juliegirl,
You need to check with your bank about overdraft protection.
Some banks have an overdraft credit line that only kicks in and charges interest when you use it by writing a check that is more than the balance in your checking acount. They charge interest on the money they advance to you, compunded daily. You can pay off this balance any time like a CC - I like to pay it off from savings as soon as I know it got used.
Other banks will automatically transfer the money from a linked account when you overdraft your checking account. They usually charge a set fee every time that the feature is used regardless of the check amount but charges no interest because they are using your own money to pay the check.
I actually prefer the former type before I think the interest is less than the set fee especially if you overdraft a series of checks - think $10-$25 a pop versus 20% interest for a few days. However, the former may also be dangerous for someone who would start using it like a CC as an additional source of funds.
That being said, to answer your question about balancing my checkbook - I HAVEN'T balanced my personal checking account in about 6 years since my first child was born!!!!!!!!!!!!!
I am responsible for recording, maintaining, and reconciling at least 6 business bank acounts at work, as well as my parents accounts besides my own.
Before my first child was born (and before DSL) I had all the accounts balanced to the penny almost daily. I had the Quicken opened on my computer at all times. Now my internet brower is on at all times.
Now with 2 kids, I am lucky to have all the business accounts up to date at least quarterly and as I mentioned, I haven't reconcilated my checking account in about 6 years! I keep wanting to catch up but I just can't find the time unless I cut off all DSL access at work and at home! Lol!
What we do to prevent returned checks and balancing checkbooks (besides having overdraft protection), is to make all deposit into a primary savings (money market) account separate from our "real" savings accounts and then trasfering the money into checking only when we need it. I like to think of it as our working or holding account. It holds our working capital until we need it while earning some interest.
Whenever I write a check or a series of checks, I make an on-line transfer from the working savings account to checking to cover the checks. I also tend to round up the amount so that there is a little bit of cushion in the checking account. For example, if I write checks totaling $589, I transfer $600 to checking. We hardly ever use the ATM or debit cards. We do keep a little cash on hand but bigger expenses go on the CC and gets paid off in full when due each month.
I set up automatic monthly payments and transfers for long term savings, ING, DRIPS, mutual funds,
DVC maintenance, tithing etc. from CHECKING. At the same I set up automatic monthly transfers from savings into checking right before the payments and/or transfer are scheduled.
I also like to keep a few months of income and/or expenses in our working savings account - I basically don't like the balance to go below a certain amount. When it gets close to that amount I start to cut back our expenses and credit card charges until the balance starts to build up again.
I'm in the doghouse this weekend. Charged $112 in fees from the bank for overdraft protection (4 items covered) Can't really argue about it because I was very lazy last weekend about recording ATM and debit card transactions and DH went ahead and wrote a large check without knowing.
I also don't miss the extra work/worry of balancing my account. I do however, check all transactions on the bank statement monthly against my checkbook.
