If there’s one event in a person’s life to trigger a financial wake up call, that event is often the overdrawn bank account.
We’ve all been there.
When the checker at the grocery store gives you that look and tells you your debit card was declined.
When you make that walk of shame up to the bank teller to pay your mortgage, since the check you’d sent bounced.
That big fat zero – or worse, negative number in red – that stares you in the face when you log on to your bank account.
It’s usually a sign that something in your financial world needs to change. Even if it’s as simple as realizing you’re a grown up and need to pay more attention.
In our lives, the zero dollar bank account has been a common theme from time to time. We can thank our variable income and various levels of debt for that.
There were times when I’d go several days making grocery and gas purchases on the credit card, not because we didn’t have money in our bank account, but because I was just too afraid to look for myself, and feared there would be nothing there.
I’d bang my head on my desk every time we overdrew, and in my most melodramatic cry, I’d wonder what the heck was wrong with us? Why do we keep doing this?
The overdraft was a sign of our failure. It was a sign of our excessive spending. It was a sign of our inability to get it together. It was a sign that we were spinning out of control.
But then something changed.
No, we didn’t stop overdrawing our account. That still happens several times a year.
What’s changed is that it’s no longer symbolic of any of those things any more.
Because:
We know where our money goes.
We’re tracking it. We may not necessarily like where it’s all going – like our fast food expenses, or…er…our fast food expenses, but we do know what we’re spending it on.
A lot of that money is going towards debt.
It’s hard to get mad at ourselves for overdrawing when so much of our money is going towards the good cause of debt repayment.
We have back up.
Every payday, $160 of my paycheck automatically goes into our “short term” savings account. We use it as a sort of slush fund for the times when income is low, or extra expenses crop up. So when our checking account gets overdrawn, the bank pulls money from our savings account – no fees, no bounced checks, no worries.
Sometimes, the overdraft is a legitimate sign that major changes need to be made.
So make them.
Other times, the overdraft is more like a barometer. Just another weather event, so you know to take your jacket when you head out the door.
July 14, 2011 at 1:14 PM
Can’t say that I agree that an overdraft is a barometer. If you are still having them then you need to watch your account more closely by keeping a check/debit register. If it is written down, no matter what the ATM says, the funds are gone and if you are approaching zero quit spending. For me overdrafts are not acceptable, they are and unnecessary expenditure and money thrown away. Yes, addition & subtractions errors happen and you may end up with and overdraft but that should be a rare occasion. With the ability to view accounts online folks should be able to see transactions daily and make sure they did not forget to include a purchase. I am please that it has been over 10 years since I had one and prior to that only a handful of times.
July 14, 2011 at 7:36 PM
I had an overdraft in college two times, and will never, ever forget it. I was so mad because I watched the snowball effect of how one overdraft caused the other and I was terrified I wouldn’t be able to catch up.
If I had an overdraft now, I would lose my mind for sure.
July 15, 2011 at 3:52 AM
Red Flags are there for a reason. If you have an overdraft, you just might be eating out too often. If you have an overdraft, you just might be needing to get a second job delivering pizzas. It pays to pay heed.
July 15, 2011 at 6:01 PM
I agree with entering everything into the check register whether the funds are drawn or not. That way you don’t overdraft, or at least you don’t overdraft without knowing it!
July 18, 2011 at 6:35 AM
You are so right, at least you don’t overdraft without knowing it. Too many folks know they will overdraw their accounts and do it anyway. Working in a credit union I see it daily.
July 18, 2011 at 12:00 PM
I like your point about linking your savings as overdraft protection. After my one (and only since I immediately got overdraft protection!) overdraft, I linked mine to my savings. I used it a couple times in my youth, but recently have kept an eagle eye on my finances and overdrafts are hopefully a thing of the past!