Okay. You now have a checking account. If you have decent credit, you might even have one with bells and whistles, such as interest, low fees, overdraft protection, or some combination of the above. The next step is learning how to use it to minimize charges and prevent returned (“bounced”) checks.

The first step is to know the rules, provisions, and charges that go with your account. Yeah, this means, in plain English, READ THE DAMNED FINE PRINT! Seriously. It’s how you will know how long it will take for your deposits to become available, what fees your bank or credit union will charge for various services, whether or not you need to maintain a minimum balance and how much it is, what penalties will be assessed for returned checks or being overdrawn, etc. For example, my credit union has an online bill-pay service that is free as long as you schedule at least one payment per month through it. For any month you do not do so, you are assessed a $5.00 service charge.

Your next step is even more self-evident: Do not write a check unless the funds to cover it are both IN YOUR ACCOUNT and AVAILABLE FOR USE. In 1987, Congress passed The Expedited Funds Availability Act, which sets rules as to how long banks may hold your deposit before clearing it for your use; in 2003, they passed The Check Clearing for the 21st Century Act, which effectively did away with the float (the delay between when a check is presented for deposit by a payee and when the money is actually deducted from your account).

Further, at the end of the day some banks process debits to your account before credits, so if your deposit and a check written against it hit your bank the same day, your check might be returned or paid against uncleared funds. Regardless of whether the check is returned or paid, you will be charged. My roommate’s bank charges $5.00 less if it pays the item than if it returns it, but those charges still mount up. Also, if only part of your deposit is available, or if your deposit was made after whatever your bank declares to be end of day for deposits, the same problems may occur. Not only that, but they may cause shortfalls in your account, creating a nasty snowball effect (of more checks bouncing and more charges levied against your account) that can rapidly become an avalanche!

Next, you need to know WHO is going to debit your account directly, HOW MUCH they will take, and WHEN they will take it. This means that any time you set up a payment plan wherein a third party (collection agency, phone company, Internet loan shark, etc.) will debit your account directly, you must not only know how much they are supposed to take, and when they will do so, but you must follow up by checking your account each time to ensure that only the agreed-upon amount was taken. Further – and this seems to be where many people have problems – you must record each of these transactions in your check register. If you don’t, you will neither have an accurate picture of what is in your account at any moment, nor be able to balance your checkbook.

As you can see, maintaining a checking account requires nothing more than common sense and consistent record-keeping. Once you have acquired those habits, balancing your checkbook, which I will cover in the next part of this series, is easy.

One of the most important tools for getting yourself out of debt is a continually balanced checkbook. (Please note that I did not say a bounteous checking account, although that helps!) This requires that you actually have a checking account, or develop a way to function without one.

For many of you, having a checking account is something you take for granted. However, there are those of us who – for one reason or another – have not only lost our checking accounts, but have been reported to ChexSystems (the banking equivalent of TransUnion, Equifax and Experian). For us, acquiring a checking account becomes an exercise of the same approximate ease as finding the Holy Grail.

For those of us in this position, there are two alternatives (which are not, actually, mutually exclusive).

First, you can develop ways to survive without a checking account. This can take some creativity on your part, but here are some things I did to survive without having to continually pay out fees to pay things.

• You can pay to buy money orders for everything. The advantage: you will have a receipt for your payments. The disadvantage: you will pay anywhere from $.75 to $3.00 for a money order. These fees mount up very quickly.

• You can use an agency to cash your paychecks. The advantage: if you have a government or corporate paycheck, this will give you quick easy access to your money. The disadvantages: check cashing facilities ALWAYS take a percentage of your check as a fee. For my checks, which were in the $560 range, this meant I was giving the check cashing facility $7-8 per check. Again, these fees mount up. Also, these places will only cash certain types of checks. If a friend offers to help you out, for example, you will not be able to cash his check. Further, these places often have time limits as to how long you can hold a check before cashing it. Most will not honor a check more than thirty days after the date it was issued.

• You can ask a friend to cash your paychecks and other checks you receive. The advantage: no fee. The disadvantages: your friend will know what your income is. Also, unless you have an exceptionally supportive friend, he or she may get tired of doing you this favor. Further, his or her bank might not want to take a third-party check.

• You can ask a friend to write checks for you. The advantage: no fee. The disadvantages: you will pretty much need to have the money in hand to give to your friend when asking (or at least have a definite date when you will put the cash in his or her hand). And, as above, your friend may tire of having to keep writing checks for you.

While you are doing the above, you should be researching the second alternative: acquiring a new checking account. First, there is an interesting article here that you should read. The author has been through the process and has a good idea of what you are up against. The main thing to remember is to avoid any site that wants to sell you a list. The lists are on the Web for free. A Google search on “ChexSystems victims” provided more than ten pages of resources.

If all else fails, there are a ton of websites that will sell you the lists, but they tend to ask $50 to $100 for a list. Again, since you can – with a bit of patience – find the information yourself, I don’t recommend this.

What I did was to look for banks and credit unions in my area. I found that all the banks did use either ChexSystems or Telecheck, but that many of the local credit unions did not. I also found that some banks would open a savings account without using ChexSystems, but these were the exceptions rather than the rule. Credit unions, I found, often had a set of idiosyncratic requirements for opening accounts, but were much more available to folks with problems (for example, the credit union I’m now using only required that I either live or work in Brooklyn, New York, and I do both). Since my job and home are some distance from the credit union, I filled out a form at work to deposit my paycheck directly, and they do so free of charge.

Okay. You have now (hopefully) acquired a new checking account. The next step is to keep that account balanced and functioning in a way that maximizes your money. I will cover that in the next installment of this series.

Today, I filled out my April 2008 report at NetworthIQ. I have done so sporadically since July 2007. There is some good news, too: Since I last filled out a report in September 2007, I have reduced my debt by $821. Okay, you may say it’s not a lot, but on a salary of under $20,000/ann., I am pretty proud of this.

Further, while my net worth is still negative, it is less so than when I started: Back in July 2007, I owed $59,704; as of this report, I owe $41,122. This is a reduction of $18,582. Again, not bad on a salary of less than $20,000/ann.

Granted, to do this, I have had to get creative. I sold things I was no longer using, switched to the library instead of buying books, started taking surveys online for cash, started taking advantage of free offers, and cutting down substantially on eating out.

Now, I know I still have a long way to go. Next steps are getting my bicycle checked out by a friend, and getting my cycling legs back, so I can cut down on transit spending (not to mention improving my health), paying off that last credit card, increasing my emergency fund, and continuing to figure out ways to generate extra income.

First, let me apologize for the unexpected hiatus, and commit to not having that happen again. I had some medical issues which have been (mostly) resolved.

The good news is that I cleaned up another credit card on Tuesday! I cannot tell you how happy that makes me! I have one card with a small balance (under $120), some personal loans, and my student loans to pay off; then I will finally be debt-free for the first time in my adult life!

I’m not kidding myself here. These last bits will not be easy to do; the personal loans come to about $30,000, as do the student loans, but I intend to use the wonderful snowflake method described at I’ve Paid for this Twice Already to attack them.

Fortunately, I had consolidated my student loans just before the government tightened up on them in 2005 and, when I ended up in a job that paid one-third of what my former job did, I was able to put the consolidated loans into forbearance. I don’t recommend doing this because, while you are not paying on the loans, interest continues to accrue, but it was the best choice I could make at the time.

So, my current plan (once that last credit card is cleared up) is to pay down as many of my personal debts as possible before the student loans come out of forbearance at the end of this year, alternating loan payments with emergency fund deposits. Realistically, this means it will be about three and a half years to four years before I will be completely debt-free. Given that I have spent the last thirty-five years in debt of varying sorts, I think I can wait to finish the process.