Home > Articles > Business & Management > Finance & Investing

Avoiding Late Fees and Overdrafts

📄 Contents

  1. When Time Flies, So Does Money: Finding a System for On-Time Payments
  2. Finding the Best Way to Pay
  3. Less Painful Bill-Paying
  4. Summary
Overdrafts and late fees can put a large dent in your finances. Learn how to get organized to avoid them in this sample chapter by Debbie Stanley.
This chapter is from the book

In This Chapter

  • Finding a system that works for you

  • Choosing the best payment method

  • Minimizing bill-paying hassles

  • Learning to stick with your system

Just when you think you've finally got it together, BAM!, in comes another overdraft notice. It's enough to make you throw up your hands in defeat.

Don't despair. With all you've accomplished in the first two chapters, you're well on your way to perfecting every aspect of your financial organization. You have a system for tracking your income and expenses and for keeping your accounts balanced; add the skills and tricks you learn in this chapter and you just might make bounced checks and overdrafts a thing of the past.

In this chapter, you add to your financial organization with a reliable bill-paying system. We also consider some of the intangibles professional organizers look for when a client cries, "Why can't I just make myself do this?!?" With sharper techniques and clearer motivation, you'll be on your way to a life free of late fees and those dreaded overdraft notices.

Ready? Let's get those bills handled!

To do list

  • Discover the factors that impact your ability to manage your finances.

  • Find out whether your work style is "sprinter" or "jogger."

  • Incorporate what has worked in the past into your new system.

  • Learn how to share a joint account without constant overdrafts.

When Time Flies, So Does Money: Finding a System for On-Time Payments

You've heard the expression, "Time is money," perhaps from a boss who doesn't believe in lunch breaks. Indeed, this saying is typically used to motivate others, not oneself, but it's worth internalizing. It becomes much more palatable when you're using it for your own benefit, not that of a company that gives you too little of both time and money to begin with!

Professional organizers know that time is an exhaustible resource, just like money, and it's even more precious because, unlike money, there is an absolute limit to the amount of time you can "make" in a day. We also know that mismanaging one invariably costs you more of the other: If you neglect money matters, you'll have to spend time to get back on track, and if you're not careful with your time, you'll end up losing money somewhere, somehow.

And so it goes with your personal finances. If you don't have a system for paying bills on time, you'll incur late charges and possibly damage your credit rating. If you don't keep your financial records up-to-date with regularly scheduled reconciliation times, you'll bounce checks and incur still more fees and ill will from creditors.

I believe that awareness is half the battle in all organizing challenges; therefore, if you struggle with time management as it relates to your finances, you'll make huge strides toward helping yourself to improve if you become aware of a few things:

  • What makes on-time payment difficult for you?

  • How do you approach the task of bill-paying?

  • What methods have worked best for you in the past?

  • What can you do to get yourself on-track with bill-paying?

  • What special money-management issues do you face, including managing shared accounts?

The following sections help you explore all of these questions in more detail, so you're better able to come up with a bill-paying system that works for you.

What Makes This So Hard for You?

Is it solely a time-management issue in that you just forget to do it? Or is there an emotional component? Often we procrastinate or avoid a task without even realizing we're doing it, and the reason is an emotional one. It could be fear: Dealing with bill-paying stirs up your insecurity and anxiety about money, success, and making something of yourself. It could be resentment: You resent having to pay money for some things, whether it's substandard phone service or a loan you had to take to pay for something that turned out to be a rip-off.

It could be that old bugaboo, perfectionism: If you can't do it perfectly, completely, on time, every time, then your heart's just not in doing it at all. It could be boredom: This is a pretty boring task, and many people have a low tolerance for duties that do not engage the imagination. It could be confusion: You just don't "get" money or your current system is too complex.

Acknowledge the factors that are keeping you from fully engaging yourself in this project. Accept that these are valid emotions, and stop judging yourself for having them.

Are You a Sprinter or a Jogger?

I learned this one from Wilma Fellman, author of Finding a Career That Works for You. If you're a jogger, you prefer to do a little at a time, taking a steady pace and completing projects in a more or less peaceful, predictable manner. If you're a sprinter, you tend to complete projects in bursts of energy, focusing your entire being on one thing for a short period of time and then walking away from it to regroup for a while. A jogger prefers to enter transactions into a financial management system every day; a sprinter prefers to do them in a batch once every week or so.

Sprinters are much more susceptible to spontaneity, and at times much more productive because of it. The inherent problem with a spontaneous approach to money management is that the consequences of falling behind and catching back up tend to be more severe than in other areas of life.

If you're a sprinter, endeavor to create just enough structure to prevent missed deadlines while still allowing for your naturally spontaneous nature.

What Has Worked in the Past?

If there was a time when you were on top of the bills, what was different? Was there someone in your life who served as an anchor or motivator to keep you on track? Did you have more money, or less? Were there fewer bills? Assess what has worked for you and look for ways to bring it back into your current system.

What Do You Do Now to Finally Get It Done?

Do you pull an all-nighter before tax day? Do you rely on overdraft protection to cover you and then use your panic to motivate you into getting the bills settled for another couple weeks? Perhaps you thrive on adrenaline—the rush of saving the day at the last possible minute. Do you find it harder to motivate yourself to pay bills when you have a smaller amount of funds available? It could be that working in fine detail to allocate each dollar precisely is just too overwhelming for you. Does it take someone else prodding you into action (the angry spouse, the tsk-tsking mother, the relentless bill collector)? Maybe that's because you really don't want to have to do it anyway.

What parts of all of that can you incorporate into a more effective system? Think carefully about this. The answer might be that you should delegate this task to someone else; if that's not realistic, it will be all the more important for you to find a system that gives you maximum accuracy for minimum effort.

After you've made these observations, it's time to boil it all down into one big reality check: What level of organization is realistic for you? Again, set aside self-criticism and judgment, be objective, and be honest. Is it likely that you (and those holding joint accounts with you) are going to be able to maintain perfect accuracy, or do you need a system that allows a margin of error?

Now is not the time for ambition! Let's have none of the "I should" and "I'll try harder" and "I'll do better". This is about finding a system that works for you, not contorting yourself to work for the system.

Doing Damage Control with "Safety Valve" Accounts

Consider how one couple's acceptance of reality led to a brilliant idea for creating a workable system for paying bills on time. Like every other couple, Beth and her husband hate bouncing checks, but when two people use a single checking account, it's easy to lose track of the available balance and spend yourselves into overdraft. This problem can occur for a number of reasons:

  • One of you is a spender and the other a saver.

  • One is good at tracking spending and the other is not.

  • The one who pays the household bills doesn't always communicate the balance to the other.

  • One or both rely on the ATM's balance statement instead of their own calculations.

When you're sharing something tangible, like cereal or shampoo, it's easy to tell when it's all gone. Not so with money. People using the old cash-under-the-mattress system never had our problems: The money was either there or it wasn't—no line of credit, no check-clearing period. Nowadays, the money we spend exists mostly as data in a computer, and transactions rarely require cash in hand. This makes it easy for both of you to spend the same dollar—sometimes more than once!

Beth accepted that there was no way she and her husband could expect to never bounce another check—they're just not able to be that precise. What she could do, though, was minimize the damage. She made a few changes and immediately saw a huge improvement.

Follow Beth's system to address this problem for yourself:

  1. Open two new checking accounts: one for you and one for your spouse. These can be individual or joint accounts, but each must be used by only one of you. You will now have the old joint checking account (the main account) and two new ones (we'll call these the safety valves).

  2. Do not carry checks or ATM cards for the main account in your purse or wallet. File them away at home.

  3. Deposit all income from both of you into the main account.

  4. Pay the big household bills (mortgage, insurance, utilities) from the main account.

  5. Transfer a set amount from the main account into each of the safety-valve accounts, making absolutely sure you've left enough in the main account to cover the checks you sent out for bills.

  6. Use your safety valve for your day-to-day purchases and cash withdrawals at the ATM. Never transfer money from the main account into a safety valve without thoroughly balancing the main account!

  7. The person who pays the bills from the main account keeps that account balanced and reconciles the bank statement. Each of you is responsible for balancing your own safety valve account.

This system eases a lot of tension in couples where one or both aren't that great at managing money. As Beth notes, they still bounce checks from the safety valve accounts once in a while, but at least they know that the most important bills are always paid, and they no longer argue over whose fault it is that the account was overdrawn. This way, they can still have a joint account, something they believe in as a symbol of marital cooperation, but they can also minimize the impact of their slip-ups on each other's nerves and on their overall credit rating.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020