for those who do. I always keep my check register up and do not really write checks or use a debit card much. If I do not have enough cash, I go without. I pay my household bills mortgage,cable,electric, phone)by check and that is it. I have learned to live within my means so I do not feel like I deprive myself of anything very often. When I first started out with a checking account I started with $100 in there that I never touched.That way if I did make an error in addition I was safe. I do sometimes use a debit card for gas and forget to put in in my check register right away so the $100 keeps me safe there too. If I do miscalculate or forget to deduct something, I make up for it immediately when my statement comes for the month.
I do think you are making a mistake by using the credit card method but if it is working for you that is all that really matters. Just remember that it is only a temporary fix and keep trying to reach your goal of meeting your needs without them. Good luck!

September 7, 2008 at 10:56 AM

 
Blogger Abby said...

Jackie,

Thanks for reading and responding! (And for being honest but polite about it!)

It is most certainly a temporary fix and not something I want to continue but we're almost finished with the student loans (yay!) at which point we can focus on credit cards exclusively and evolve our strategy.

For answering a comment in the post, you've got an extra entry into the giveaway.

September 7, 2008 at 11:18 AM

 
Blogger Bonochick said...

You have to force yourself to stay on top of things. So far, I have never bounced a check or had an overdraft charge. Hope I never do!

When I write a check, I immediately put it on my register. When I use my debit card, I always get a receipt and put it in my wallet. While out and about, I can easily use my debit card a few times...but I know before using my card that I have enough funds to cover things.

When I have a moment at home, I sit down with my receipts and add them to the register. I also go online to view my account at least once a week to make sure that my info matches the bank's info and to verify that I've done the math correctly.

I think another mistake people make is that they assume they are fine with money right now because the check that they just dropped in the mail won't be cashed for at least a few days, so that money is still theirs. I never think that way. Once I write a check, I just immediately consider that money to be gone and untouchable...despite the bank's web site still showing that I have that money. I don't...it's spoken for!

September 8, 2008 at 7:30 AM

 
Blogger Rachel said...

I agree that if it works for you, it works, we can only do what we can do. The only thing I'd watch out for is overspending because adding to the credit card balance isn't "real" money or a set amount (you mentioned it costing you interest to use the credit cards for putting expenses on, and it only costs interest if you carry the balances from month to month). We also put almost all our regular expenses on a credit card to earn rewards (electric, insurance, etc.), but I treat each charge as if it were coming directly out of our checking account, and pay the charge account weekly, so we never carry a balance and never incur credit card interest.

September 8, 2008 at 9:55 AM

 
Blogger Abby said...

Bonochick,

Yep, most finance is about diligence. That said, there are conditions that do make finances exponentially harder to stay on top of. Like ADD/ADHD and depression. That doesn't give Tim and I free rein. But it does mean that we have to try harder and have to sometimes think outside the box.

I have an aunt who had a rewards credit card. She wanted the airline miles but didn't want to overspend on the card. So she took each transaction receipt home and debited the amount from the checkbook. That way, she never spent more than she could afford to pay off at the end of the month.

I am just glad that we have Quicken once again. Now if only the computer it was installed on was working...

But once it's up and running again, we'll be able to really keep a tight leash on ourselves. Until then, it means a lot of checking bank balances online to be sure we haven't forgotten about any major transactions.

Thanks for your comments. You're entered in the second weekly giveaway, which will post later today!

September 8, 2008 at 10:34 AM

 
Blogger Revanche said...

LOL, stuff happens. I've been extremely diligent for 8 years, and you know what? Even I've made mistakes that caused overdrafts. It's a pain, it's aggravating, but it can happen. All it takes is one little error, or oversight. So,you just have to learn from the mistakes and create solutions that work best for you, your life and your limitations.

I'm sure there are small habits you can develop that will gradually wean you off the CC system, and save even more money. I'd hope that it's something more rational than my original solution of neurotically tracking every single transaction and every bill every day -- that was a little exhausting, but what I needed to get a handle on things. The system has evolved by now, but like I said, it's trial and error.

Also, I don't blame anyone for my errors. If I want them to do me a favor and waive the fee, I admit that I played my part in earning it. It's only fair, right?

September 13, 2008 at 5:48 PM

 

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