I am really tired of holding my breath about my checking balance, and hoping that this check or that check doesn't clear for a couple of days.
I finally figured out that I should help manage my account by using my debit card less, particularly towards the end of my pay period. If you use your card a lot and then one stray check or another clears befroe you were expecting, you can get hit with some unwelcome NSF charges for those debit charges.
There has been a lot of news lately about how banks can stiff you by the order they choose to send your charges through. For example, on any given night, my bank will send through the largest charges first, whether checks or debit charges, followed by the other charges in descending order.
That has caused me great grief in the past. Say I have $100 in my checking account, and I have made debit purchases of $5, $10 and $15. Then I write a check for $89, and that check clears a day before I expect. That check at my bank would go through first, which would then bounce all three of those debit charges, assuming they go through my bank on the same night.
I have talked with my bank representatives before and asked why this happens. It seems like the debit charges should clear first, since they are smaller amounts, there are more of them, and I made those charges first. But no, say my representatives, they have polled their customers, and they said they would prefer the largest charges to go through first????? Well, they didn't poll me. By sending the larger charge through first, they will earn three NSF fees, as opposed to only one if they had done it the other way.
In recent weeks, I have held my breath many times, worried that a string of debit charges would go through at an inopportune time. Worse case scenario, it could wipe out a huge part of my balance. Luckily, that has not happened.
But what I have decided to do is that at the end of my pay period, when the dollars really count--is to try to pay cash for all the small things, like newspapers, coffee, gas even. It would be better for me to deduct some money from my checking account and pay for those things. That way if there is an overdraft charge, it would only be one from the withdrawal, rather than a bunch for small purchases.
I am really looking forward to the day, hopefully soon, when I don't have to hold my breath anymore.
Tuesday, September 11, 2007
Saturday, September 8, 2007
Warranties Can Be a Life-Saver
There are a lot of pros and cons out there about buying home warranties and extended warranties and such. I have become a big believer in them, and this year my home warranty saved my butt.
My air conditioning unit was on borrowed time--I can't believe how old it was, and my fear was it would go out on me and I would have to replace it. Some people who live in my building have had to pay as much as $3,000 when that happened to them, and generally I am not in a position to have that much money on hand to pay for a repair of that magnitude.
I know some people say, rather than paying the warranty premiums, just save the money and have it on hand--an emergency fund if you will--in case of needed repairs. That is all fine and well, and the best situation if you can do it, but it is hard to have that much in an emergency fund all the time. There have been times when I have had that much money in the bank, but when I have had to use it, it has been hard to replenish it.
All I know is that when in April my air conditioning broke, if I had not had the home warranty, I would literally be toast. My building is a hot building, and I think it would be impossible to be here when the temperatures start soaring. In April when this happened, it was only around 80-85 outside, and it was already sweltering inside. I was having trouble sleeping, and my pets were panting.
Imagine how it would have been this summer when temperatures outside reached 100 degrees F, and stayed that way for about a month! There would have been no way.
Apparently my bill in April would have been about $1,000 without the warranty, a bargain compared to the money others in my building have had to put out when theirs were on the fritz. But it would have been $1,000 more than I had, and I definitely would have been in a pickle.
With the warranty, all I had to pay was $55. I will bet my money on the warranty.
My air conditioning unit was on borrowed time--I can't believe how old it was, and my fear was it would go out on me and I would have to replace it. Some people who live in my building have had to pay as much as $3,000 when that happened to them, and generally I am not in a position to have that much money on hand to pay for a repair of that magnitude.
I know some people say, rather than paying the warranty premiums, just save the money and have it on hand--an emergency fund if you will--in case of needed repairs. That is all fine and well, and the best situation if you can do it, but it is hard to have that much in an emergency fund all the time. There have been times when I have had that much money in the bank, but when I have had to use it, it has been hard to replenish it.
All I know is that when in April my air conditioning broke, if I had not had the home warranty, I would literally be toast. My building is a hot building, and I think it would be impossible to be here when the temperatures start soaring. In April when this happened, it was only around 80-85 outside, and it was already sweltering inside. I was having trouble sleeping, and my pets were panting.
Imagine how it would have been this summer when temperatures outside reached 100 degrees F, and stayed that way for about a month! There would have been no way.
Apparently my bill in April would have been about $1,000 without the warranty, a bargain compared to the money others in my building have had to put out when theirs were on the fritz. But it would have been $1,000 more than I had, and I definitely would have been in a pickle.
With the warranty, all I had to pay was $55. I will bet my money on the warranty.
Wednesday, September 5, 2007
I did a bad, bad thing
I did a bad, bad thing, but for a good reason. I submitted a letter today, saying I needed to make a hardship withdrawal from my 401K for tuition and tuition-related expenses. Yes, I know it is stupid, because I have to pay a 20 percent penalty and 10 percent tax on it.
But there is really no other way for me to pay the expenses. If there were, I wouldn't touch it. I took this out of my small 401K at my new company. I would never touch my big 401K at my old company, the fund that is doing so well. So I feel better about that. My big retirement fund is actually doing well.
My justification is that I really, really need the money and I have no other way to pay the expenses. Also, I don't have to worry about the money every single day. Worrying like I have been doing can't be good for me.
So now I can rest easy. I can pay for my education.
And when I graduate, I can start putting a whole lot of money into my new 401K.
And I can feel good that I still have a really good 401K balance in my other fund.
So, maybe it is not so bad??
But there is really no other way for me to pay the expenses. If there were, I wouldn't touch it. I took this out of my small 401K at my new company. I would never touch my big 401K at my old company, the fund that is doing so well. So I feel better about that. My big retirement fund is actually doing well.
My justification is that I really, really need the money and I have no other way to pay the expenses. Also, I don't have to worry about the money every single day. Worrying like I have been doing can't be good for me.
So now I can rest easy. I can pay for my education.
And when I graduate, I can start putting a whole lot of money into my new 401K.
And I can feel good that I still have a really good 401K balance in my other fund.
So, maybe it is not so bad??
Sunday, September 2, 2007
Help for Those Facing Foreclosure
There has been a lot in the news in the last couple of days about what Bush wants to do for those facing foreclosure. He is getting a lot of flack about this from some quarters. I am no Bush fan (that is an understatement) but I do think that what he wants to do has some merit.
Yes, many of the sub prime borrowers probably shouldn't have had mortgages to begin with. But they were trying to own their own homes. And the lenders didn't have to approve them, but they did. Yes, maybe some of these people were in the subprime category because they are bad with money and can't manage it well. But it still seems like some forces beyond their control were at work here too.
Anyway, Bush is wanting to put in place some measure that will help some, but not all of those in trouble. I am not an expert at this, and don't know all the details, but from what I do know, I think it is a good idea. After all, if a bunch of people are suddenly in trouble like this, it can't be good for the economy, right?
There is also a group of people out there (as evidenced from some money message boards) who seem to think that these people should not be helped at all. After all, they say, we paid our mortgages, and we do things the right way--why should we help them out?
I understand what they are saying, but I always marvel at people who think they are ever above making a mistake or doing something wrong. Just because they haven't gotten into a mess yet, does that mean they never will? Bad things happen to good people.
Yes, many of the sub prime borrowers probably shouldn't have had mortgages to begin with. But they were trying to own their own homes. And the lenders didn't have to approve them, but they did. Yes, maybe some of these people were in the subprime category because they are bad with money and can't manage it well. But it still seems like some forces beyond their control were at work here too.
Anyway, Bush is wanting to put in place some measure that will help some, but not all of those in trouble. I am not an expert at this, and don't know all the details, but from what I do know, I think it is a good idea. After all, if a bunch of people are suddenly in trouble like this, it can't be good for the economy, right?
There is also a group of people out there (as evidenced from some money message boards) who seem to think that these people should not be helped at all. After all, they say, we paid our mortgages, and we do things the right way--why should we help them out?
I understand what they are saying, but I always marvel at people who think they are ever above making a mistake or doing something wrong. Just because they haven't gotten into a mess yet, does that mean they never will? Bad things happen to good people.
Friday, August 31, 2007
What's the Real Story About Credit Card Debt?
Before I get into the topic, I must say I have been having terrible problems logging into this blog. I never have trouble logging into my other blog. I hope the login issues are not symbolic of my troubles with debt!
Liz Pulliam Weston, a money expert with MSN Money, recently wrote an article titled "The big lie about credit card debt." In the article, she states that a GFK Roper poll and Bankrate.com were inaccurate in saying that the average American is around $9,000 in debt and are in "debt denial." Not only that, but she says the majority of U.S. households have no credit card debt, using the Federal Reserve as her source.
Her reason for writing the article, she says, is to dispel the credit card myth, and more importantly to point out that the myth gives false comfort to those who think they are average for having credit card debt and "are charging down the road to financial ruin."
My point is, the average person may not have $9000+ in credit card debt, but how many people took out a loan, including a home equity loan, to pay off the credit card balances? I would say quite a few, probably.
At the same time, an article in Investors Business Daily, says there is a jump in credit card borrowing and there is trouble brewing. The article said that balances on cards rose 11 percent in May and June, and with two exceptions, it was the highest rate since the recession in 2001-2002.
I can understand Weston's not wanting people to feel secure in having so much credit card debt, but it seems like Americans are generally in debt, and what difference does it make what the source of the debt is?
Liz Pulliam Weston, a money expert with MSN Money, recently wrote an article titled "The big lie about credit card debt." In the article, she states that a GFK Roper poll and Bankrate.com were inaccurate in saying that the average American is around $9,000 in debt and are in "debt denial." Not only that, but she says the majority of U.S. households have no credit card debt, using the Federal Reserve as her source.
Her reason for writing the article, she says, is to dispel the credit card myth, and more importantly to point out that the myth gives false comfort to those who think they are average for having credit card debt and "are charging down the road to financial ruin."
My point is, the average person may not have $9000+ in credit card debt, but how many people took out a loan, including a home equity loan, to pay off the credit card balances? I would say quite a few, probably.
At the same time, an article in Investors Business Daily, says there is a jump in credit card borrowing and there is trouble brewing. The article said that balances on cards rose 11 percent in May and June, and with two exceptions, it was the highest rate since the recession in 2001-2002.
I can understand Weston's not wanting people to feel secure in having so much credit card debt, but it seems like Americans are generally in debt, and what difference does it make what the source of the debt is?
Sunday, August 26, 2007
Budget Busters
I am so tired of living with debt. I would be out of debt now, but decided to go to law school, and that has prevented me from paying off my debt that I could have otherwise. I don't have regrets about law school, but I do have regrets about the debt, which started long before I started school.
I can't wait to pay it off. That won't be this year, my last year in school. It could be the year after though, depending on how hard I hit it. I want to hit it hard.
I found a short article on the Web the other day, compiled by Bank.rate. Titled "6 Budget Bombs," it talked about the things that can sabotage your budget. Do any of these resonate with you?
1) Cut out all the fun stuff. I guess this one speaks for itself. Too much fun stuff can be fatal to your budget. Being in law school, I don't have much time for fun stuff, but I do like to eat out. Being single, that is an easy way to get together with people. But when you do it multiple times a week, it wreaks havoc.
2) Be hit or miss with savings. Guilty!
3) Overuse debit card. Guilty! There is nothing worse than overdrafting using a debit card. I have not gotten in the habit of writing down the amounts like checks.
4) Pay only the minimum on cards. Guilty! That will definitely end after I get out of school though.
5) Live without emergency savings. Guilty! Having a good emergency fund is more important to me now that I have changed jobs and don't have sick days. My previous job had a much better safety net, with sick days and short and long term disability, none of which I have now.
6) Spend more than you earn! Guilty! Even though I have gotten better at this in the last couple of years, and will continue to get even better with it.
I can't wait to pay it off. That won't be this year, my last year in school. It could be the year after though, depending on how hard I hit it. I want to hit it hard.
I found a short article on the Web the other day, compiled by Bank.rate. Titled "6 Budget Bombs," it talked about the things that can sabotage your budget. Do any of these resonate with you?
1) Cut out all the fun stuff. I guess this one speaks for itself. Too much fun stuff can be fatal to your budget. Being in law school, I don't have much time for fun stuff, but I do like to eat out. Being single, that is an easy way to get together with people. But when you do it multiple times a week, it wreaks havoc.
2) Be hit or miss with savings. Guilty!
3) Overuse debit card. Guilty! There is nothing worse than overdrafting using a debit card. I have not gotten in the habit of writing down the amounts like checks.
4) Pay only the minimum on cards. Guilty! That will definitely end after I get out of school though.
5) Live without emergency savings. Guilty! Having a good emergency fund is more important to me now that I have changed jobs and don't have sick days. My previous job had a much better safety net, with sick days and short and long term disability, none of which I have now.
6) Spend more than you earn! Guilty! Even though I have gotten better at this in the last couple of years, and will continue to get even better with it.
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