A reader gets hit with these fees every month because she can't make ends meet.

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Question: I just started to budget a few months ago, after reading articles and blogs. I’m in debt, and I’m working on that. I have no credit cards due to poor credit management, and I have a small savings account that I can only put $10 a month into.

My main concern is using my overdraft protection funds to cover my bills. I get paid twice a month on the last day of the month, and the 15th of the month. (If that date falls on the weekends, I get paid the day before.)

After figuring out all my expenses for the month, I’m in the negative. I split up my bills between the two paychecks. I have two automatic payments that come out on the 30th of the month. This causes my account to go into overdrafts ($28 fee per item).

So when my direct deposit comes in, it deducts what I owe and leaves me short on funds for paying rent or car insurance — unless my overdraft kicks in again. This is a constant struggle on my part.

Sometimes my overdraft will be a little over $100. The next payday it will be over $300. I have my budget to the bare bone and I’m still coming up short. Any suggestions?

— Josephine in Alabama

How To Never Pay An Overdraft Fee Again

How can I avoid overdraft fees? A reader is hit with these fees every month because she can’t make ends meet. When I council smart people who are constantly being hit with overdraft fees, I know it’s a symptom of a much bigger problem.

These people aren’t lazy, they aren’t forgettnig to check their bounces. No, they’re just like Josephine, good people buried under bad debt. It might seem weird that when I hear about constant overdraft fees I may start thinking about bankruptcy.

Bankruptcy is a last-ditch maneuver towards financial freedom. But based on what Josephine has told me so far bankruptcy may be an option. It sounds scary and it’s a last resort, but it’s not a death sentence.

I urge you to read Debt.com’s report the pros and cons of bankruptcy. I also mentioned bankruptcy because Josephine is just the kind of person it’s designed for, she provided me with a detailed list of her finances which she meticulously maintains.

She’s obviously the kind of person who will spend and save responsibly. If she can just get back to zero. If you have an issue like Josephine’s please call Debt.com.

Howard Dvorkin answers…

Using overdraft protection to juggle debt is like drinking poison because you’re thirsty – but then you drink the antidote right after. Eventually, this process takes its toll.

Better to solve the original problem.

I can understand why you feel you have no other choice, Josephine. When you’re struggling week to week, it’s hard to step back and look at the big picture. That’s what credit counseling is for.

A certified credit counselor will give a free debt analysis, reviewing your entire financial picture to see what programs exist to help you out. Based on the details you’ve provided, this might sound like an odd thing to say, but: I believe you’re going to be just fine.

How can I say that when your numbers don’t add up? I’m simply impressed that you’ve crunched all those numbers. You’d be surprised, Josephine, how many Americans have no clue what their income is, much less their debts.

The first step to solving a financial problem is quantifying it, and you’ve done that. When you speak with a credit counselor, that phone call will be so much more productive because the data is right at your fingertips.

Based on what you’ve told me so far, bankruptcy may be an option. That sounds scary, and it’s a last resort, but it’s not a death sentence. I’d urge you to read Debt.com’s report, The Pros and Cons of Bankruptcy.

I’ve been asked about bankruptcy many times, from questions like Is It Possible To Get Credit Cards After Bankruptcy? (yes) to Will Bankruptcy Keep Me From Buying A Car? (no, but it will cost more to get an auto loan). I’ve even been asked Can I Declare Bankruptcy Twice?

While a credit counselor often spends a lot of time just trying to understand the contours of someone’s debt, in your case, the conversation can focus on the best solutions. If that’s bankruptcy, then I expect you’re just the kind of person that last-ditch option was designed for: Someone who will appreciate the clean slate, and will prosper in the future.

If you don’t call Debt.com, Josephine, call someone who can get you the help you need. You’re a success story waiting to happen.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Meet the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

CPA and Chairman

Dvorkin is the author of Credit Hell and Power Up and Chairman of Debt.com.

Ask the Expert, banking, bankruptcy

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Article last modified on October 9, 2018 Published by Debt.com, LLC .