Money Mind Freak

I am one of those people who deliberately sets their alarm clock wrong. Even though I know it's set ten minutes fast, I get a jolt every morning when I look at it and I think Oh crap, it's after 8! I'm going to be late! Shiner makes fun of me for this. He doesn't understand how I could really be tricking myself, since after all I'm the one who deliberately set the clock wrong. And it doesn't make sense. But even so, that trick successfully taps into the reptilian part of my brain that runs on instinct, and instinct is ultimately what prods me out of bed in the morning.

It occurred to me that I do the same thing when it comes to finances. I do lots of things every day in how I manage my money that aren't anything more than mind games, but those games keep me setting one foot in front of the other. A few examples:

I pay myself first. This one is an oldie but a goodie. I direct deposit a portion of every paycheck into an HSBC account in which I track separate sub-accounts for emergency savings, wedding savings, and vacation savings. My contributions to my Roth 401(k) work the same way. You can't spend what you can't see.

I keep my debt at a nice, round number. Every month I make at least three payments to my home equity loan: I make my regular minimum payment, obviously. And I make a second principal-only payment of $500. Then, after both of those payments have cleared, I make an extra principal payment of whatever amount will get me down to a multiple of $25. For example, at the end of December I made my regular minimum payment and my regular principal-only payment, ending with a balance of $21,662.80. Then, applying the snowflake-meets-OCD principle, I sent another $12.80 off toward that debt. Ta-da! $21,650 is so much more aesthetically pleasing than $21,662,80. And the ratchet tightens down just a little bit more.

I operate my checking account on a zero-balance principle. Sometimes I think of this as paying myself first and last. This has two parts. First, I control the amount of money I put into my checking account. Rather than setting my savings goals and letting myself spend everything else, I set my spending targets and try to save everything else. Both of those approaches are forms of budgeting, but withe different frames. I don't live on a miserly amount, but I do create something like an artificial sense of scarcity, which keeps me from feeling like I can spend it because I've got it. Second, at the end of each month, just before my next paycheck hits, I sweep what's left in my checking account into savings or debt repayment. This keeps me always putting "extra" money toward one goal or another. And, because I don't let myself "roll over" what's left from the end of my January paycheck into February, and the roll over February's paycheck into March, my monthly spending ceiling stays constant from month to month rather than creeping upwards.

I buy myself lunch. To save money, I pack my lunch most days. But I realized that unless I was careful about it, I didn't really end up spending less money in the aggregate, because I would just spend that $5 on something else rather than putting it in savings or toward debt. So I started marking on my day planner when I brought my lunch or had it comped. At the end of each week or two, I transferred the money I saved--the number of days I didn't buy a lunch times $5 saved per meal--to pay down my home equity loan. Those savings dont get "lost" anymore.

So what head games do you play with money to keep yourself on the straight and narrow?