Nickel and Diming Myself
As I was putting together this post, my blog buddy Miser Mom published a lovely piece about the mathematical theory behind the accumulation of small changes with big results. I’m not a math geek, but this inspired me. Partially because it’s what I was writing about at the moment, partially because it totally validates in a very real math-y way all these weird idiosyncratic habits I’ve developed. Tips and trick that probably should have been included in my 25 Things. They weren’t. They are small, yet effective ways I trick myself into stashing meager sums of money. Meager sums of money, which thankfully add up. It’s very easy to delude yourself into putting away a few bucks here and there. It’s when I go back and track those dollar here – dollar there techniques I’m shocked at how much I’ve socked away.
If you’re maybe a little bit OCD like me. You can trick yourself into playing all sorts of games.
Rounding, up and down. Deposits are rounded down to the nearest dollar. Expenditures are rounded up. Not only does this streamline entries into my trusty Financial Empire spreadsheet, it creates a natural cushion. I don’t fret about the occasional missed expense. Every once in a while, I balance my checking account to the ‘true balance’ (or somewhere close to it) and put a portion of the cushion into savings proper.
Saving change and singles. Nothing new here, except I’m vehement about my collection. I pay with the largest bill possible to maximize the amount of change I’ll get back. I never pay with change. Never. I’ve also been known to ‘liberate’ under appreciated change from co-workers. Hey, if they are going to neglect those pennies, they don’t deserve them! I got a handy dandy change roller for Christmas years ago, and I’m proud to roll my own. I hoard the rolled change along with other small cash windfalls and deposit it once it hits a respectable number. Usually about $20.
Dealing in whole numbers. This is where the OCD comes in. I’m a little strange about keeping account balances at nice pretty numbers. There’s no $1,178.12. Yuck! $1200 is so much nicer and only $21.88 away. Of course, I can afford to put away another $21.88. So, after the monthly interest payments hit my savings accounts, when the account balances are all kattywampas, I make a deposit to get to the nearest $100 or $50 or even $25. Doesn’t really matter, just a nice pretty round number.
I do the same thing with the balance on the Big Fat Mortgage. Once the monthly payment applies, I make another small principle payment to get it down to an agreeable number.
Conversely, if the balance on my checking register is left at an odd number after the weeks spending, I stash that couple bucks. If I have $323, I take $3 and put it towards the cushion, or the mortgage, or the Emergency Fund. Most of the time, that then leaves those accounts at ugly numbers, which starts the ugly number elimination all over again. Do you see how my affinity for whole number starts to work to my advantage?
Interest trickle down. Big fan of Targeted Savings accounts here. We have one currently collecting dust for travel, and much more robust Vet and Garden accounts. These are never going to be big balance accounts. That’s not their purpose in life. Their purpose is to protect our long term savings. They don’t make much interest, and what interest they do make doesn’t really do them any favors. I roll all monthly interest from any miscellaneous accounts into our long term savings. Again, it’s not much, but it’s another deposit. Even better, one that doesn’t cost me a thing.
I know it. I’m kinda crazy. Not only have I cultivated these habits, I actually look forward to doing them. I’m constantly upsetting my own apple cart, for the pleasure of setting it right again with small payments. It’s one of my ways of actively participating in my finances. These habits don’t make up the sum total of my monthly savings. However, they nicely supplement the budgeted amount, and they do add up over time. Epsilon says so.