I HATE OVERDRAFT FEES!

They are the most nasty stupid pesky ugly fugly waste of your money.

Back in my 20′s when I was broke I used to pay hundreds in overdraft fees every month. They would add up like crazy because I would get overdrafts on top of overdrafts and my checking account really took a beating.

This usually happened because of two fatal errors I kept making…

FATAL ERROR #1: The Bottomless Debit Card
Sometimes I was only overdrawn by a few dollars and didn’t know it. I’d charge away on my debit card but the bank would approve the charges so I thought I had enough money, even though I did not.

Do you know how it annoying it is to get $95 in overdraft fees because you overdrew your account by THREE DOLLARS?!? I’d get such high fees because I would use my debit to pay for $1 at the supermarket…and $1 at the hardware store…and $1 at the parking meter.

But you get charged 3 fees because they were 3 separate charges. AAARRRRRGHHHHHH!

FATAL ERROR #2: All Your Checks Get Cashed At Once
Sometimes the money I deposited in my bank account took longer to clear than I thought it would. So I had written checks to people against that deposit in good faith figuring by the time they cashed my check the money would be cleared. Ummmmm….think again.

Anytime I did this it seemed like every mother, sister, father, brother and child in Los Angeles decided to cash my check while my deposit was still “on hold”. I’d look at my online banking in the morning and have money and then minutes later I’d be way negative because of 5 checks that had been cashed.

AAARRRRRGHHHHHH once again! Why did all 5 of you have to pick that exact day to cash my check?!?

Luckily the bank always paid the checks but then of course I got charged 5 overdraft fees totaling $175 bucks. Plus everyday my deposit stayed on hold and didn’t clear I stayed overdrawn. So on top of the $175 overdraft fees I’d get slapped with a $10 fee everyday until my deposit cleared the bank.

It was beyond frustrating especially since I had online banking. So how come the online banking wasn’t helping me stay on top of my sh*t and avoid overdraft fees?

Well, I realized there is actually a deathly flaw in online banking. Not online banking itself, but the way we use it. The money your online banking SAYS you have in your account isn’t always the money you ACTUALLY have!

Online banking only shows you real time data of all transactions that have cleared your bank account. It leaves out charges, checks, deposits, etc. that have not cleared your account yet.

So to get your true cash balance you need to figure out what we accounting nerds call “Book Balance”. Here’s an easy breezy example of how to calculate this:

$1,000.00  Take your CASH BALANCE from online banking
- ($500.00) SUBTRACT OUT the checks you wrote that have not cleared
- ($12.00)  SUBTRACT OUT the debit card charge for the new mop you bought
- ($25.00) SUBTRACT OUT the debit card charge for brunch with your BFF
= $463.00 This EQUALS your Book Balance AKA actual true cash money you have

So you see in the example above, if you just went by your online banking balance you would think you have a whole grand in the bank when you actually have $463. That’s quite a difference!

That’s how online banking gets you; it can make you think you have more money than you actually do. That’s why it’s so important to do this quick calculation and always live by your Book Balance.

Once I started doing this my overdraft fees finally went away. I’m won’t lie and say I never get them. I still make occasional mistakes and get an overdraft fee but it’s pretty rare. I used to get 5 or 6 a month and now I may get 1 or 2 a year.

Also another thing many banks have is overdraft protection that lets you link your savings account to your checking account, so anytime you get overdrawn in checking the money automatically pulls from savings. This is really helpful and can make things easier for you because you don’t have to worry about constantly calculating your Book Balance.

Either way you choose it will help you finally say goodbye to those stupid pesky nasty ugly fugly overdraft fees that just eat up your hard earned cash!

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