Sunday, February 13, 2005

Personal Finances 101

Every so often things happen that remind me not so subtly that there is no earthly reason other than the mere passage of time that I should be considered an adult competent to handle my own finances. This is my way of saying that I'm a complete idiot who should not be trusted to take care of an income and expenses at the same time.

I usually have a pattern of some sort set up. Because I get paid every other Friday, my routine usually is:

1. Receive paycheck. (My office is so small we haven't bothered to set up a direct deposit system. No biggie, if you ask me.)

2. Deposit paycheck.

3. Knowing that the check will take at least a few days to clear (usually by the Tuesday following), use online banking to schedule some bill payments for the Friday following. Because I generally know how much is going to get paid out, I know how much is left of the paycheck, and thus how much I can spend on discretionary stuff. [But see caveat below.]

4. Cycle repeats itself for the next pay day.

So basically, my money schedule is an alternating set of Fridays: deposit on one Friday, pay bills the next Friday, deposit more on the next Friday, pay more bills on the following Friday.

This process makes some sense, no? Well, it could make sense to someone with half a brain -- that is, to someone other than me.

First, my great system frequently fails to take into account auto-debits which I have set up on my account. For some reason it ALWAYS slips my mind that a good chunk of change is accounted for every two weeks in the form of a mortgage payment, and even worse, that condo fees, student loan payments, and insurance premiums get deducted (annoyingly, on different days) once a month. So when I budget how much I have that I can spend, I somehow forget that even though I can see how much I'm spending by writing checks, I consistently forget how much I'm spending in the form of letting others take my money from me.

But the coup-de-grace is what happened to me over the first two weeks of February. I am, in fact, a space case.

So, plan worked as usual, paid off some bills on Friday, received new paycheck the following Friday. Except this time, instead of telling my bank to write out some checks the following Friday, I somehow managed to tell it to send out checks that same day. Thankfully, the bank did so without waiting for the check to completely clear (thus preventing overdraft charges), but it left me almost completely without any funds at all for the next two weeks. Projecting forward, after the following Friday (the non-pay day), my checking account would contain fifteen cents. Cents.

Reviewing my bills and payment histories today, I found out exactly what I did wrong. See, I stress over high-interest credit cards. I hate when I spend so much that I can't pay off the balance on the day-to-day usage ones. So after I had paid a chunk of change to two cards in the last pay period, I forgot that I had made those payments, and paid still more to them the very next week. The original game plan had been to pay them down over the course of a few months. Instead, I accidentally paid them down over two weeks.

And, of course, I didn't really have the money to pay it down that fast. Uh... oops. Talk about dipping into my savings prematurely.

Oh, and because the two payments both were made during the same billing cycle and didn't zero out the credit card, I still have a minimum payment due for next month, even though I never intended to pay as much as I did for this past month. Grrrr.

Thankfully, I had been planning on using my tax refund money to pay down credit card debt anyway. So I finished my taxes this weekend, and expect a decent refund to hit my savings account soon, effectively bringing back what I accidentally spent on paying down these cards. I guess, in a way, I pretty much borrowed against my own tax refund. By accident.

My saving grace is, at least when I screw up this badly, I do so close enough to tax time that a magical buffer appears, giving me access to a sudden "windfall" to make up for my stupidity.


p.p. said...

I am the king of the late fee. I seriously need a personal assistant.

Dennis! said...

Late fees suck too. Especially if you get whacked with a late fee and, as a result, your interest rate (which was a "special" balance transfer offer) skyrockets up by like seven times what it was before.