Tuesday, June 28, 2011

Checking Your Balance - Every Day

With the advent of online banking, there is no reason you should ever, ever bounce a check.

In response to my $750 Pizza?  Not Quite posting, some wishy-washy weak thinker sent me a long diatribe about how the people who run the pizza place are bad - which somehow makes it OK to commit check fraud.

Their one comment was, "Well, I suppose YOU never bounce a check!"

Well, when I was young and dumb and on drugs and drunk most of the time, yes.  And I never balanced my checkbook, I cashed my paycheck in bars, and I did a lot of stupid things like ordering pizzas when all I had to my name was $20 or less.

And that was stupid behavior, which was nobody's fault but my own.  And that was the point of my post.  If you want to get ahead in life, you have to stop doing stupid things.   If you are down to your last $20, ordering a delivery pizza is not the best use of your money - a bag of rice would be a better choice - something that would make more than one meal.

But that's just me being rational.

The other comment the commie-hippie winner-hater had was, "Well, I suppose we're all supposed to check our math two or three times before writing a check!"

Check your math?  Please don't tell me you try to balance your checkbook using a paper register.  This is 2011.

Today, every bank - even tiny home-town banks and credit unions - have online banking.  You can log in every day - or several times a day - and check your balance, check to see what checks have cleared, and rationalize your account.

And almost every computer comes with a free copy of Quicken, or some other basic financial software that allows you to enter your checks, balance your checkbook, and rationalize your accounts.  And many bank websites can export the account data to Quicken, if you don't feel like typing it all in.

But wait, there is more.   You can access the bank website through your smart phone - or through a regular phone by 1-800 number.  In short, there is no way you could ever be in a situation where you cannot access your bank balance and see what checks have cleared and calculate, down to the penny, what your available balance is.

If that isn't enough, many banks will send you daily alerts as to your balance and also warnings as to when your minimum balance is reached.  I get a message daily from BoA as to my balance.

And if you set up a savings account to roll-over to your checking account, it will automatically deposit money to prevent overdrafts, on the odd chance they should occur.  How hard is that?

And of course, there is the debit card, which can be used as a credit card, and will be declined if the balance is too low - saving you a lot of hassle.

So today, no, I never bounce a check and the odds of it happening are slim to none.  But it does take financial discipline of course, and with modern computers, this is far easier than back in 1980.

Back then, we had to wait for monthly statements, and then try to balance your accounts after 30 days.  Needless to say, it wasn't easy.

But, even with all that, back in the day, when I was a reckless and feckless youth, I realized that if I did bounce a check, that it was a serious business, and that I had to make restitution right away.  Bounce enough checks, and you've got Johnny Law knocking on your door, and you're doing the perp walk.  It is a crime.

So even as irresponsible as I was back then, when I bounced a check, I made sure I went to the merchant in question and paid them in cash - as well as any bounce fees in cash.  Usually they were holding the check and would give it to me as a receipt.  You don't let that slide for a week, or a month.

In the $750 pizza story, which takes place in the brave new world of 2011, for some reason the fellow couldn't determine that he had less than $20 in his checking account.   He writes a bad check with the wrong address on it (putting your current address on a check is important!) and when it bounces, he waits for a letter from the store, which, not surprisingly, goes to his old address.   A month goes by and suddenly he is surprised to discover that Civil action has been filed against him.

Sorry, no sympathy.  You bounce a check, you make it good - and that may mean a "hassle" of writing to the corporate office, calling someone, or maybe even asking your ex-girlfriend if she got a letter addressed to you.

But bouncing a check is really unnecessary in this day and age.  But moreover, you should never spend when there is that little money in your account.  Why?  Because even a debit card can screw you up.

As I noted in another posting, during the early days of debit cards (20 years ago) I ran into this problem:

For example, when I was younger, I wrote a check from my account to pay the rent. There was $50 left over in the account (I was poor), so I went out for Chinese food that night. The clerk kept swiping the card several times and for some reason the charge did not go through. After his fourth attempt, the charge went through and I though everything was OK.

The next day, I checked the balance on my account (I was anal-retentive even then) and was horrified to discover FOUR charges for Chinese food on my account. What's more, my landlord had tried to cash my rent check - and because of the erroneous Chinese food charges, it BOUNCED.

Ouch. What happens when Merchants "authorize and settle" a credit or debit card is that often a hold is first placed on the card ("authorize") and then when the transaction is completed, the amount is settled. Once the Chinese restaurant ran a settlement later the next day, the erroneous charges came off my account. But the fact remained that the three erroneous "holds" on the account meant my balance was too low to clear the rent check.

The moral is to never spend your account down that low - with a DEBIT card. If you have to squeak the last penny out of your bank account, write a check (which the Chinese place would have taken) or pay cash.

Granted, the Chinese take-out place was to blame - but the owner was a friend of mine, was I going to go after her?  The bank fortunately allowed the check to be re-presented (they did that back then) and waived the charge, as they saw from the transaction ledger that I had not really overdrawn my account, but that the "hold" on my debit card had forced the issue.   But I learned a valuable lesson - or lessons:

1.  If your available bank account balance is under $100 or so, stop spending.  You are running out of money, and if you run the pump dry, the bounce fees will be staggering - at a time when you can least afford to pay them.

2.  If you have less than $100 in your bank account, buying take-out food is not a good idea.  While General Tso's chicken may be tasty and all, if you are that low on money, you need to be spending more wisely, not "treating yourself" to take-out food.

Like I said, I was irresponsible back then.  And when you are irresponsible, bad things happen.  Left-leaning hippie chick thinks that we should be rewarded for being irresponsible, instead of taking our lumps.  While discipline is never fun - unless you are kinky that way - it is instructive and useful to you personally.

Because of incidents like the Chinese-take-out disaster, I changed my financial habits - it was a wake-up call to me that I needed to get my financial shit together.  And I hope the guy with the $750 pizza has similar revelation - or his life will be one $750 pizza after another, and he will sit there wondering why life sucks.

And it doesn't have to, either.  If you just make different choices - get up off the couch, go to the store, spend $15 on food (that may last several meals) instead of watching TeeVee and getting a $20 pizza and having a check bounce.  Yes, that is effort, but almost everything in life that is good involves effort.  You have to try, man!

And that effort includes monitoring your finances - down to the exact penny!  The money in your life is important - not as an end in and of itself, but as a means to an end.   When you squander money, you squander your life - your hard work, your savings, your future.  Many, if not most of us never realize this - ever - in life.  Some of us figure it out towards the end, when we try to retire.  But most young people are clueless in this regard - or at last I was - and just wrote checks until they started to bounce.

That was a miserable way to go through life - and it was a miserable existence.   And it was a choice not a circumstance.

Choose wisely!