Rewards, or keeping the momentum
Dec. 18th, 2009 09:49 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jamethiel posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
actyourwageI'm going to state a concept that you will find in every single decent finance blog/book EVER.
To save money, your income must exceed your expenditure.
That's it. There's no magic formula, no "Do this! You will become rich overnight!" How to do that, though? Financial management is as much about psychology as it is about mathematics.
The trouble is, buying stuff makes you feel good. That gorgeous plasma screen, that stack of DVDs. I'm sure you can all think of stuff that you bought that you didn't really need that you bought because you wanted them. And there's nothing wrong with that.
In moderation. But if you're anything like me, the instant payoff of feeling good outweighed longterm considerations. Like, oh "How am I going to pay for this." It all went on the credit card, which, at 18% interest just crept higher and higher. So in the five years that I had my credit card, I got $3500 in debt.
Finally, I had a wakeup call. I got a higher paid job. After about a year, I went "... I should really do something about this. And where am I going with my life?" I set some goals. I've met some of the medium term ones (paying back my mother), I've knocked down one of my longterm goals to becoming a medium term goal. I've at least started one of my longterm goals.
When you're in debt that you cannot pay off at once, when you're saving towards a big target that you honestly can't imagine ever meeting, how do you tackle it? How do you keep motivated?
In the last post, I talked about breaking it down into tiny steps to tackle it. In this post, I'm going to talk about different methods for keeping motivated.
The first thing is: we are not rats. In the 1950's, James Olds and Peter Milner experimented on rats. They found that a rat with electrodes implanted in the pleasure centre of its brain would repeatedly press a button to stimulate the pleasure centre, ignoring all other needs, including feeding, drinking and sex.
It's a horrific experiment that stuck with me. And last year I came to an epiphany: whenever I spent money on DVDs and then had to live on ramen or skip lunch, I was doing exactly what those rats did. But I have a choice: I am in control of myself.
I stopped the behaviour that was counter-productive to my long-term goals. I still leave myself a little bit of play money because everything is just grim without it. But I stopped getting in more debt. I calculated what I needed to do to get out of debt. But it's really hard. I'm more than meeting my financial obligations. Some months, it is incredibly hard to say "I will pay almost 5 times the minimum payment on my car because I want to get out of debt".
I know that the minimum repayment is calculated to get the credit card company as much as they can. But knowing that doesn't make me transfer that money onto my credit card.
So I'm going to put down a couple of things that help me:
Routine
In Australia, interest is compounded daily and charged monthly. So paying off the card as soon as I get paid makes sense. But for people whose interest is compounded monthly, it makes no financial sense to pay the payment you calculated onto your card as soon as you get paid.
It does make psychological sense, though. It really depends on the individual. I have to pay the money as soon as I get paid because my impulse control is poor. I'll think "$20 doesn't matter..." and I end up paying half what I've calculated I need to. For other people, though, they need to make the payment at the end of the month because otherwise they will run out of money and put more charges on the card.
Make your routine work for you. Stop accumulating debt--my credit card is currently frozen in a block of water.
Then try various things. I pay my credit card as soon as I get paid. It might be helpful to you to transfer it to somewhere you can't get at it and then transfer it back before the payment is due. Or maybe you wait until after you've done your weekly shop and then pay it.
Whatever you do, do it at a defined time/place. Stick to it. Give yourself a mental pat on the back when it's done. Routine really does help.
Rewards
Remember that rat brain I talked about before? You can make it for you as well as against you.
Being a Goddamn Grownup about money is hard. Give yourself a pat on the back. Honestly, that's what this community is for. For us to get encouragement about achieving our goals. Feel absolutely free to post "I have reduced my debt by (x) amount!" or "I made a plan and I have STUCK TO IT FOR A MONTH!" We'll congratulate you, because we know how hard it is!
For more concrete things, you can give yourself a reward. But not a reward that costs a lot, and make sure you save it for times when you really did do good, otherwise it will lose all it's meaning.
For myself, rewards are:
Having a long bath and giving my skin an honey and oatmeal facemask.
Having a pot of tea and some biscuits and sitting down for an hour.
Going out to a local cafe and having a cup of coffee.
Giving myself a day to do whatever I want, with no time constraints and nowhere I have to be.
Getting a friend to give me a back massage.
Updating my spreadsheet and watching that percentage of debt paid creep up.
These things are tiny. But they really do help me.
What are your ideas for rewards?
To save money, your income must exceed your expenditure.
That's it. There's no magic formula, no "Do this! You will become rich overnight!" How to do that, though? Financial management is as much about psychology as it is about mathematics.
The trouble is, buying stuff makes you feel good. That gorgeous plasma screen, that stack of DVDs. I'm sure you can all think of stuff that you bought that you didn't really need that you bought because you wanted them. And there's nothing wrong with that.
In moderation. But if you're anything like me, the instant payoff of feeling good outweighed longterm considerations. Like, oh "How am I going to pay for this." It all went on the credit card, which, at 18% interest just crept higher and higher. So in the five years that I had my credit card, I got $3500 in debt.
Finally, I had a wakeup call. I got a higher paid job. After about a year, I went "... I should really do something about this. And where am I going with my life?" I set some goals. I've met some of the medium term ones (paying back my mother), I've knocked down one of my longterm goals to becoming a medium term goal. I've at least started one of my longterm goals.
When you're in debt that you cannot pay off at once, when you're saving towards a big target that you honestly can't imagine ever meeting, how do you tackle it? How do you keep motivated?
In the last post, I talked about breaking it down into tiny steps to tackle it. In this post, I'm going to talk about different methods for keeping motivated.
The first thing is: we are not rats. In the 1950's, James Olds and Peter Milner experimented on rats. They found that a rat with electrodes implanted in the pleasure centre of its brain would repeatedly press a button to stimulate the pleasure centre, ignoring all other needs, including feeding, drinking and sex.
It's a horrific experiment that stuck with me. And last year I came to an epiphany: whenever I spent money on DVDs and then had to live on ramen or skip lunch, I was doing exactly what those rats did. But I have a choice: I am in control of myself.
I stopped the behaviour that was counter-productive to my long-term goals. I still leave myself a little bit of play money because everything is just grim without it. But I stopped getting in more debt. I calculated what I needed to do to get out of debt. But it's really hard. I'm more than meeting my financial obligations. Some months, it is incredibly hard to say "I will pay almost 5 times the minimum payment on my car because I want to get out of debt".
I know that the minimum repayment is calculated to get the credit card company as much as they can. But knowing that doesn't make me transfer that money onto my credit card.
So I'm going to put down a couple of things that help me:
Routine
In Australia, interest is compounded daily and charged monthly. So paying off the card as soon as I get paid makes sense. But for people whose interest is compounded monthly, it makes no financial sense to pay the payment you calculated onto your card as soon as you get paid.
It does make psychological sense, though. It really depends on the individual. I have to pay the money as soon as I get paid because my impulse control is poor. I'll think "$20 doesn't matter..." and I end up paying half what I've calculated I need to. For other people, though, they need to make the payment at the end of the month because otherwise they will run out of money and put more charges on the card.
Make your routine work for you. Stop accumulating debt--my credit card is currently frozen in a block of water.
Then try various things. I pay my credit card as soon as I get paid. It might be helpful to you to transfer it to somewhere you can't get at it and then transfer it back before the payment is due. Or maybe you wait until after you've done your weekly shop and then pay it.
Whatever you do, do it at a defined time/place. Stick to it. Give yourself a mental pat on the back when it's done. Routine really does help.
Rewards
Remember that rat brain I talked about before? You can make it for you as well as against you.
Being a Goddamn Grownup about money is hard. Give yourself a pat on the back. Honestly, that's what this community is for. For us to get encouragement about achieving our goals. Feel absolutely free to post "I have reduced my debt by (x) amount!" or "I made a plan and I have STUCK TO IT FOR A MONTH!" We'll congratulate you, because we know how hard it is!
For more concrete things, you can give yourself a reward. But not a reward that costs a lot, and make sure you save it for times when you really did do good, otherwise it will lose all it's meaning.
For myself, rewards are:
Having a long bath and giving my skin an honey and oatmeal facemask.
Having a pot of tea and some biscuits and sitting down for an hour.
Going out to a local cafe and having a cup of coffee.
Giving myself a day to do whatever I want, with no time constraints and nowhere I have to be.
Getting a friend to give me a back massage.
Updating my spreadsheet and watching that percentage of debt paid creep up.
These things are tiny. But they really do help me.
What are your ideas for rewards?