Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com.
Dear To Her Credit,
I need to get more organized with my bill paying. Every
month when I get my check, I go buy money orders to pay my bills. The money
orders are 75 cents each. My son pays our Section 8 rent with his disability
check, and then I pay him back half of it. But I always get home and discover I've
forgotten one bill, and then have to walk back to town and get another money
order.
The reason I don't have a checking account is that I went
through a divorce and lost my house to foreclosure a few years ago. I keep my bills either in my purse or in one of a couple of
stacks at home along with coupons and other stuff. I'd like to make a budget, but I don't really know what I
spend on things. I'm planning to buy a computer, but I don't have one yet. I
use the Internet at the library. Can you help me? -- Susan
Dear Susan,
You're spending way too much time and money traipsing around
getting money orders, and you're walking around with a month's worth of cash to
do it. That's not convenient or safe. Plus, unless you religiously keep your
money order receipts together and track them someplace, money orders don't help
you much when you're trying to make an effective budget.
You need to re-enter the banking world and get a checking
account.
Plenty of people go through divorces and foreclosures and
still have checking accounts. If you've tried to open an account and have been
turned down, there's some other problem. Richard Barrington, personal finance
expert for Moneyrates.com, says, "The underlying problem is not because of
foreclosure, but because of a specific checking account problem, like having an
overdraft and then not putting in the difference."
Before you go to a bank and possibly get discouraged by
being turned down, find out what is being reported about you that has kept you
from getting an account. Do this by getting a free annual report from Chexsystems. Chexsystems is widely used by banks. Barrington says, "Data
stays on there for five years. In terms of the reader's problem, the issue would be
how far in the past that problem was." Every year that goes by, old data
gets farther back in the rearview mirror.
When your report arrives in the mail, check for problems. I hope they've all passed out of view and you can apply for a regular
checking account. If something shows up that is incorrect, take steps to fix
it. Mistakes happen!
If your report reminds you of some unfortunate incidents,
you're not alone. In fact, so many people have similar problems that some banks
offer what they call "second chance" accounts specifically for people like you.
If you apply for a "second chance" account, take note:
These accounts do tend to be more expensive.
There's a setup fee and higher monthly fees than a regular checking account. "That's
understandable because the bank is taking a higher risk," says Barrington.
Before you sign up for an account, check with
the FDIC and make sure you're depositing at a legitimate FDIC-insured institution.
Your goal should be to switch over to a regular
account as soon as possible. You can do this just by maintaining your account
in good standing for a period of time and then trying again to open a regular
account.
I'd also encourage you to keep your bills in one place from
now on -- a place you keep nothing but current bills. I try not to even set
bills down on the table with the other mail -- they go directly in my "bills place." You'd be surprised how much trouble this one simple step can save you!
"Getting your finances in order gets easier and easier
as you go along," says Barrington. Once you have a checking account and a designated
place for bills, you can track your bills and spending more safely and
efficiently. One step at a time, you can get your finances organized and under
control.
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: March 19, 2010
Three most recent To Her Credit stories:
Should one spouse take on full debt load? – A married couple with joint card debt wants to transfer the balance to a lower rate card. Should the better credit score spouse take on the burden alone? ...
Can you use dad's credit card when he's ill? – An adult child is taking care of her dying father and wonders about the legality of using his plastic to pay for bills and medical expenses ...
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!
