Bad checks

How much does a bounced check cost?

Let's say you write a check for $100.00, and it bounces. My bank charges $25.00 for a bounced check - they'll cover the amount because we have a savings account there, but they still charge $25.

That's 25% of the amount of the check. Is there anywhere you can think of that can earn 25% interest in just a few days?

Loan sharks are jealous, I tell you.

If you don't have the money, don't spend it. If "it's in the mail", but might not arrive until the check goes through the bank, hold off on writing the check, and figure out why you're spending more than you have - and stop doing it.

Sure, I know, this sounds so simple, and yes I've written bad checks, and yes I've been in situations where I don't have the money to pay the electric bill, and yes I've had the phone service disconected because I couldn't pay the bill on time. I do understand the realities of life.

This is how I got myself out of that terrible cycle. I married a wealthy woman. Just kidding.

First, I started recording all of your expenses and income. I was amazed at what I found. At the end of the month I could not account for a large amount of money. So the next month I kept better track, and I found that I was throwing away money at an outrageous rate. I'd buy a candy bar and a pop at the corner store on my way to work, then spend a few bucks on lunch, and hit the corner store again on the way home from work. It didn't seem like much, until I added it up. Once I did, I saw something amazing. Candy bar: $.75, Soda: $.75, Lunch: $5.25, Chips: $1.00, Soda: $.75. That's $8.50 per day, 5 days a week ($42.50), 4 weeks a month ($170.00). Wow!.

But I like my pop, I like to eat lunch out, I like my chips, I don't want to give them up.

Here's what I did. I went to the grocery store and bought a 12 pack of pop, and a box of chips, and a bag of candy bars. The savings were more than I thought they would be. Soda was now 3 for a dollar, candy bars were now 4 for a dollar, and chips were 2 for a dollar. So instead of $3.25 per day on snacks to and from work, I was spending $1.38. I was saving almost two dollars a day, or $37.40 each month. Now that doesn't seem like much, but when you've got nothing, and are bouncing checks, to have an extra $37.40 each month is like manna from heaven. For lunch, I changed what and where I was eating just a little and was able to save another dollar a day. I started eating more pasta for dinner and saved even more. I even took my lunch to work a couple times a week. Before I knew it, I'd stopped bouncing checks, and had started a savings account.

What you do will be different from what I did, but the point is that until you track your expenses you'll never know how to save money.

More finance tips

• Permanent files What to store in your permanent file.
• Safe Deposit Box What to store in, and how to get, a safe deposit box.
• Filing Checklist How to develop a filing system, either to start a new one or improve your existing one.
• Other Files What to else to keep in files.
• Budget Keeping a budget.
• Medical Records What to keep, and what to do with medical records.
• Home Inventory Creating and maintaining a home inventory file.
• Car Purchases The most efficient use of your money when purchasing a car.
• Phone Book An organized personal phone book file system.
• Keeping Records Where to keep records.
• A home office Setting up a home office.
• Home Office Running a business from home.
• Banking Banking, savings, checking, and other bank accounts.
• Balance the checkbook How to balance a checkbook.
• Interest What interest can do for you or to you.
• Bad checks How much a bounced check really costs.
• Tax refund What to do about tax refunds, how to calculate what to have taken out for taxes during the year.
• Pay off debt How to get out of and stay out of debt.
• Cutting Expenses Ideas for reducing expenses as much as possible.
• Investing Making wise investments.
• Credit Cards Making wise use of credit cards.
• Debit Cards How to use debit cards.
• Finances and records Getting started with your finances and records.

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