Insolvency Resolved 

The confession took place, as they do, at a dinner party turned late-night wine-flavored gabfest. The blonde leaned in closer, voice dropping: "I'm overdrawn -- again. It's crazy. If you knew how much I've paid in overdraft charges this year ..."

Others nodded. One whispered a four-figure amount. "It is crazy," she agreed.

None of the guests were insane, lazy or incompetent, yet most had been overdrawn before, some, like our four-figured gal, multiple times. Just as important as why otherwise cautious, sensible people engage in behavior clearly self-destructive is why banks would charge such shocking fees to begin with.

The answer to the second part isn't surprising. Banks siphon a ton of money off their customers via "courtesy" fees: financial institutions collected over $38 million in 2007 and 2008. The most significant portion stemmed from overdraft charges, which have been raised by as much as 35 percent in the past few years.

According to Mint.com, the average household spent $368 on non-sufficient funds fees in 2008. Of those, the ones who tended to go overdrawn more often squandered about $1,472 -- which is just about the sum murmured at the aforementioned dinner party. More than 50 million Americans overdrew their accounts last year; more than half of those did so more than five times in that 12-month period. The dinner guests were not exceptions; our financial system and the habits it encourages create an environment where spending more than one has -- and losing track of that spending -- is the norm.

The good news is, some better regulating kicks in between July 1 and Aug. 15, 2010. Instead of extending customers the "courtesy" of approving transactions for which funds are not actually available and charging them for that favor after the fact, account holders will have to deliberately opt in to such a system. (This will not apply to checks and recurring automatic debit card payments.) If you have a checking account, you will be notified of your option to choose overdraft "protection" with a full explanation of the fees involved. If you do nothing, you have not opted in. You must deliberately tell the bank that yes, you want to be allowed to swipe your debit card at will and deal with the fallout later. Otherwise, if your account is down to $51 and you're trying to ring up $68 worth of groceries at Wildberries, your card will be declined. Awesome! OK, not awesome -- awkward and embarrassing, really -- but sure beats a $33 slap in your overdrawn face after the fact.

But what to do between now and the government's intervention? Pull yourself up, dust yourself off, hold your chin up high and swear you'll never drink so much again. Wait, that's a totally different (but related) topic. Back to the money thing: We're looking at the new year, so what better time to take charge instead of being charged? The bank is totally not the boss of you.

So, some Money 101. This is advice akin to saying if you want to lose weight, eat less and exercise more. In other words, obvious. But sometimes success is a matter of hearing truths repeated until they sink in and affect behavior for the better.

One truth we should review before we get into the nuts-and-bolts: You are not your bank account. No matter how overdrawn, you are not your bank account. You are how you treat people and what kind of joy you bring into the world. Your bank account has no say in that, so don't let it trick you into thinking it does. Remember, even if you totally screwed up because Christmas suckered you into overspending or you're hurting because your hours were cut and you couldn't even do Christmas, you are not your bank account.

OK. Now that we're clear on that, do this: Stop carrying plastic. Leave your credit and debit cards at home. Only bring what cash you can afford to spend. You cannot go overdrawn or off your budget if you remove the means by which that would happen. You spend more when a card is your primary method of payment. Use cash.

How do you know how much cash to carry?

A couple days before payday -- this is crucial, doing this before your paycheck arrives, so you know exactly where the money is supposed to go and don't accidentally spend it all first -- list all the bills due.

Factor in gas, groceries, other expenses and a miscellaneous cushion of 10 percent. If that total exceeds what you're bringing in, figure out what you can delay, cut back on, do completely without.

If by some miracle you have extra funds, use them to cushion your account against unexpected blows.

Set up online payments for the bills and, after you get paid, take out the cash amount to cover groceries, gas and those other non-bill expenses.

As long as the math is right and you don't forget some automatic charge that sends your account into a spiral, this system works.

Obviously, advanced scenarios exist. But as we move into a new year, new decade and new non-overdrafting way of life -- I have plenty of places I'd rather donate $1,472 per year than my bank, sweet as the tellers are -- let's start small, take pride in each week of success and shake our heads about when we were so crazy we let the bank do bad things to us!

I asked folks what they hoped for, money-wise, in 2010:

"To have my student loan debt erased."

"I'm going realistic. I want to work more for less money."

"Bring down the monthly expenses and get out of debt."

"To be the first millionaire to graduate from my graduate university."

"I want to buy a house!"

"To be able to rest in knowing that I won't stop breathing if my funds are low."

"That one day ... in all reality ... money would not be a prerequisite for happiness."

"Going to renegotiate mortgage and spend less save MORE!"

"Get famous. Money follows!"

"Pay off debt."

I hope 2010 ushers in an era of fiscal maturity. I hope to remember that my financial worth and my personal worth are two totally different things. You? Go to northcoastjournal.com and post your comments, advice or tales of economic adventure.