Getting Over the Overdraft: How I Started Saving
Published on - December 5th, 2011 (by Tim Sullivan) I forgot to endorse the check. Normally, this is no big deal for my bank. That day, they decided it was. Originally, they cashed the check, the money went through and popped up on my online banking sheet. Then someone else caught the check down the line and didn’t like that it wasn’t signed. They took the money out of my account, stamped the check to be returned, and sent it back to me for endorsement.
Here’s the thing: I didn’t have any other money in the bank.
The cost of one missed signature
Because I forgot to sign the back of my paycheck, I incurred the following fees:
- $100 for rent. That rent check bounced. $50 for the bounced check from my management company. $50 late fee for that month.
- $35 overdraft fee for groceries. I bought $27 worth of groceries.
- $35 overdraft fee for the sandwich.
- $35 overdraft fee for gas. I drive a scooter and can hold about a gallon in my tank. Gas was less than $2.50 per gallon.
- $35 overdraft fee for the iTunes album.
That’s a grand total of $240 in charges and overdraft fees.
I spent less than $50 on food, gas, and an album, and it cost me an additional $140 in overdraft fees. Later I found out that’s the maximum for one day, so there is some pity in the world. I didn’t need that sandwich — why didn’t they just reject my card?! They explained to me that it’s because I never told them to do so. As to whether or not that’s all criminal or how to effectively talk your way out of overdraft fees, that’s another subject. Neither of those fixed the larger problem: I needed to change my habits.
I was living paycheck-to-paycheck and really had no reason for it. I wasn’t in debt. I made enough money for me. Yet somehow at the end of each month during those last few days before payday, I always ended up eating a lot of rice. So what did I do when I had $240 in late fees to pay? I paid them. I didn’t max out a credit card. I found $240 in my budget (and I use budget in the sense that everyone on earth has a budget, not that I’d ever sat down and actually made a budget or looked at budgeting) and still ended up with the same result at the end of the month: rice on the stove.
It occurred to me that if I could put $240 aside one month for bank fees, I could probably do it another month for savings.
Making cuts
To start my emergency fund, I cut back on several things I normally would have purchased, such as the following:
- A plane ticket to New York to visit my college roommate
- Mountains of books
- An über fancy date with my girlfriend
- Two months unlimited yoga at that swanky new studio
- The NFL Sunday Ticket package from DIRECTV
- A trip to IKEA for random non-essentials (New champagne flutes? Yes, please. Lingerberry juice concentrate for all! Yes, I should buy a new pillow. This faux leather chair is only $75! With NFL Sunday Ticket, I would pretty much need it.)
Nope, no plane tickets. I finished a book or two off my shelf. No swanky dates, just a pot of specially seasoned beans (and she loved me all the more). I waited for a friend to get me in on her pass to the new yoga studio. I went over to a friend’s house for the Bears game, and yeah, I guess I bought a six pack. And look, I lived without the chair!
Two or three months in, I had a decent stash saved. This was the start of my emergency fund.
Why set up an emergency fund?
Most GRS readers understand the importance of an emergency fund, but for someone starting out, it’s not always clear how often a cash cushion will come in handy. The following are some reasons I’ve used mine:
- I moved into a new apartment. I needed to pay one deposit before I got my last one back.
- My ear was clogged and I couldn’t hear. I tried the over-the-counter stuff and it made it worse. After 10 minutes at the doctor’s office, I could hear again. Initial visit cost me $85 plus $10 for the gunk they used.
- I was tired of fishtailing every time I rode my scooter in the rain. After getting yet another flat, I swapped out the Chinese-made tire the bike came with and got the super-tread ones. I haven’t fishtailed since.
- I only get paid once a month, and sometimes things come up right before the next paycheck. When I first started saving, it got me over that rice-eating hump at the end of each pay cycle.
I think those were valid reasons to use my savings. Just for fun, here were some reasons I have not used my emergency savings account:
- My friend wanted me to go to a Josh Groban concert.
- Two of my high school friends were getting married. They registered at Neiman Marcus.
- NFL Sunday Ticket.
- It’s getting cold at night. I want a car.
Putting together an initial emergency fund can be incredibly challenging. The first step is always the hardest. Bank fees spurred me into action. Others start with their tax refund. Some start small, some big. Just $50 in my account would have been enough to avoid those bank fees. Forget the excuses and start however you can. Track your spending – on your credit cards and everywhere else – for a month and give more consideration to what isn’t necessary, then put that into a high yield savings account. Stash your holiday bonus into savings. Sell some things online or to a local clothing store. Get a roommate. Take on a small second job or even look for seasonal work.
Before you start worrying about how much you need to set aside or what your future financial goals should be, before you rule out buying a house or going on that dream trip you’ve always wanted to take, start your emergency fund. Paycheck-to-paycheck isn’t the only option. Setting some money aside, whatever you can manage, is your first step. Do it today!
How did you first get started saving? What was your turning point?
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In the “not thinking” arena, the lightbulb moment for me was when I realized I could have the bank automatically transfer money from my checking account to my savings account each time my employer deposited my pay check. Money that I didn’t see in my checking account was money that I didn’t feel the urge to spend.
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For me it was in high school when I bought my first car, and began realizing that my $99 per month payment had to come from somewhere. I learned very quickly that if you spent your money on fun items and entertainment, you had no money on future goals.
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Your post rang very true for me at this point in my life. I am still in debt, but have started taking the first steps towards an emergency fund. I found myself in incredible debt after settling an expensive divorce, and without a job, my only option was to cash in whatever I had been able to save over the last 12 years. As that fund started depleting, I realized two things – how helpful that money was in my time of need, and the fact that now that fund was no longer there for the future. Other than food and rent, all other expenses had to take a back seat. Debt repayments had to be factored in from the monthly apportioned budget which was still coming from the emergency fund of the past.
Learning from this experience – financial discipline, avoiding debt, repaying debt at the earliest at any cost, and setting up saving for an emergency fund as a monthly budget head.
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That day of overdrafts may possibly be the best financial thing that ever happened to you! Great job recognizing you needed to make some changes instead of just blaming the bank and keeping your spending habits.
We always saved for retirement, but had a lot of loans to pay off after college. Then we had 3 kids right in a row. We saved slow and steady since our mid 20s, but we never were big spenders. There wasn’t really an ephiphany moment for us like you had, my story is actually quite boring.
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> instead of just blaming the bank and keeping your spending habits.
Bank does deserve blame. You don’t approve a check (unless it shows as pending with a temporary credit only) then bounce the deposit back.
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Yes time to switch banks, preferably to a local credit union.
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Some of us actually use cash to make our everyday purchases, thus avoiding those dreaded overdraft fees. A similar fee barrage happened to my sister-in-law and my wife’s friend recently when each made similar innocuous mistakes with their work checks.
I don’t think people understand how our growing credit/debit card based consumer economy drives the price up for everything (somebody has to pay those transaction fees, and it certainly ain’t the retailer), while lining the pockets of banks with usurious fee income.
Once again, cash is king in the retail space. My business is cash only and my prices are 5% cheaper because of it (and business is strong).
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On the contrary, it is the retailer. Credit card processing fees are downright painful. The interchange fee can be as high as 3% on top of a flat per transaction fee. As a mom-and-pop retailer who accepts credit cards about it; you’ll probably get an earful.
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I think she meant that retailers pass along the costs to consumers. I imagine that some people think businesses are jacking up their prices an extra 3-5% to compensate for credit card fees. That wasn’t the case for the small businesses I worked for. Credit card fees were just the cost of doing business — like heat, electricity and marketing.
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I’ll start paying cash when the retailers give cash payers a better price. Until then, we’re going to continue collecting our credit card points.
We just bought a new $2000 mattress (bad backs) from Sears. After trying the bed out in the store, we came home and ordered online from Sears via the Discover Website and got ourselves $300 cash back. Sometimes paying cash is foolish.
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One of the businesses I used to work for gave a discount on large purchases if people paid using debit or cash. I think it was 3% — equivalent to the credit card fees on the most expensive credit card to have. People were surprised at how much that amounts to, and it’s more than the 1 or 2% they get back from their rewards.
Now I ask if there’s a discount for not using a credit card and the answer is “no” almost all of the time.
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That’s when I take my business elsewhere, usually. I pay cash for big ticket items. I can usually get a better deal than the “$300 cash back” that someone might get for using a cc.
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@Mark – I think you need to be careful with that though. Clerks at places like Home Depot or Sears are only authorized to come down so far on price and that is typically in cases of damaged merchandise. And I have never heard they were allowed to come down due to cash over credit. I would be concerned that the employee was pocketing the money and not actually ringing the sale.
I should add that the Stearns and Foster mattress set we ended up buying was already being purchased at a supposed 50% off so we were already getting a decent deal. (Although I’ve never bought a mattress that wasn’t at least 50% off – I always feel like mattress salesman are in league with the used car salesman). I would be very surprised if you could get a big box (relatively high volume) price that will also give you an honest significant cash discount.
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I think most credit card companies forbid doing this now…
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I hope you looked at them all by yourself and didn’t ask for an associate to help you pick one out, if you did plan on ordering it online through the Discover website all along. Don’t forget there are still retail employees making a commissions, and time they spend on you (to then not even shop in their store) is time they could’ve spent elsewhere.
I work at Sears as a cashier (no commission for me to worry about), but I have seen this happen to many of the people selling on the floor.
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This is a great post. I love that you turned a negative experience into a positive one.
Just a side note, it wouldn’t have been your bank that returned the check for lack of endorsement. It would have been the paying bank. (Unless it was the same bank, of course). Just so you’re mad at the right institution.
And, to be completely fair, it actually could have been someone at your employer’s who returned it. It’s unlikely, but possible.
It is possible they approved your card for the sandwich because the check had not been returned yet, so there was in fact money in your account at the time. But to be fair, they probably would have approved it either way! The good news is that the recent financial reform including legal barriers to prevent the banks from issuing a debit card approval that would overdraft your account, but I believe you have to opt-in for the service, and I doubt the banks are keen to advertise that it is available.
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Your story is why debit cards can be far worse than credit cards.
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Yup. Say I run up $1000 on my card, an “oops” happened, and there’s not enough to pay the expenses come due-date. On a card with an 18% APR, you’re looking at less than $20 for that oops. (That’s assuming you’re able to catch up and pay the bill in full.)
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As someone who’s worked in the retail banking industry for the past 7+ years, I’m a bit confused as to why your bank turned down the deposit… the only time a signature is actually required is if you’re actually cashing the check (by which I mean exchanging the check for cash in your hand) or if you’re performing a split deposit (depositing some of the check and receiving some cash back), or if the check isn’t made out to you explicitly. Typically, if the “Pay to the order of” line matches the name on the account, then not signing the check is equivalent to printing “For Deposit Only”.
That being said, I love the idea of “If I Can Find The Extra This Month, I Have The Extra Every Month”. Now if I can just get the self-discipline to follow your example!
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Yes–I was wondering the same thing.
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Come to think of it, I had a “same-same but different” problem. My grandpa passed away a couple of years ago, and my dad had power of attorney on the account. Dad wrote me a check (grandpa’s bank was different than mine, and had no local branches in the area) which my bank rejected, because dad’s name didn’t show up on the check face. Imagine the annoyance when the check was returned to me.
I actually had occasion to be in a town with my dad that had a branch of the bank grandpa used, and we went and had a nice chat. (I really wanted tender that my bank would accept without question…) The conclusion I got was that the guy checking ATM receipts was being overly anal.
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I recall a year or two ago when I got literally twenty emails from my bank trying to get me to sign up for “overdraft protection”. In some cases implying that OP was required, or that I would somehow be penalized for not opting-in to OP.
I ended up moving my $$ to a credit union, which I love. But I did get a couple of emails urging me to sign up for overdraft protection before they gave up. What a racket.
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Good post! Funny how one error can have such a big impact.
For me the problem wasn’t saving, it was that I was saving/investing so much automatically that I felt like I was living pay check to pay check — and I put extra money in at end of the month.
Then one of my pay checks got delayed a few days and I had to do a lot of rearranging to make sure a check didn’t bounce. Now I’m letting a balance accrue in my checking account even though my first instinct is to put it in savings instead. This method is less stressful
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It’s amazing how we can think we’re doing the right thing but it’s doing more harm than good. I would always try to pay off my credit card balances every month – and I didn’t have the money – well I did when I made the payments, but by the end of the month – I was back to putting groceries on the credit cards, cause I had spend all my money paying off the credit cards. And I couldn’t tell month to month if I was making progress – but it sure didn’t feel like it.
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My emergency fund began two summers ago when a few things came together all at once:
1. I read Total Money Makeover and decided I’d start following that road.
2. Windfall number 1: Retro-active pay on our new contract.
3. Windfall number 2: $500 (less taxes) health care spending – having an emergency fund = less stress = better health
4. Staff discount payout.
Since then I feed it a little bit every month and it grows – slowly but surely. It is indeed something that keeps me from worrying too much!
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I think it was bank fees that did it to me too. I was pretty upset that I would get charged over thirty dollars for a 3 dollar card swipe that they could have just declined. I’ve been putting away money in savings ever since and now I shoot for 10% or more of my take home income.
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I have gotten some overdraft fees because of frankly careless mistakes (i.e. forgetting the due date until 2 days later), but from my experience, if you are polite and generally a good customer, the bank / credit card company will be happy to waive the fees if you ask. If the customer representative doesn’t, escalate the issue to a manager. I’ve done that several times and probably saved myself around $200.
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That is very true, and it works for just about any late fee/charge – not just bank overdraft charges.
I’ve done this myself in the past when our paychecks happened to be out of cycle with one of our major bills.
If you call & explain the situation calmly and truthfully, most places (including utilities) will waive late fees, etc.
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So true. I thought I’d paid off my Lowe’s CC (it was recorded in Quicken), but it appears I had a senior moment and never actually transferred the money. When I got the statement indicating I owed $15 in fees (no interest–it was 0%), I immediately called and asked them to remove it. No problem.
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high-five fellow scooter rider!! best form of transport for a city, $5 in gas every couple of months. good times!
also, i hit an overdraft once and signed up immediately for overdraft protection. unless i’m missing something from the negative comments regarding Overdraft protection, i love it! i got one $35 fine once, and now anything that’s not in my account, i just have a tiny credit account that they bump the amount too. it shows up when i log into my bank, so there are never any nasty surprises, and i’ve never hit an overdraft fee again. i think i’ve used it maybe twice, but i like knowing it’s there, catching anything i miss.
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I have overdraft protection from my credit union for free – well, they charge me a couple cents interest until I pay back the money – but my husband would have to pay for it at Wells Fargo. I think when banks charge for it is when people get irate. My lighning line prevents me from having to keep large amounts in my checking – extra protection from identity theft.
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i got mine for free at hsbc after an overcharge, the guy was very friendly and i haven’t had a fee since.
looove hsbc. i’m so pleased that they haven’t pulled any crazy moves in the past couple years, or at least any that i’ve noticed. i can use the card internationally, the website is great. atms can be scarce, but i’m usually fairly close to one in nyc, and with a little planning it’s no problem at all. also they do no-envelope deposits at their atms- so cool. i found myself at a different atm once with envelopes, geez, how 2000 of them. my branch is also pretty friendly, the hours are pretty slim but it’s a bank so whatever. they don’t ping me with fees, and are friendly on the phone, even though i barely need to call because their website is so good.
lol i don’t work for them i swear. but hsbc was my “free frisbee” checking account in college, and it never did anything crazy to me so it’s been my primary bank ever since.
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My mom marched me to the bank with my first ever paycheck at 15, and we started an account. At the end of the summer, she made me buy a CD with almost all the money I had made so I couldn’t touch that money all year (I had an allowance for necessities and had never needed more than that, expense wise, to get by). I saved many summers worth of money and used that to study abroad in college.
I graduated college with only $700 to my name, and I used my graduation money to get into my new apartment (necessary for my job 10 hours from home). And then I truly realized how important an emergency fund is to have. I saved 50% plus of each paycheck during that seasonal 4 month job, and I have never looked back. Having that efund has helped me out time and time again.
Funny story: during grad school, I got my first ever cavity. I had basic dental but no filling coverage, and I was complaining to my mom about how I’d find money for the $100 filling. She immediately said “isn’t that what you have an emergency fund for?” Well played, mom.
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Leah,
One counter-point to your mom would be that for small expenses (I’d count $100 as small), you should have a plan for replacing it. For me, $100 for a real emergency is trivial. But, if I *needed* to hit my emergency fund because I couldn’t scrape up such a small amount, I’d be worried about how I’d replenish it — if your e-fund takes a $100 hit too many times, you won’t have much of an e-fund.
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Nice article. I like that you pointed out that you still had to buy that 6pack to watch the Bears’ game. We have a neighbor who gets some of the boxing fights on PPV – I would never pay for it myself – but we like to go and bring the snacks – win win for all parties. It more fun to watch a match with friends anyway.
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Your story is a lesson that everyone needs to learn! It is amazing how a little mistake can spiral into a huge problem. I am a faithful user of Mint.com and love how it tells you how to use extra money towards your goals. If you have an extra $50 in your budget it will tell you, “use this towards your vacation fund and you’ll reach your goal 5 months early.” You get the idea–every penny helps!
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Great post. For me, I’d heard about keeping an emergency fund from different sources, but somehow it didn’t sink in until (a) we bought a house, and (b) I read Dave Ramsey’s Total Money Makeover. Fortunately we always get a hefty tax refund because we have more taken out than necessary to make sure we have $ for DS’s summer day-camp tuition (yes, I know, this is not the best way to save, but it works for me so I don’t care), and we had $1K more than needed which became the fledgling Emergency Fund.
I’ve only incurred serious fees once from a bounced check, but I will never forget it – in the days before direct deposit and when ATM’s were still relatively new (around 1980 or so), I deposited a paycheck on a Saturday via the bank’s ATM. They lost the check (no paper receipts provided then) and I proceeded to bounce all the other checks I wrote on that paycheck (rent, groceries, etc.), to the tune of some $500. The bank (Marquette National, now long gone) claimed no record of the deposit and refused to cut any slack. I closed my account and went with another bank, and I have never ever since deposited another thing via an ATM and never will.
Always get a receipt.
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Funny, the one time something like this happened to me was when a teller put through my $680.00 check as $6.80–I just threw the receipt into my wallet and didn’t think about it again until everything started bouncing.
Never had any similar problems with an ATM!
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A friend was judging me a little this weekend. I didn’t want to contribute to the office charity — my own favorite charity (Border Collie rescue) is in desperate need this year as so many folks are getting rid of their dogs. I have decided to donate all my planned giving to them. She said, well you are rich and everything is so easy for you and you should give to both.
I am well off, but I pointed out that when she was partying in high school and dropping out, I was the ridiculed nerd studying to get into college, then into grad school, then working 4 part-time jobs, then working extra hours, and now hey yeah it is always so easy for me. That’s why I don’t travel (too expensive), drive an older car, have a budget. Gagh, the whole conversation really upset me. You can probably tell that.
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Interesting how you had so much extra money and was spending it so freely. Glad that this experience made you re-think how to spend. I hate when your hard earned money goes to wasted things like bank charges.
There is something to be said about being on your own and not having convince someone else what is necessary. I often find it hard to convince spouses to adjust their spending spending even when they are working towards common goals.
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I am retired now, but when I was working my trick was to put half of every pay raise into the credit union. It was automatically deducted and deposited, so I never saw it or missed it. The additional amount in the first check containing the raise was always spent on a “damn I’m good” family outing, then I would call the credit union telling them how much to add to my automatic deposit. That extra cushion, saved me many times.
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This post is striking way-too-close to home. Not me, it’s my boyfriend. He was stressing that he didn’t have enough money for xmas presents, so we decided to transfer money from our joint account to his until he gets his xmas bonus from work.
To transfer money, we had to set up the link between the two accounts online. No problem, I’ve done this a few times before with other accounts.
You know that test transaction that they use to prove you really are the owner of the account? Where they deposit and then withdraw two amounts that add up to less than a dollar?
Cost him $60 in overdraft fees.
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My favorite part of this article:
My high school friends are getting married. They registered at Neiman Marcus.
Hahahaha. Sorry, that’s just really, really funny to me.
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I started my efund when I had to borrow $100 from my dad to pay for my son’s scout camp nearly 20 years ago now. Loved my late husband, but that man never met a dollar he couldn’t/didn’t spend. So I set up to split my check between the checking and savings. He knew that money was going into savings, of course, but it was ‘off limits’.
Now that I’m living on a single income (his life insurance went to pay his medical bills), I’m so glad I’m used to budgeting and saving. Doing OK, and I don’t miss the worry about bounced checks at all!
As far as the mechanics of how I set up – I have an extra month’s wages in the check book. In other words, I’m always spending LAST month’s checks on this month’s bills. That is my ‘first line’ efund as well. Any extra funds where I was underbudget are ‘swept’ into the savings account at the end of the month. I’ll move some into a CD or my brokerage account when it builds up to $500 in the savings account.
I also have a proper “efund” at ING that I am funding slowly (now at 2 months for a total of 3 months available to me). And I escrow property tax and several other ‘occasional’ bills in a money market account at the same credit union (both the money market and the savings ‘sweep’ account are linked to my checking account.) The money market and share savings accounts are set up to be tapped in case of an overdraft, btw. There’s no fee for that unless I use it, and then it’s $5 plus daily interest. But with the month backstop in the checking account, I don’t remember how long it’s been since I’ve had to use it.
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Several years ago, I realized that the $5 check I’d written for a doctor’s office copay was going to bounce because I was short 17 cents. Fortunately I had a friend working at my bank and I called to see if he could give me the money. He gave me a quarter instead
But it really was a wake-up call that I was cutting things far too closely.
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as much as i love rice and beans, i’m super pumped that Umi and Toulouse can still be in your culinary plan. Also, this is a really unfortunate example of how financial institutions take advantage of the little guy. Living paycheck to paycheck is an unfortunate reality for so many people that creating a budget to escape that cycle is not feasible, and $240 in fees is a total outrage.
anyway, celebratory lingonberry cocktail for you, timothy sullivan, you got the budgeting thing down pat!
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This is a good article, but seems to be missing something as I see it. There’s a distinction between an emergency fund versus a wad of money in every account as padding. The padding can cover when a bill is due two days before payday, or I accidentally picked up a $40 bottle of wine when I intended to grab the $9 one, and don’t notice. I have a small automated donation set up, but sometimes forget to account for it when paying bills and making other donations. Padding takes care of those, and doesn’t have to be a lot, just more than the typical largest bill.
Emergency money in a somewhat harder to grab form is for when I get laid off, need surprise car repairs etc. It should be a generous four-digit amount, at least.
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The overdraft and other fees you were hit with have become major sources of revenue for banks, estimated at $16 billion in 2011. Also, see the Nov 23, 2011 Washington Times article “Banks’ Accounting Boosts Overdraft Fees” for a brief description of ongoing practices by banks to process debits and credits in an order designed and intended to maximize overdraft fees.
I’d bet a lot that your un-endorsed check would not have been returned if the bank hadn’t seen an opportunity to cash in on overdraft fees. In fact, I’d bet the job of the person ‘down the line’ who returned the check is to make decisions so as to maximize bank fee revenue.
If I were you I’d raise heck–especially if you’re aware of any other instance where un-endorsed checks were processed by this bank–up to and including closing all of your accounts. If you’ve been a good customer of this bank for a long time, it’s unacceptable to be treated as you have, in my view. This is an ideal situation to use competition to your advantage. If your bank won’t treat you like a valued customer, tell them you’ll find one that will. Talk to a branch manager, not a teller.
Good luck.
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My ah-ha moment was when an emergency vet bill gobbled up all my emergency fund, plus some. I was forced to charge the bill on my credit cards. A year later later, with 3 1/2 months of emergency fund in the bank, I cut up my credit cards and vowed to never be without enough money for things like that again. Even after being un-employed and underemployed, a year of law school (paid for with my severance check), a move to another state and yet more schooling (not law this time), I’ve been able to survive the past 2 1/2 years living on beans and rice with part of an emergency fund still in tact.
So, when people say you can’t live without credit cards, I’m proof that you can! Credit card and debt free since 2001.
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After months of stress, I sold my house in a short sale. I netted $1000. I didn’t think twice, I put it in the bank for emergency funds, and I don’t even think about spending it. I add to it every month. Debt-free is the way to go.
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I started very young (7 years old). I learned a great deal about savings when I received a mall allowance in school (starting in the 7th grade).
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Roughly 5 years ago, I became very alarmed because I had no emergency fund. I decided then to establish one. A week ago, the furnace went out. The technician came and informed me that the furnace was corroded, dangerous and essentially kaput. The cost: anywhere from $3500 to $4800 depending on whether the evaporation coil had to be replaced. As I type this entry, I’m in a back bedroom converted to an office with an electric heater (bought with my emergency fund) with the temperature currently at 68 degrees. I’m very comfortable as long as I stay in this room. The temperature will drop to freezing tonight. Yes, temperatures drop that low in California. On Thursday a new furnace will be installed. And I will be able to afford it–thanks to my emergency fund.
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Wow. That is a serious kick in the pants. Those fees were outrageous, but at least something positive came out of it.
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First of all, thank goodness for credit unions. I’ve never seen them be anything but willing to work with members when something like that happens (also, have never had a problem with not signing a check when it’s being deposited into my account when my name is on the check. o_0)
In other news, I would automatically pay all of the bills that would come due before my next pay check and then transfer anything in excess of $200 to my emergency savings. I knew I wasn’t going to need anywhere near $200 for food and groceries between then and my next paycheck, so there was no reason to not put it in savings.
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It wasn’t any one thing. My husband and I decided we needed to get fiscally responsible and having an emergency fund was the first step. That was about four years ago and I can’t even begin to express how much difference that one little step of an emergency fund made in our lives. We now live the life we dreamed of because of that first step.
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If it’s the first time you’ve incurred late fees with any of the institutions involved, chances are you can have them removed. I once forgot the the due date for my credit card payment and was a few hours late. Called and had the late fee removed. Ditto for an auto-repair loan. The first check I mailed took 10 days to clear, making my payment 4 days late. I called and explained, and they credited the money back. I have since switched to online payments for my credit cards that I schedule as soon as the bill arrives, and pay the auto loan over the phone with an e-check. I am really wanting to rebuild my emergency fund. I had a baby and have not been working since August. A month of slightly free spending (nothing that big, but $20 here and there really adds up) coupled with some unexpected medical bills has left me scrambling with paying bills on a credit card because my husband’s next paycheck will show up too late. I don’t like having that happen. I have some money in savings, but it grows smaller, and once we use it, is hard to put back. I’m really working on using a budget this month, and I’m hoping I get a decent tax return that can jumpstart a new emergency fund.
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