Not too long a long ago, I logged into my bill payment checking account to find a negative balance staring back at me. Yup, I had overdrawn my account and had been charged a $38 dollar overdraft fee. It’s not funny but I just had to laugh at myself because “really $!&*”….So here’s what happened.
“Yup, I had overdrawn my account and had been charged a $38 dollar overdraft fee.”
I have a number of different bank accounts for different purposes (I discuss them in this blog post) and one of them is a bill payment account that I use to pay all my bills (including my automated bills) and also to pay for my day to day expenses like groceries and gas. I typically track this account very closely and budget it down to the last dollar because I know exactly what expenses are coming through it and when those expenses are coming through.
How I overdrew my account
Well in this particular instance, I had gotten really busy and I wasn’t as on top of tracking my budget as I typically would be. There were a couple of days where I did not log in to my bank account and I didn’t reconcile my transactions against my budget instead I was making mental notes of my transactions as they were happening.
If I had actually taken the 5 minutes to log in and reconcile things, I would have realized that I made an unplanned transaction for an expense that I could have easily adjusted for and all would have been well in the world but I didn’t – I was taking mental notes instead. Luckily, I never let more than a couple days go by without checking my account so I caught this overdraft on the day it happened.
Getting the overdraft fee refunded
As soon as I realized what had happened, I got into recovery mode. First of all, I reconciled my budget and reviewed my upcoming transactions. I also reviewed and adjusted the reminders on my phone to alert me to check in on my budget and spending (whether I felt like it or not) and then I called my bank and put on my sweetest voice to beg and plead for the $38 dollar overdraft fee to be refunded.
While the bank was under no obligation to give me back this money, they did issue me a refund because over drafting my account was not my normal behavior – I was very grateful and it definitely reminded me why I needed to stay on top of things. All of that being said, there are a couple take-aways I’d like to review from this experience.
Take away #1: “Set it and forget it” does not apply to budgeting
Budgeting is an on-going work in progress and despite the fact that I got really busy, I still needed to check in with my budget. Case in point – It only took a couple days for things to get messed up.
Of course there’s no budget that is perfect every single time because sometimes life happens but it’s all about adjusting as you go along and creating a new budget in advance of every month since no two months are the same AND very importantly checking in and reconciling your actual spending against your budget frequently throughout the month.
When it comes to your budget and building wealth, your money doesn’t care how busy or how lazy you get. If you don’t tell it what to do, it will do whatever it pleases and you don’t want that because that can get really expensive.
Take away #2: Mental calculations don’t work
Yeah – those mental notes I was making were a waste of my time and I knew better. All I needed to do was take the five minutes to check in with my accounts and with my budget and get it right. As opposed to running mental calculations, just take the 5 or 10 minutes or even the half hour to review your finances and adjust things as needed – it’s worth it!
Put some re-occurring time on your calendar once a week to sit down and really go over your budget and your transactions in detail and also, spend a couple minutes once a day just checking in on your most use bank account.
So there you have it, another money mistake but another lesson learned!