This is the true story of a young woman who was just overwhelmed by her expenses. It started with just one $40 check.  Bella had two bank accounts at different banks, and both were at zero. She had no cash.  So, she deposited a $40 check into her ABC bank account, and withdrew the $40 in cash. She knew it would take 2 days for it to clear out of her XYZ bank account, where there wasn’t money to cover it. But she would deposit a check into that one to cover the $40, drawn on another account when a deposit went in.

Kiting is a Criminal Offense

Bella was using the two days in between banks as a ‘float’. Writing checks back and forth on accounts that have no money, to cover other accounts that have no money is called kiting.  Taking out cash she didn’t have meant she was living beyond her means. Some people do this with their credit cards too – they take a cash advance from one to make a payment on the other.

Bella had developed several illnesses, and was required to buy medication not fully covered by her insurance. She also had a passion for tight black pencil skirts, high heels, and red lipstick. The kiting continued, except it escalated and the checks got larger.  When her pay check went in, it had to cover rent and food, but also the checks written for cash that hadn’t yet cleared – $40 here, $60 there.

Delaying the Inevitable

She was eventually caught by the branch manager who reviewed all employee statements. Kiting by a bank employee is a firing offense and Bella lost her ability to be bonded. That meant she couldn’t pursue any career where touching money was involved.

Living beyond our means always catches up to us. Here’s what living beyond our means looks like:

• Credit cards have a balance all the time, not just occasionally.
• Credit card balances are increasing. More cash has to go to minimum payments.
• Car loans or home mortgages are refinanced, and the equity (the amount of loan paid off) is taken out to use for living expenses, or make credit card payments.
• Bill payments are delayed for a few months due to lack of cash flow.

Debt grows. More cash flow goes to paying debt instead of living life and having joy. Dealing with these symptoms early means more flexibility in solutions. If you are in a situation like this, give us a call and we’ll help you sort out the options to get out of debt.

Your Personal Money Coach

Carrie

Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Behavioral Cents, LLC and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

Carrie Rattle is a Master Money Coach & Founder of Behavioral Cents. She is a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. With a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live their own dreams. We work in a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation. Thoughts always welcome: carrierattle@behavioralcents.com