Okay, in this “fictional” example say someone was just charged some overdraft fees (I know, find a bank that doesn’t have them first, right?) from reoccurring payments putting the checking account into the negative. We’ll say -$225 or so.
Now, if this person happens to have $300 in an Ally savings account, do you suggest they use that to cover their account & bring it to the positive? Payday isn’t until Friday & will only be for $500. Leaving $225 for the next week, which isn’t ideal for the 1st of the month. I know I can try to call & have them waive the fees, but I don’t think they’ll agree to that unless the account is in the green. (It’s a credit union, but the only other option to avoid fees is to stop/deny those reoccurring payments.)
What would you do personally in this situation?
__***__I know the absolute first step is to get my life in order so I’m not paycheck-to-paycheck anyway. COVID has just been a wrecking ball in my life, causing me to make way less money than I did before after being laid off.
I would do what I could to leave the 300$ in savings- manage with the 225$ for the week- AS LONG AS you don’t accumulate more fees. If you will go deeper in debt, then I would use the savings but make it a priority to bring that savings back up.
That’s what I’ve decided for now. I’ve got a little extra cash coming in so that helps a lot.
I’ve heard some people say to use the savings to bring the bank account positive again with the explanation “it’s for emergencies, right?” I get both sides of the argument so it can be difficult to decide. Thanks for your response! ?
If you’ve $500 coming in, I wouldn’t bother with withdrawing from the savings account. I’d just do:
Have them waive the fee after the $500 has come in.
Audit the reoccuring payments to see if there’s a way to cut some stuff out so you get a little bit more breathing room for next time.
Another thing to think about is how much $/mo are you putting in to your savings account - if you run into this dilemma frequently you might just need to save a little less for now until you’ve cut your expenses.
If it were me, I’d be looking at a few things:
One - is there a way to raise some cash to help the situation? (I’ve sold old college text books for $65 cash as they were still in use; I’ve made money as a subject for college research) Penny Hoarder has a lot of ideas on the topic.
Two - I’d speak with the credit union/bank and not guess their reaction. I would explain the situation and point out that Covid is still causing financial hardships and is there anything they are willing to work with you on? Maybe you work to pay down the amount owed instead of just wiping it out in one transaction and leaving you with nothing.
Three - I would see about saving on groceries for a few weeks to get extra cash (Going really basic - eggs, toast, oatmeal).
Four - Every state has local resources (food banks, utility help, etc.). I would seek out help just to get through this hardship before things turn worse. Churches might be able to help too.
I’m sure there are other ideas too. Sometimes, it just takes flexibility and creativity.
always like learning from every one, thank you