A Series of Unfortunate Events: Do You Buffer Your Checking Account?
Posted on | August 9, 2010 | 15 Comments
I check all of my bank accounts almost obsessively during the week like a new mother listens for her baby’s breath throughout the night—not because I expect there to be any issues, but simply because it’s a feeling of security. However this week I decided to check it on Saturday because I had an eerie feeling. Call it my-money’s-being-screwed-with intuition or foresight, but as I pulled our bank account onto the screen there it was: we had over withdrawn on our checking account to the tune of $650.00, and were slapped with two $34.00 fees.
Me? Over withdrawn? I could see red, both on the page and in the rest of the room. I had only over withdrawn once in my life, when I was 15 years old. I couldn’t believe it then either, so I went to the local bank and had the woman sit down and show me the documentation. It was around Christmas time, so I had made debit purchases and tapped the ATM much more than normal, but I knew that there was no way I had over withdrawn. In fact, I told her it must be a bank error. She smiled in one of those condescending ways and assured me that bank errors almost never happen, and that she was sure we could find what I had done wrong. Opening my account on her computer screen and checking it against my puny checkbook, she smugly showed me the ATM fees that I had not taken into account of the fifteen or so transactions I had, thinking she had found the problem. But as she scrolled down the screen, I saw the real problem: a check for $98.00 I had never written was debited against my account…it was the bank’s error.
After looking at my own computer screen this time, I could see the story unfolding before me. In June we made our second-to-last car payment of $400.00. And then something funny happened: two days later, the car loan people (TDECU) took another $400 from our account. I felt a little irked by this, but mainly happy because heck, now we had paid our car off early! We received the title free-and-clear in the mail, and gave ourselves a big pat on the back. Everything was going as planned.
Then, after signing into our account one day at work towards the end of July, I saw that TDECU had debited another $400 out of our account, just days before our mortgage was due. We run a pretty tight ship with our checking account and do not keep much of a buffer in there. Because of this, Paul called TDECU and spent an hour driving to their location and picking up a check for what they had taken so that we could deposit it back into our checking account right away. Then, two days after that, they took another $400 out of our account.
Just in case we weren’t able to get the first $400 back in time to pay the mortgage (because it wouldn’t look bad on our credit at all if we happened to be late on a mortgage payment just ten months after purchasing our home…can you taste the sarcasm?), I had transferred money from our savings into our checking. So when the second $400 came out, it was not such a big deal. We called the bank, and they said they would send the check in the mail.
Except I had forgotten what I had planned for our checking account in early August: to pay the man who built us our vanity for the laundry room (upcoming article), and the scheduled early payment on our credit card that month to account for some airfare I had been reimbursed for. That’s when the sky fell down. The vanity builder cashed his check (and thankfully the bank allowed it through—how humiliating that would have been), and then a day later my scheduled credit card payment went through.
In other words, one of the checks bouncing was the fault of the bank, as we had called them in June to double check that our payment to TDECU was cancelled forevermore, and they assured us it was (on top of the fact that we cancelled it manually from home). But one of the checks bouncing was my fault due to cash flow issues. So what am I going to do? Monday morning I will be at my bank’s door (JPMorgan Chase) and demand to have one of the $34 fees returned. The other I will chalk up to an unpleasant experience and a lesson learned.
I was always under the assumption that if we kept a buffer in our checking account, we would find ways or reasons to spend it. Perhaps I am faulty in that thinking though. Let me ask you guys, do you keep a buffer in your checking account? If so, do you mind sharing how much you keep in there? For those of you who run a tight ship, have you ever had an incident like ours?
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August 9th, 2010 @ 8:44 am
We don’t keep a buffer in our account. We did have an overdraft once recently, and it was my fault because we have multiple accounts that I pay things from, and I used the wrong one. However that’s the first time that’s happened in years *knock wood *. We don’t really have a set amount that we leave though — I’ve let it get as low as a dollar before.
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August 9th, 2010 @ 9:28 am
Hello Jackie!
Thank you for sharing. $1 is pretty risky–but I like money more in a savings account than a checking account anyway:). Have a great day!
Amanda L. Grossman recently posted..A Series of Unfortunate Events- Do You Buffer Your Checking Account
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August 9th, 2010 @ 4:13 pm
I like to have a buffer in our checking accounts, because we don’t carry a lot of cash and I never want to be in a situation where I can’t access cash in a pinch, and I also don’t like to worry about remembering and keeping track of each of the bills that gets auto-debited each month. I know I also don’t like to budget as closely as you do, so it makes more sense for my style of money management to have a nice buffer. I start to feel pretty uncomfortable if my buffer $ gets below $400. Same for Scott’s checking (I manage both our accounts which are separate but we are secondary on each other’s accounts.. he often checks with me to ask how much $ he has in checking!)
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August 10th, 2010 @ 10:24 am
There usually is a buffer but not on purpose… We try to monitor charges closely and keep track on the budget (excel spreadsheet). So it makes it easy not to overspend – and therefore have a buffer.
I didn’t quite follow that unfortunate series of events. I’m confused where the $98 came from. The vanity guy? Either way, I am so glad you caught it!!! I can’t believe you were able to remember so far back!!!
Thankfully Thrifty recently posted..Travel Vouchers
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August 10th, 2010 @ 11:27 am
Hi Thankfully Thrifty–the $98 check literally came from a stranger who had written it to someone, and somehow it was debited from my bank account. I didn’t know who the guy was, but the bank was totally at fault because they allowed the check to be taken out of my account.
Thanks for your comments!
Amanda L. Grossman recently posted..A Series of Unfortunate Events- Do You Buffer Your Checking Account
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August 10th, 2010 @ 12:50 pm
We do keep a buffer in our checking account.
After years of spending an enormous amount of time constantly monitoring acct balances and every single transaction, we realized that it was more efficient to audit transactions once or twice per month and keep an amount slightly larger than expected expenses in our checking acct.
We also added an extra buffer with overdraft protection via a line of credit provided for free by our credit union – not even a transaction fee is charged if we overdraft, we just pay interest on the time we keep the money from the line of credit.
As you get older, you start putting a premium on your time
It’s not worth spending hrs. of your life doing ‘busy work’ when you can get a better ROI by investing that time on relationships and enjoying life.
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August 10th, 2010 @ 2:08 pm
We have two checking accounts (Chase and ING). They both have a $1000 buffer. After a few months of having the extra there, you almost don’t pay attention to it. I see $1500 and automatically think $500…
It comes in handy when we take random fun trips and need a few extra hundred in cash while we transfer it from our vacation fund (which takes 3 days).
It also came in handy the one time that Chase decided to take 2 mortgage payments in 1 month…$900 billed twice brought us down to about $200. Yes, they would have covered any overdrafts or whatever, but it was nice not to have those additional problems while it was worked out.
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August 10th, 2010 @ 3:06 pm
Hey Central NC! Thank you for your comment. I am definitely starting to feel more of a premium on my time from even a few years ago…although I’ve got a ways to go:).
Budgeting in the Fun Stuff: Hello! That is a large buffer, but it definitely seems to work for you. I am thinking of a few hundred dollars moving forward. Thanks for your comment!
Amanda L. Grossman recently posted..A Series of Unfortunate Events- Do You Buffer Your Checking Account
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August 10th, 2010 @ 4:04 pm
We have two buffers to checking:
1. Whatever is left over after I transfer a large even-numbered sum of money from savings to pay bills. This is generally between $50 and $500.
2. All the interest that I never credit to our checking account. This builds up over the years.
We also keep between 6 and 10K in a savings account linked to the checking, so if we do overdraft we get the smaller fee instead of the larger one.
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August 10th, 2010 @ 5:50 pm
Oh man, boo!!! That totally stinks! I am sooo glad you caught that! Like I said, good memory!
Thankfully Thrifty recently posted..Travel Vouchers
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August 10th, 2010 @ 8:57 pm
I keep a $200 buffer in our checking account and we also have overdraft protection – Wells Fargo charges $7 if we overdraft. I also have email notifications set up if we do overdraft. Sometimes I’ve been able to move the money over during the night and I haven’t been charged an overdraft fee. I’ve had less than five overdraft fees in 25 years of banking and it still freaks me out if it happens.
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August 11th, 2010 @ 8:21 am
Hello Nicole!
Grumpyrumblings–that is cute:). Thank you for your comment. We haven’t opened up an interest-bearing checking, but the idea is intriguing:).
Amanda L. Grossman recently posted..A Series of Unfortunate Events- Do You Buffer Your Checking Account
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August 11th, 2010 @ 8:22 am
Mrs. Accountability: Hello! Thank you for your comment. This really freaked me out, too! It’s like getting caught doing something bad in school:).
Amanda L. Grossman recently posted..A Series of Unfortunate Events- Do You Buffer Your Checking Account
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August 15th, 2010 @ 10:14 am
We keep a small buffer ($100) in the checking account.
I also have our savings account linked for overdrafts but that hasn’t happened since I opened my account with this bank a couple of years ago.
Kay Lynn (Bucksome) recently posted..What If You Didn’t File Your Taxes This Year
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August 15th, 2010 @ 10:47 am
Hey Bucksome!
Thanks for your comment and information.
Amanda L. Grossman recently posted..Scan Artist
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