Monday, August 2, 2004

Track expenses to get grip on spending

Writing it down may be a hassle, but it makes you reconsider purchase

By Steve Rhode

Question: The old expression is very true for me, "There is too much month left at the end of my money." I don't have a clue where my money is going. I make a good living and should have plenty of money left over. What do you suggest?

Answer: Although it's not a lot of fun, you really need to start keeping track of where your money goes. For a couple of months, you should write down every penny you spend. You can use a simple notebook or use a proven system like the Ultimate Spending Plan from It makes tracking getting a grip on your expenses much easier. If you have a family, everyone should do the same.

Two things will happen once you start monitoring your spending. First, you will spend less, because when you have to keep track of an expense, you're likely to think twice about it. Secondly, you will quickly notice places where you are wasting money without realizing it. After a few months, you will have enough information to change your spending habits. Any time you find yourself falling back into your old ways, do this exercise again. It works!

Q: My son has written about 50 bad checks. I don't think he ever thought through the consequences. Many of these were for around $2.50 for cigarettes, but we've been sent letters announcing additional fines that must be paid. Many of the letters are from collection agencies that refuse to accept payment plans. My question is this: what will happen if we send checks for the original amount, but not the fine? If the merchant didn't adequately post the fine, can we get away with not paying it?

A: It is likely that your son is responsible for both the bad checks and the fines. You can check with your state attorney general's office for rules regarding fines for bad checks, but proving that some were not legitimate may be difficult. In the event that you can't dispute the fines, be more adamant with the collection agencies about setting up payment plans. If you convince them that your son doesn't have the financial resources to pay them quickly, they may realize that accepting smaller payments is better than nothing. Do not agree to a payment plan he can't afford.

There are serious consequences to knowingly writing bad checks. You can even be arrested. I had one client that constantly wrote bad checks, almost every day, because he enjoyed the rush he felt when handing someone a bad check.

He felt he was getting away with something.

Writing a couple of bad checks can happen, but 50! Today bad check fines can run upwards of $50, $25 from the merchant and $25 from your bank. Writing 50 bad checks can cost you $2,500 in fines, collection aggravation and a bad check history that may prevent your son from being able to open a checking account in the future. Sounds like your son needs to start living on a cash basis if he can't get a grip on controlling the checkbook.

Tip: Avoid credit repair clinics that charge high up-front fees to "clean up your credit." In some cases, their tactics are not just expensive, but illegal. Some companies, for example, will "steal" credit records of people who have died in faraway places like Guam or Puerto Rico.

For free advice on how to clean up your credit report on your own or to get a current copy of your credit report, visit

Send questions or comments to Steve Rhode is a money coach, president of Steve Rhode Inc. and co-founder of the nonprofit consumer education group

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