Like anyone else, I always like to get a good deal. At the same time I like to make my money work for me and this is why I frequently transfer money to our money market account or other investments. However, this has gotten me in trouble with overdrafts from time to time. The problem is I don't leave enough money (cushion) in our checking account to protect us. I get caught by things like automatic bill transfers, checks that weren't cashed from a few weeks/months ago, or unexpected expenses that require immediate payment. All of this could be easily avoided and could save my family some heartache. Who wants to pay unnecessary fees when you have the money to pay for it? To think what we could do with the money that I am essentially throwing away is painful to think about.
For the readers of TTG, I feel that I personally benefit from writing blog posts like this because it 1)allows people to see that I too am still a work in progress, 2) shows that everyone has their vices and can work on managing their money better, and 3) helps me research on ways that I can save my family money and how others might benefit. With that being said, here are a few ideas I have come up with that I'm looking at implementing to make sure this doesn't happen again.
- Leave a cushion – having $500 – $1,000 extra in our checking account is a lot smarter then having it in a money market account earning 1.10% interest.
- Set up a savings account at my bank with automatic overdraft protection – currently, I have a checking account and money market accounts, but our bank offers an option where they will transfer money from your savings account to pay for any overdrafts. So, essentially it's the same as leaving a cushion in your checking account except you may not be tempted to use it as readily. This will save us from incurring the overdraft fees.
- Automatic bill transfers – have all automatic bill transfers come out of your checking account or savings account on the same day. This way you know exactly how much every month is needed to be in your account to pay for all your bills that will be withdrawn on x day of the month.
So far these are the ideas I've come up with on how to protect myself from having these ridiculous expenses that can be prevented. I'd appreciate any other ideas or comments that might help.