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When the overdraft is overrated

We still overdraw our bank account several times a year. But it's no longer a sign of our financial failure.

By MSN Money Partner Jul 26, 2011 10:07AM

This guest post comes from Lindy at Minting Nickels.

 

If there's one event in a person's life to trigger a financial wakeup call, that event is often the overdrawn bank account.

 

We've all been there.

 

When the checker at the grocery store gives you that look and tells you your debit card was declined.

 

When you make that walk of shame up to the bank teller to pay your mortgage, since the check you'd sent bounced.

 

That big fat zero -- or worse, negative number in red -- that stares you in the face when you log on to your bank account.

 

It's usually a sign that something in your financial world needs to change. Even if it's as simple as realizing you're a grownup and need to pay more attention.

 

In our lives, the zero dollar bank account has been a common theme from time to time. We can thank our variable income and various levels of debt for that.

 

There were times when I'd go several days making grocery and gas purchases on the credit card, not because we didn't have money in our bank account, but because I was just too afraid to look for myself, and feared there would be nothing there. Post continues after video.

I'd bang my head on my desk every time we overdrew, and in my most melodramatic cry, I'd wonder what the heck was wrong with us.Why do we keep doing this?

 

The overdraft was a sign of our failure. It was a sign of our excessive spending. It was a sign of our inability to get it together. It was a sign that we were spinning out of control.

 

But then something changed.

 

No, we didn't stop overdrawing our account. That still happens several times a year.

 

What's changed is that it's no longer symbolic of any of those things anymore.

 

Because:

 

We know where our money goes. We're tracking it. We may not necessarily like where it's all going -- like our fast-food expenses, or ... er ... our fast-food expenses, but we do know what we're spending it on.

 

A lot of that money is going toward debt. It's hard to get mad at ourselves for overdrawing when so much of our money is going toward the good cause of debt repayment.

 

We have backup. Every payday, $160 of my paycheck automatically goes into our "short-term" savings account. We use it as a sort of slush fund for the times when income is low, or extra expenses crop up. So when our checking account gets overdrawn, the bank pulls money from our savings account -- no fees, no bounced checks, no worries.

 

Sometimes, the overdraft is a legitimate sign that major changes need to be made.

 

So make them.

 

Other times, the overdraft is more like a barometer. Just another weather event, so you know to take your jacket when you head out the door.

 

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