Frugal Intuition

My husband does not balance his checkbook.   I remember finding this out early on in our dating career and thinking that for a smart guy, he was being really dumb.

“But I’ve got online account access.  I can see how much is in my account at any given time,” he argues.

Uh huh.  And what happens if you don’t remember every check you write or every debit you put on your card?  And what about when the bank makes mistakes?

“Uh…”

Yeah.   We’ve been married for over 5 years, together for 9.  He still doesn’t keep a checkbook ledger.  We simply don’t have joint checking.

Not keeping a checkbook ledger is something I hear more and more often in our modern world where everyone has online checking access.  As people have shifted from writing fewer and fewer checks to debiting their purchases and bills, the idea of keeping a ledger of purchases seems to have fallen by the wayside.  It’s no longer convenient to jot down that date and amount of a purchase when it’s not right there by the check (or these days, card).

My System

For each debit purchase, I take the receipt and wrap it around the card.  Once or twice a week, I sit down and unwrap all those receipts and enter them into my checkbook ledger.  I also log in to my bank to check their record of the purchase to make sure that it matches the receipt in my hand, and I balance my checkbook as I go.

For those of you more technologically inclined, I recommend getting a program like Quicken or Microsoft Money.  Now I know you can download your statement from the bank directly into those programs, but the POINT of this exercise, is to keep your own records of purchases to compare to the bank’s.  Yeah, it’s kind of a PITA, but then when discrepancies arise, you have your original receipt.  What?  You don’t?  Yeah, you should keep those.  All receipts during the course of a month should be kept until they have cleared your financial institution and you have verified that your financial institution has recorded the correct amount.

Why is this such a big deal?

Well, a few reasons.

1. By writing everything down yourself and not relying on the bank, you have a full record of how much you have spent, regardless of whether it’s cleared the bank or not.  Some businesses take time to report their transactions to the bank.   You can’t afford to be unaware that transactions haven’t cleared.
2. By writing everything down yourself and keeping all your receipts, you are in a position to notice and challenge discrepancies.  For example, sometimes you will see a different amount on a restaurant charge than you paid.  Sometimes this is a waiter or waitress changing the tip amount after the fact.  Sometimes they ran the wrong card for the wrong order.  The point is, if you don’t have your receipts and didn’t write it down, you won’t know and can’t do diddly.

That’s right.  Banks can screw up.  

A story from my own life to illustrate.  Back when I was getting ready to go to college, I had a tiny credit card with a $300 limit.  My parents had gotten it for me when I began driving as an “Emergencies Only” measure.  Prior to my departure for school, my mother had me out purchasing necessities for dorm life. She also sent me by the pharmacy to pick up an expensive prescription for her, so my balance was higher than the norm (sigh…I miss the days when a month’s worth of gas was less than $60).  Then I went to pick up a new pair of running shoes.  When I got to the register, my card was declined.  Okay, fine.  I’d reached my limit.  It was mostly stuff for Mom anyway.  So I wrote a check to cover it.  I’d just made a $150 deposit in the account a couple of days before.  A day or two later, I received an insufficient funds notice in the mail.

Excuse me, no, I have money in my account.

Well, after some investigating and producing of receipts, etc., it came out that the bank had made an error and counted my $150 DEPOSIT as a $150 DEBIT.  All my fees were reversed and the money returned to my account because I had proof that they had screwed up.  Now, granted, this kind of thing does not happen often (thankfully), but it DOES happen, and you’d best be prepared.

That story is also a good illustration of why you should keep a ledger for your credit card as well.  I know.  GASP!  Making extra work for ourselves.  But if you’re someone with a lot of consumer debt, it will be very helpful for you to write down all those credit card purchases as you make them.  Keep a running tally.  I bet you’ll be surprised at how often you swipe that plastic.

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