This one is goes out to anyone who is still holding onto any #moneyshame. I’ve made my share of money mistakes, too! And I’d like to share a story of exorbitant fees to show you that some of the best financial education I received was a result of making mistakes.
(Or at the very least share a semi-long embarrassing story I’ve told at parties to fill moments of silence regretfully, because no one makes friends talking about one’s finances apparently.)
Back in the day, when I had consumer debt up the wazoo and no nifty money management habits in my toolbox, I made a money mistake that felt awful at first (and cost me $180 in fees!) but turned into an awesome lesson in logic, credit reporting, and negotiating.
Even back then, before I could come close to considering myself a money maverick, I was pretty diligent about managing my bills. I don’t remember how much of it was choice rather than necessity but I checked in on my finances at least weekly.
I would log into my online checking account to see how much money I had and how much I could spend and cover my bills before my next paycheck came in. (Ahh, the good ol’ paycheck-to-paycheck days…)
One day, I noticed I had a little too much money in my checking account. Great problem to have, right?! WRONG. A big payment on one of my credit cards never posted. And it was one that I was paying off in full (and really excited about, too!).
I’m not sure what I did wrong – if it was just a glitch on the website or if I never hit the confirm button or if I just made that magical payment in my head – but I logged into my credit card account and was horrified to stumble upon a Late Payment Alert!
My stomach SANK. Here I thought I was going to pay off a credit card and avoid an interest charge but instead, not only did I incur interest, I got hit with a $27 late fee to boot! I also knew nothing about the Fair Credit Reporting Act back then so I actually thought that all of my credit cards would get confiscated and my car would get repossessed and I’d have to turn myself into debtor’s prison. (This isn’t 1820, Michelle.)
Naturally, I was really sick over that late payment charge because I felt like I took one step forward and two steps back with my finances. I was working really hard and still felt like I couldn’t get things right.
Ever though I’m a super-duper introvert and not a day goes by that I don’t thank the universe for the option of texts and emails over phone calls, I knew I could try to have them waive that fee it if I explained the situation. Having a tarnished personal finance record was way worse that having a confrontational conversation with a mystery bank rep.
(To my fellow confrontation-averse introverts out there: If I can negotiate, so can you!)
First, I quickly made a payment manually hoping that my credit card company would see I was good for the money and this was all a big misunderstanding and not only would they waive the late fee but they would remove the slip-up from my permanent record and I would be welcomed back into society warmly.
The customer service rep looked at my history and waived the fee before I could even ask for it to be waived which was surprising. She also offered me three extra promotional offers as well, which was kind of weird, because I was clearly in the wrong, but then I realized those promotional offers weren’t actually in my best interest and were just an attempt at getting me to slip up and make them money again. I got her to reverse the interest charge instead (because I had worked myself up to negotiate something) and hung up the phone.
The good thing about catching stuff like this early is that only payments made beyond a 30-ish day grace period from the due date get disclosed to the credit ratings bureaus, so this wouldn’t hurt my credit score. Still, I could have had a $27 charge, plus interest! But no one was gonna know about it. Thanks for that lesson, Lianna from Capital One!
But wait, the saga does not end there! Apparently, in my fits of panic, remorse, and self-loathing, I chose the wrong checking account when I rushed to post the late payment. And, yep, you guessed it, my payment BOUNCED! I found out by getting a letter in the mail before my weekly money check-in where I would have discovered, yet again, that I had “too much” money in my checking account.
Bouncing a payment was also something new to me. Did you know that merchants can post payments THREE times before they accept that the money isn’t there to be paid? I DIDN’T. So my credit card company kept putting my payment through and my bank kept saying “Nope, nothing to take here” and charged me a $35 fee EACH of the three times. THAT’S $105 IN FEES, DUDE.
By this point, I felt totally defeated. I just wanted to crawl into a cave and hide and live off the land without banking or wifi. But I was pretty pissed that I only received a letter in the mail. What if it was fraud?! Why isn’t my bank more concerned about this?! I get 20 emails telling me my monthly statement is ready but not ONE to tell me I just lost $105 in fees my account was too overdrawn to even cover?!
I had to make ANOTHER phone call where I started off by complaining about my bank’s apparent lack of fraud protection, but they were all like “Michelle, you’ve been such a wonderful customer for several years, we value your business, blah blah blah…” and they reversed the $105 in fees. I quickly, but carefully this time, transferred money from the checking account the payment was supposed to be made from if I was paying any attention at all the first time around.
So, we’re good now, right? NOPE. Even though my bank charged me all that money for overdrawing my account, they didn’t actually spot me the money, so I got hit with a returned fee charge of $27 on the credit card. *dead inside*
Yep, you guessed it! Phone Call #3. I had to call my credit card company again to have them reverse the returned payment fee. That took a little bit more coaxing but I explained the situation and I might have even said “Do you have any idea how many hours in therapy this is going to cost me? I will put my therapist’s payments on this card if you reverse this!” which isn’t exactly on the scripts I give my clients now, but whatever, it worked.
THE END. Finally.
I got my $180 back and maybe even a little dignity. But I share this story to show you how money mistakes can teach us great financial lessons.
Now I know how credit activity is reported to the credit bureaus and how expensive it can be to bounce a check or overdraw your checking account and how to pay attention enough to pay my bills from the right accounts.
Once or twice a week, depending on my level of spending activity, I’ll sit at my dining room table with a mug of hot tea and make sure all of my income and expenses are reconciled and the amounts in my bank accounts and credit card statement match up to what’s in my budget tracker. I’ll look at my bills calendar and make sure everything that’s due that week is set and scheduled to get paid.
And I'm going to be honest with you: there have been two times since The Late Payment From Hell Saga that I almost missed due dates. But the beauty of checking in with your finances regularly is that you catch any mistakes early.
We probably learn more from mistakes than by reading a boring personal finance book. At the end of the day, money mistakes are not a reflection of our worth.
How do you avoid these situations for good?
1. Tidy up once and for all! This might feel incredibly tedious and overwhelming and scary, but managing your finances in chunks is going to leave you feeling like you’re always missing something or just treading water. Once you tidy everything up as one big project, the bite-sized tasks to maintain it all are way more impactful and way less stressful.
2. Keep a bills calendar and checklist. Even if you have everything automated, it doesn’t hurt to check in and make sure the payment actually went through. Want to be even safer? Schedule those payments 7 days before your due date, so if you see your payment didn’t go through, you’re not actually late on the bill once you catch it.
3. Change your due dates to fit your cashflow. If the due dates on your bills are too overwhelming to manage and track, you may be able to call some of your creditors and utility companies to change them. I’ve had clients schedule everything for the first week of the month so they only have to worry about their discretionary spending over the rest of the month. If that’s something you’re interested in, it doesn’t hurt to ask! Don’t be a hero – simplify that stuff!
4. Check in at least weekly! This doesn’t have to be a whole big project – just 15 to 30 minutes per week should do the trick. And to make sure you do it, schedule it on your calendar like you would a doctor’s appointment (with a $50 cancellation fee!).
You don’t have to be good at math to manage your money well and being really good at math doesn’t make you a personal finance expert either (*points to self*). Good money management does involve light logic, but it’s mostly just conscious and calculated thinking. And (of course!) learning from your mistakes!
And even if your finances are a total mess, banks and financial institutions are still totally fighting for your business. The faster you start picking up the pieces, the sooner you’ll reclaim your power.