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Frugal living tip #46. November 21, 2009

Posted by ourfriendben in Uncategorized, wit and wisdom.
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Silence Dogood here. In 2009, we’re committed to bringing you a Frugal Living Tip every week to help people like us survive these tough economic times. This week’s is about not losing what little money you may have.

I’ll get to that in a minute. But first, a couple of statistics I read in the local paper that struck me as ironic. Savvy gardeners and homesteaders won’t be surprised to hear that, thanks to the recession, home canning is up. Sales of canning equipment were up 30% this year. That’s the good. Unfortunately, hard times also make us crave cheap indulgences—something we can still do to make ourselves feel better. So another sign of bad times is the skyrocketing sale of potato chips (up 22% this year) and other fatty, salty comfort-food snacks, rising dramatically after years of stagnant sales. Sansabelt, here we come. That’s the bad.

Now for the ugly, the point of this post: It’s bad enough when you don’t have much money sitting in the bank. But it’s a lot worse when what little you do have is siphoned off through overdraft fees. Here’s some scary data and excellent advice from Humberto Cruz in his article “Invest time to avoid fees.” (To read the entire article, go to www.themorningcall.com.)

First, the scary stats: 51 million American adults overdraw their checking accounts once a year; 27 million, five or more times a year; and 18 million, ten or more times each year. Those overdrafts come at the cost of $26.6 billion in hard-earned money, at an average of $29.58 per bounced check. Many banks charge fees if your checking balance falls below a minum each month as well. And late fees on credit cards are supposedly rising into the high 20s—in other words, heading towards a third of the bill.

The bad news doesn’t end there. Not only are fees for using debit cards at banks not affiliated with your own rising steeply—the average is now $2.22 per transaction plus a $1.32 fee levied by your own bank—$3.54 each time you use another bank’s ATM. (I’ve also read that some banks organize debit charges from highest to lowest amount rather than by transaction date, so unless you record each and every transaction as you make it in your checkbook and balance the total immediately, you may think you have more money than you actually do at any given time and overdraw inadvertently as a result.)

Yikes! How can you avoid this mess? Mr. Cruz offers some good advice from a consumer-oriented website, Bankrate.com: “Match your accounts to your needs. If it’s just simple checking, bill pay, ATM or debit card transactions, a non-interest-paying but free checking account with no minimum balance or per-check charge is best.” He also advises you to keep track of all your transactions and balances, including ATM and debit transactions and your credit cards. He checks his accounts online daily, and swears he can do this in under a minute. You may not want to check every single day, but if you have the uneasy feeling that your balance is bottoming out, it would be well worth it. After all, the last thing you need when money is already tight is to be handing what little there is over to the bank!

            ‘Til next time,




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