Tuesday, December 23, 2008

Recognize hidden charges to avoid debt

Being prepared is a way of life, not like a New Year's resolution to lose weight. One way to be more prepared economically is to be aware of the multitude of hidden charges built into our high speed electronic way of doing business. This problem was brought forcefully to mind with a recent letter to the editor of a national magazine.

Right now, it is popular to write articles on weathering the financial storm. In the recent letter, the writer noted that he went to his local bank ATM weekly to get pocket money. He observed that the bank fees had jumped to "$3 a transaction." In this one area alone he calculated he was spending $156 per year on ATM charges. He went on to say that he had started using the ATM at Wal-Mart stores and found that their fees were only $1.40 per transaction, thus saving $119.60 per-year.

What is wrong with this picture? First of all, this person was using the ATM to get "pocket money." How much was he spending each week on pocket money purchases? Did he even know? Cash has a way of being spent and not necessarily for necessities. If you are worried about $120 in ATM fees, perhaps a better place to start is looking at what you spend on unnecessary items each week from pocket money.

As to the ATM fees, there are a multitude of ways to avoid them altogether. First, use a debit card rather than cash. Second, get cash back from purchases rather than withdrawing money from an ATM. He was already in Wal-Mart, I assume he was also making purchases, he could get the same "pocket money" by asking for cash back on his debit card, rather than paying to have the machine spit out a twenty dollar bill of his own money.

Economic security begins and ends with awareness of each expenditure and the cost of using our society's convenience services. Look at your bank statements carefully. You might just see charges that can be easily avoided.

We need to return to the old adages, waste not, want not and if we don't need it, don't buy it. Financial security can come from paying attention to details.

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