Bank balance does not balance

[disneysteve]

Originally Posted by Radiance

I am not ready to check those pesky receitps.

I have to say that this statement concerns me. You started this thread to ask why your account doesn't balance but now say you aren't ready to do what is needed to balance the account. I have had a bank cash a check for a different amount than it was written for. I have had a bank credit the wrong amount for a deposit I made. There are lots of errors that can and do happen. If you aren't checking each transaction, how can you possibly know if they are all correct? I will say it again. You can not assume that the bank is always right.

[Radiance]

I will get there, right now I register the gas expense on my envelop budget as the bank says it happened.
So technically if a mistake was made, I am copying the mistake into my records, therefore I should still be able to balance out anyway.

I will try to record start recording receipts in a month or so.

[disneysteve]

I just want to make sure I'm clear. Do you keep any type of written record of your transactions? I still do things the traditional way with pen and paper. If I write a check, I record it in the paper checkbook register. If I pay a bill online, I record it in the register. When an automatic payment is made from my account, I record it in the register. I don't use a debit card so don't have to deal with recording those transactions, but if I did use one, I'd record those as well. When I make a deposit, I record that in the register. Then when the monthly statement comes, I check my records against the bank's records and balance the account. It takes about 10 minutes per month and is quite easy. In fact, many months, my 14-year-old daughter does it for me and she has done so since she was 9. If the numbers don't add up, we figure out where the mistake was made. Usually, it was an error on my part but occasionally, I find a bank error.

[creditcardfree]

You either need to record the transaction as it happens, such as when you pay a bill online, or keep the receipt until you do record it. Don't wait to record it until it shows up at your bank. That is the main reason you can't rely on the bank balance, because it can be several days delayed from when you spent the money.

You can only rely on the balance you keep a running total of.

When I shop and use my debit card, I put the receipt in my purse. I record any receipts I have each day. I write a big 'R' on the receipt after I record in my register, so that I know that I have recorded it. I have an excel spreadsheet for this. If I pay a bill online, I record it immediately, even if the transaction won't happen for several days.

[Radiance]

What a drag, but I guess I have to get into the habit to do it and do it consistently . I do it for some things, but for others I record them as they show on my bank's site which I check daily or every other day. I don't write checks, mainly debit card so my transactions show at the third day the latest, over 90% show the same day.

I do have adversion to receipts piling on my purse, so when I register as the transaction happen (like at the grocery store) I do it via text message and throw away the receipt as I go out the dooor.

I think I was trying to avoid doble work; register on my personal system and then "mark" them as my bank clears them up. I see now why people balance out only once a month. I was trying to KEEP my checkbooked balanced at all times and I think that has been overkill, unefficient and almost impossible.

ok, so

1) Register transactions as they happen OR save the receipt and do it that night so I can throw it away
2) Balance the checkbook once a month only.
3) Check the bank website often to address any UFO (Unidentified Funny Overcharge)

Am I glad I asked this question... Still hate the idea of registering every transaction manually. Maybe will serve as a shopping deterrent:

[cptacek]

Radiance, I balance my checkbook more than once a month, especially when I am trying to eek out a bit more cash to complete a goal. If you want to keep closer eye on it, you can.

At my bank, you can log in online and see each transaction as it is credited or debited. I log in during the middle of the month and check things off, and balance to the daily balance shown on the web page. When I get the statement at the end of the month, I have a few checked off already, so I just do the remaining few weeks, and see if it balances against my spreadsheet. If it doesn't, check the whole month.

If you write checks, get duplicate checks. Then, when you are done writing the check, you don't have to record it anywhere when you are at the register...it already made a copy for you. Then, record it in your spreadsheet when you get home, or when you next balance your checkbook.

If you want to keep receipts (which you should for reasons other than balancing the checkbook...for instance returns back to the store, or tax reasons) but don't want to clutter up your purse, just put a basket or something close to where you drop your purse off when you get home and clear it out there every day.

I have always kept receipts, but my husband hasn't. It took him about 4 months of me nagging him (I swear I wasn't nagging, just asking for them every couple of days, but he thought I was nagging) and now he keeps every receipt too. It is so important for us because most of his expenses are farm expenses that we use to offset farm income, so if he doesn't keep a receipt, that costs us 10-15% (whatever tax bracket we are in).

If you don't want to keep receipts, you can use your phone to send a text to yourself. That sounds like a good idea.

Whatever you do, just get in the habit of it.

If the problem of balancing to the bank balance comes from before you started keeping track, you eventually have to reconcile that. If, after a few months, you have tracked everything and are the same amount "off" every time, just make another entry on your spreadsheet saying "reconciling to bank balance", put the amount in, and go on from there.

[minnie1928]

Originally Posted by disneysteve

I have had a bank cash a check for a different amount than it was written for. I have had a bank credit the wrong amount for a deposit I made. There are lots of errors that can and do happen. If you aren't checking each transaction, how can you possibly know if they are all correct? I will say it again. You can not assume that the bank is always right.

As a banker for nearly 20 years, this is totally correct.

[cicy33]

One thing I have noticed lately and it irks me to no end is when I get fuel the bank will show a $1 charge for like 3 days before it finally shows the actual amount.

[disneysteve]

Originally Posted by Radiance

Still hate the idea of registering every transaction manually. Maybe will serve as a shopping deterrent:

One way around this, kind of, is to stop using a debit card. I've never used one and don't plan to start. I pay everything with a credit card. That way, there is only one payment to deal with each month but that payment may cover 30 or 40 different shopping transactions and other monthly bills.

Of course, you still have to make sure the credit card statement is correct, but it makes balancing the checking account much easier since there aren't nearly as many transactions to deal with.

[cicy33]

Originally Posted by disneysteve

One way around this, kind of, is to stop using a debit card. I've never used one and don't plan to start. I pay everything with a credit card. That way, there is only one payment to deal with each month but that payment may cover 30 or 40 different shopping transactions and other monthly bills.

Of course, you still have to make sure the credit card statement is correct, but it makes balancing the checking account much easier since there aren't nearly as many transactions to deal with.

This is a good way to do it but only if one is very disciplined and of course has a credit card that has at least 1000 limit. Since you pay your bills that way I am assuming the general household spends that much. But it is too easy to just pay part of it. I know that I would be very tempted. think I will stick with my debit card.

[Radiance]

To be honest, I don't see how the credit card would be any better.

My bank shows debit charges same day, actually just a few hours later. It even shows charges "pending authorization" on a separate section.

It is only when i am forced to use the debit card as a visa that it takes up to 3 days. This is mainly in places where they dont take debit cards, which, by the way happens to me often at gas stations. It is also common in restaurants, but I need to avoid those anyway...

i dont write checks, but the checkbook I do have has duplicate, so I would be covered.

Some things I find out when checking the bank transactions online is my sunpass, it is always $20 each time it automatically replenishes and I admit I don't reconcile with the sunpass website online. I know it happens 1-2 times a month, I allocate $35 for tolls and forget about it.

cptacek, i like the basket idea.

[cicy33]

I have two checking accounts, one in north carolina and one here in illinois. my one in n. carolina shows the items really fast and the one here is sllloowww. did I mention slow??? That is why I have decided to go with a written check book. I figure I can keep track of that and then balance against the bank as things clear. For example, I wrote a check on monday to a local business. I also mailed a check monday for a cc payment (must get that thing paid off!!!) the check for the cc has already cleared!!!! the check to the local water department? Nope. and I live in a town of about 1000 people. It is really small. I don't understand that. One thing that clinched my decision to run a manual checkbook is when I wrote a check to the secretary of state for tax on my vehicle and it took over 30 days to clear. I forgot about the check, you know how that goes. so when it did clear I was just glad there was still money in the account. so now I will write everything down and hope that helps. One thing I also do now that I used to do years ago when I kept a manual checkbook was to write the check for the amount in the first column but when I deducted it I rounded to the next dollar. I used to be able to save an extra 500 a year doing that. It is amazing how often one will use their debit cards. You don't even realize it till something like that builds up. This might also help to keep a surpluss in the account so you aren't surprised by anything you might forget.

[elessar78]

Originally Posted by Radiance

To be honest, I don't see how the credit card would be any better.

My bank shows debit charges same day, actually just a few hours later. It even shows charges "pending authorization" on a separate section.

It is only when i am forced to use the debit card as a visa that it takes up to 3 days. This is mainly in places where they dont take debit cards, which, by the way happens to me often at gas stations. It is also common in restaurants, but I need to avoid those anyway...

i dont write checks, but the checkbook I do have has duplicate, so I would be covered.

Some things I find out when checking the bank transactions online is my sunpass, it is always $20 each time it automatically replenishes and I admit I don't reconcile with the sunpass website online. I know it happens 1-2 times a month, I allocate $35 for tolls and forget about it.

cptacek, i like the basket idea.

It's easier because when you reconcile your balance, the payment for the credit card is only one line item vs many small transactions with a debit card.

[disneysteve]

Originally Posted by elessar78

It's easier because when you reconcile your balance, the payment for the credit card is only one line item vs many small transactions with a debit card.

Exactly. The credit card creates just one bank transaction on one day even though it might actually represent 10 or 20 or 50 or more actual transactions. If I had to record every transaction that we put on our credit card individually in our checkbook register, that would make the whole process way more complicated because we use our credit cards constantly. Our typical monthly charges are upwards of $3,000.

[elessar78]

I think I would have more success now in learning to balance my checkbook than when I was fresh outta college. What gave me so many problems back then was that I had too many points of withdrawal: checks, atm cash withdrawals, non-member ATM fees (which varied), debit card usage, etc.

Once we pay off our last and only credit card I MAY consider going back to using a credit card for the convenience factor and the cash back.

[JustDave]

We switched to using a credit card almost exclusively, mostly because if you're going to buy something anyway, why not get the rewards for it? I will say that it's not for everyone, however. Some people spend more on credit, so if you're this type of spender, this may not work for you.

A side benefit of this is what others have mentioned - there is only one transaction versus dozens for a debit card. Previously I was updating the checkbook several times a week with new receipts.

One thing I would add, and I think this is what DS was saying, is that I "pay" all bills at the beginning of the month. Most of these are automatically withdrawn, but a few are done through a check. For every bill at the beginning of the month, I mark this bill as paid and deduct it from my checkbook and Quicken, no matter if the money comes out on the 1st or the 31st. That money is earmarked for these bills, so it can't be spent anyway -- as far as I'm concerned, that money is gone. This means you can't rely on the bank balance, since it rarely will match what's in your checkbook. It does, however, prevent me from spending money that I still technically have in the bank, but which is destined for other bills. The balance is what's written in the checkbook, not what the online balance says.

This isn't a perfect system since you will have some bills that are different every month (electric, gas, etc.) and won't know the amount until the bill arrives. In this case, you could withdraw your budgeted amount for these bills and adjust it when the bills comes, or write yourself a note to keep in your checkbook to make sure you don't spend this budgeted money.

[Radiance]

I must be missing something here, please bear with me:

[credit card] It's easier because when you reconcile your balance, the payment for the credit card is only one line item vs many small transactions with a debit card.

You still have to ensure all charges in your credit card are correct, verify each against receipts, etc. What is the difference? I think it is still the same amount of work. no?

[cptacek]

I agree Radiance. I don't get what is better about the credit card solution either

[disneysteve]

Originally Posted by Radiance

I must be missing something here, please bear with me:

You still have to ensure all charges in your credit card are correct, verify each against receipts, etc. What is the difference? I think it is still the same amount of work. no?

Yes and no. Checking the CC statement isn't a balancing process. It just take a minute or two to scan the list of charges and make sure each is right and I'm done.

Balancing the checkbook is more involved. I need to go through the statement and check off each item that has cleared in the register. Then I need to add up all of the outstanding charges and outstanding deposits. Finally, I have to do the math to make sure it all balances. The more individual transactions there are, both cleared and outstanding, the longer that process takes. If things don't balance, the more things I have to dig through and double check to find the error. Also, the more transactions on the account, the more opportunities there are for mistakes to occur in the first place.

If I find an error on a credit card statement, it doesn't impact anything else. I just call and straighten it out (can't remember the last time that occurred - it has been years). If I find an error in the checking account, it throws off all of the numbers until I get it straightened out.

I guess depending on your point of view, there isn't a big difference, but in reality, it simplifies things a lot IMO.