Overdraft Protection and You
Are you using overdraft protection? Should you opt-in or disregard the new policy which comes into place as of August 15.
Previously if you had a charge that came in, the bank could pay it and charge you anywhere from $30 to $40 to compensate for overdrawing the balance. Now, from what I understand and this applies to new accounts opened after July 1 and it is effective August 15 for pre-existing accounts, attempted debit-card payments with insufficient funds will just be declined, unless users opt into the previously-automatic coverage, which banks liked to call “courtesy overdraft protection.
It is an optional service and SOME BANKS are spinning it as a MUST HAVE. This is not cheap. Look at this example I found of TD Bank which charges $35 per transaction that overdraws an account more than $5, up to five transactions per day. You pay another $20 if your account balance remains negative for 10 consecutive days.
Will you opt-in or not? I personally will continue monitoring our accounts very closely and not be hit with all these additional fees. As a matter of fact, I will be discussing with my husband some of these monthly expenditures that I believe we should get rid of that are not generating income for us and are tied to our businesses.
Remember, banks do not call you and say a transaction is about to overdraw your account. You generally find out after the affect. I remember last week a person posted on twitter that their account went over by $3 for the first time ever and their bank changed the APR to 29.99 percent. I recommended they contact their bank, basically plead their case based on their record and see if they would waive. Their bank declined saying there was nothing they could do. Let’s remember, they are there to make money and now they will make even more money off of this person if they do not monitor their account closely.
Credit Card practices – Beware
I could not resist writing about this as soon as I saw it this morning. The story was titled Credit Card practices cleaned up. Wellllllll….. there would be something more to this story. I wanted you to find out just as soon as I did.
According to the Manager for the Pew Health Group, issuers have been increasing fees for cash advances and balance transfers. Banks have hiked those fees to a median 4% as of March from 3% in July 2009, according to the study. Credit union cash advance fees rose to 2% from 2.5%.
Have you noticed on your bank statements that the fees were higher when you got a cash advance? I don’t do cash advances; however my husband does and this is going to make me go back and re-assess what he has been paying in fees. Then have a discussion with him and see if there needs to be an adjustment in how he gets cash. There’s no fee for walking inside the bank and making a withdrawal! Hmmmm.
Pew researchers also found that penalty rate increases, which are not subject to CARD Act rules, remain widespread. According to the study 94% of bank cards and 46% of credit union cards included penalty rate terms. The median penalty rate, when disclosed, rose to 29.99% in March from 28.99% in July 2009.
I encourage you to read all of those pamphlets that come in the mail with your bank statement. I will be the first to admit, I’ve gotten those envelopes in the mail and not read them because it was not my bank statement..only later to learn there was some very important information in those envelopes. Let’s be honest there are times when you get bombarded by sooo much mail – this person offering you life insurance, or this person offering you a credit card that it just seems like another advertisement.
Ladies, when it comes to your finances, bank statements, letters from the bank PLEASE take the time to read and take the necessary action. Armed with information and utilizing that information is what will make the difference when it comes to your money and marriage. As the Wife CFO, it is important that you HANDLE business!
His Account, Her Account or Our Account?
You are the Wife CFO, but the question has been on your mind quite a bit – should we each have our own individual accounts or do we have one joint account? It does not matter how short or long you have been married, this is a popular topic which is one of the primary reasons that I am addressing it here. I have several thoughts on this, so get ready to clear your mind and follow my train of thought.
Remember you came into your marriage with individual credit and to some extent will continue to have some individual credit. That is a good thing so you do not end up naive about credit and money management if something happens to your husband.
As you are weighing the question – ask yourself, what is the reason that you want separate accounts? Be truthful and do not deny your reason. Potential reasons:
(1) Is it because one spouse has more debt than the other and you do not want to put up with that anymore? You feel as if your marriage canot get ahead.
(2) You like being in control of your finances and vowed that you would not have a joint account once you were married.
(3) You recognize having one account for all the money can become problematic. What do you do if there is a rainy do or even an emergency?
(4) If there is a lot of debt and you cannot pinpoint how it is happening, separate accounts could aid you in that process. You would watch each account and are able to determine where the spending is happening and by who.
Having separate accounts does not say that you are establishing a secret account in order to one day leave your husband. A separate account could be in place because you came to the marriage with debt and you felt it was better to keep your funds separate until you clean up your credit which did happen in our marriage. I came to our marriage with debt and my husband’s bank would not even put me on his bank account. At the time that truly hurt my feelings and made me feel really bad. Yes we ended up getting an account at a different bank together so that I would have access to some money. Looking back that actually was a good thing by the bank, but believe me at the time it did not feel good at all.
The bottom line for you as the money manager could be to get the accounts in a manageable place whether it is joint or separate as long as you spouse is willing to work with you. It is imperative that all the bills are paid, mutual financial goals are in place and you have a plan for the future.
Ways to Reduce Debt
You may be re-evaluating the marital finances after listening to the audio, Mid-Year review and wondering what are some of the ways you can reduce debt immediately. Let me share with you what we did. Yes, I said we because I had to get my husband to buy in:
1) Stop using credit cards all together. Oh yea, I know this might be hard for some of you and I encourage you to think about it this way, if you are using a credit card that is not tied to your bank account what you are doing is incurring more debt. A bank credit/debit card the money is coming out right away. But a credit card that is not, means that you are charging something that will continue to have future payments until you pay it off.
2) Pay your credit card bills on time which means seven to ten days before they are due. This way you do not get hit with those late charges which could cause you to end up with overage charges.
3) Be conscious of when your charges on your bank card actually hit your account. Hint: They usually do not hit your account the day you charge it, as a matter of fact it can take several days. I have witnessed several people in the bank mad because when all the charges hit their account at once, it put them in overdraft situations. They were not notified by the bank and all those fees make it worse.
4) If you work outside of the home, brown bag the lunch. Adds up really fast. The money you save put it towards a debt.
5) Do not fall into the trap of consolidating debt and then re-charging up all the credit cards. Recipe for disaster.
6) Make a list when going to the mall or other retail outlet and stick with it. DO NOT apply for the credit card offers.
7) Evaluate expenses that are monthly that are for personal and business. For example, look at your cell phone plan and is there a way you can get a better plan. I did this with our cable, internet and telephone with long distance. They were separate bills and we consolidated them into one and got a much better rate.
One of the business expenses that I have recently changed was we had a fax line that we were paying roughly $40 a month on and not using that much. I decided to research online fax services – cost, usage per month, whether or not there was a long contract and more. I ended up choosing an online system that cost me $9.95 per month. The difference I will put in savings.
9) Shop with cash and be disciplined to stick with it. I cannot tell you how many times I went to the grocery store or Whole Foods with a specific list and husband calls and says can you get a,b,c,d, and e. There has been times when it has sent me over the amount budget. When I have been at Whole Foods if it was not a MUST HAVE – I put it back and stayed within my budget! So before you go shopping ensure that you have talked with your spouse to ensure you are getting or have discussed the extra items that they would like. The flip side of that – there are times when he goes to the store without knowing the dollar amount and has the list. If the twins have gone with him, when they come back I will ask them what did Daddy buy that was not on mommy’s list… and they sing like birds.
10) EAT out LESS! This was a huge one for us. From the time I met my husband he has always liked to eat out. Don’t get me wrong – he is an EXCELLENT COOK and I’m good too. It’s just something about going out for him. So when we had to reduce this, in the beginning it was painful for him and then he began working with it. Cooking together promotes healthier meals and family time.
11) Review the grocery store flyers that come in the newspaper or mail. Be a conscientious shopper – look for the sales on the items you buy the most, use coupons and buy the items in bulk that you need to. How about this: our local grocery store sent us the reward coupons on several of the items we buy the most. That is what I like, reward me for the money I already spend. Some coupons were for free items, some were for a certain amount off and others were buy one get one.
12) When it comes to extracurricular activities – have some fun and get real creative. Plan a picnic at a local park (your only cost should be the food); instead of spending $20 plus to go to the movie (that doesn’t include food) two words – Red Box for $1.08 or Net Flix for $4.95 per month( that’s the lowest membership) and you can buy a box of popcorn at the store for a couple of dollars. The money that you save put it either towards a bill, savings or emergency fund.
13) If you are an avid book reader such as myself, don’t go and buy brand new. Get on the internet and check out Amazon.com to see what the book sells for used, go on ebay and see if the book is for sale or better yet – go to your local library and see if they have the book. MONEY SAVED!
14) A few weeks ago we were into major spring cleaning. My husband started it and I jumped on board and decided that old books that I have no use for, I will put them on ebay. Who would have known.. before the night was over I had some sales. Next thing I know, husband was bringing me old books that he had for me to put them on ebay as well. DO your homework when it comes to ebay, shipping cost and whether anyone would want your items.
15) This one might be hard – whatever that drink is that you have to have first thing in the morning or throughout the day – give it up for 30 days and see how much you save. I was updating my ledgers the other day and noticed that my husband had an expense of $3.02 that came out 4 times in one day. I called him and said what costs you $3.02 and he told me – its coffee. So imagine this $3.02 x 5 days a week equals $15.10 a week equals $60 a month. 60.40 x 12 equals $724.80 . Would $724.80 make a difference in your finances?
These are only some beginning ways to reduce debt. Do you have a way to reduce debt that is not mentioned here? Add a comment!
Wife CFO and Non-sufficient Funds
How many times have you thought the accounts were in order and the next thing you know, you receive a telephone call, get a card in the mail from the bank or you decide to go online and review your account only discover that your account is in the negative? You think to yourself, I was monitoring the account and knew the amount of money that was in the account. Now you are dealing with the account being in the negative, and have gotten charged a fee on top of that.
How does this happen when you knew there was enough money in the account? First and foremost, let me share with you that I have been there and you are not the only one that has experienced this nor will you be the last. If you are a business owner, you may also think to yourself, what will that vendor think that your check did not clear? Will you lose them as a vendor? Trust also becomes a factor.
Below are some reasons that this happens:
(1) Of course the obvious, there was not enough money in the account for the transaction that you did.
(2) Your spouse has an automatic deduction that you were not aware of.
(3) The day you purchase an item utilizing your debit or credit card, did not necessarily process through your bank on that day. As a matter of fact, it could be anywhere from a couple hours to several days later when that transaction gets processed.
(4) Let me perfectly clear when I say this. Not saying that any of you would do this – There are some people who write bad checks on purpose which carriese its on set of consequences outside of the non-sufficient fee.
Is there a remedy? Yes. There are steps you can take to remedy dealing with non-sufficient accounts:
(1) If you have been a great customer and have not had an account in an overdrawn status before, I recommend that you go in to the bank and speak with a personal banker about waiving that fee based on your history with the bank. You will not know until you ask. Some banks have a policy that they can waive one fee per year or something similar.
(2) Pull your bank statements from the last two months and make a note of all the automatic deductions (yours and your husband). Look at what the deductions are, date they process through your bank as well as how much they are. Now, let me caution you – the day they come out of your bank account is important and I would make sure the money is in the account prior to that date. Why you might ask? Because you do not know exactly what time the transaction is processed on that date. So I would recommend ensuring the money is there at least five days prior and do not touch those funds.
(3) Regularly talk with your husband about the marital finances so he is aware of what is happening with the marital money. You do not want him thinking the money is one thing, then he begins spending and it is truly something else.
(4) You could also put overdraft protection on your account. Each banking institution has its own policy when it comes to overdraft protection. Do your research.
Caution: If a bank account stays in overdraft for either 30 or 45 days, the bank could close the account.
Personal Note: I have seen firsthand where a customer could have numerous bank accounts, make a lot of deposits and they will not contact you if your account is about to be overdrawn. Hmmm, so much for customer service right!
Weigh in: Are banks really set up to help you.
Midyear Financial Review
All over the world, July 4th was celebrated. Independence Day – what are you doing when it comes to your financial independence. Take a listen to this downloadable audio and get started:
Lack of money impacts behavior
Oftentimes a lack of money impacts behavior and it doesn’t matter if it is the husband or the wife. The stress of not having enough money to pay bills, take vacations or even purchase necessities can cause people to act out of character. Think about it… when is the last time one of your girlfriends contacted you and was complaining about her husband and finances?
What do you think after listening to her? Did you agree with what she was saying and how she handled the situation? Or did you offer her a suggestion on a different way of sharing with her husband about their financial stress and current issue?
When you think about your own marriage, as the Wife CFO how do you behave when there is a lack of money? Does your behavior change, your words or even you attitude? Remember Wives, you set the tone for your households. What you think, say and believe about a certain situation is what everyone else will think, say and believe. Choose your words carefully, as well as your actions.
If there is a shortage in your marital finances, then you can take steps to address the shortage and work on having a surplus. For example:
1) Review all of the marital expenses – automatic deductions and all monthly expenses
2) Do not forget to include recreation expenses – restaurant eating, movies, etc.
3) For the next week, write down everything that you spend money on. (You might be surprised at how much is being spent on wants versus needs i.e. – vending machines, frozen coffee, smoothie etc.)
4) Where can you cut costs? Take steps to cut those costs so that you can have a surplus.
I strongly recommend if you have a surplus that you do not turn around and use that for “fun money” but apply it towards a bill, emergency account or vacation fund. This way you are working towards a financial goal that can impact the marriage and family.
Roles of Money in Marriage
Wives in a previous post, I shared about how a lack of money can impact behavior. You have seen it whether in your own marriage, someone in the family or even a friend’s marriage how a shortage changes people’s behavior. Even to this day, money is a serious topic that is often avoided because of shame, fear and even misunderstanding. I want to give you this exercise and don’t take it lightly. This could actually give you some insight into what you think about money.
Don’t worry, we are definitely going to get into Mindset – not this post. Understandably you are aware that it takes money to pay the bills. On a sheet of paper, write down what all the roles are of money for your marriage. There is more to money than paying the bills and I encourage you to take this time to figure it out if you have not ever thought about it this way.
Knowing the roles of money in your marriage can impact your marriage in several ways. For example – can aid you in planning for retirement, college education for kids and even if you desire to start that business. Those are just a few things that knowing the roles of money could change long term. As a matter of fact, determine if the different roles of money is a short-term or a long-term.
I invite you to send in or leave a comment on what you believe are some of the roles of money for your marriage to share with other Wife CFOs. I remember I wrote a post for a wedding website last year pertaining to this and one of the editors of the site shared how on point this was.
What is a CFO?
CFO is the acronym for Chief Financial Officer. I particularly liked the definition from Business Dictionary which states, “Senior-most executive responsible for financial control and planning of a firm or project. He or she is in charge of all accounting functions including (1) credit control, (2) preparing budgets and financial statements, (3) coordinating financing and fund raising, (4) monitoring expenditure and liquidity, (5) managing investment and taxation issues, (6) reporting financial performance to the board, and (7) providing timely financial data to the CEO.
Let’s take this in context – Responsible for financial control and planning of a firm or project. Financial control means action taken to ensure costs incurred and revenue generated are acceptable.
Ready to get into the thick of CFO: He or she is in charge of all accounting functions which include credit control. I want to break down each of these components beginning with credit control.
According to Investopedia, credit control is “A strategy employed by manufacturers and retailers to promote good credit among the creditworthy and deny it to delinquent borrowers. This will both increase sales and decrease bad debts, thus improving a company’s cash flow. Credit control is an important component in the overall profitability of many firms”.
Next is preparing budgets and financial statements. I know the word budget generally is perceived in a negative fashion and I want you to think of it in a new way. Think of budget this way – Budget says that you are controlling your money and it is working for you versus not controlling your money and your money working against you.
Coordinating fundraising and financing is another responsibility of a CFO. This action is crucial to different businesses, especially nonprofit organizations. Think about how many times you have attended or donated a nonprofit organizations fundraiser. As the Wife CFO, remaining aware of the financial picture helps you determine what type of loan is necessary when financial situations present.
Monitoring expenditures and liquidity, this one alone can make or break a business or corporation. These factors can impact the budget in a major way. Therefore, it is best to be aware of what the expenditures are and how liquid a company is.
Let’s go to another favorite of mine managing investment and taxation. It is always important be aware of what is happening with your investments as well as the tax implications. On a personal note, this would include retirement plans, life insurance policies as well as stocks.
I will combine the last two which is reporting financial performance to a board and providing timely financial data to the CEO. In this case it would be to your spouse. Even though you are the CFO, it is important to involve and include your spouse when it comes to marital finances.
Let’s say it – A CFO has to be accountable and responsible for the job he or she must do. The person must be committed and focused when it comes to the overall mission of the company or organization. There are many people that depend on the CFO.
Share your comments now that you have read what a CFO is.