Tuesday, October 14, 2014

A Credit Card In Motion Tends to Stay in Motion

(Image: One of my new toys tools for getting work done. Being able to easily put in finish nails is really ,really nice. Being able to powerfully blow air around is really nice too.)

According to TeacherTech.Rice.edu, Newton's 1st law of physics states:
"An object at rest will remain at rest unless acted on by an unbalanced force. An object in motion continues in motion with the same speed and in the same direction unless acted upon by an unbalanced force. This law is often called "the law of inertia". This means that there is a natural tendency of objects to keep on doing what they're doing. All objects resist changes in their state of motion. In the absence of an unbalanced force, an object in motion will maintain this state of motion."
Pretty profound and clearly had a massive impact on our understanding of physics. I also think it goes beyond just objects and is just as true with human behavior. In physics it's called inertia, but with behavior its called habits. This make intuitive sense: we keep doing what we're doing unless something external stops us. And even when something tries to change us, we fight it.

But this last week I noticed the law of inertia in my life in a different way: how I spend money.

Normally I'm pretty frugal on my personal spending. Some would kindly point out I'm probably too cheap. Normally that's true. I regularly go an entire week without spending any money (I pay off our credit cards weekly, so I know when it's still a zero balance). What's strange is that it actually feels weird to pay for something after holding a "streak" that long of not pulling out your card.

However, this last month has been different. With the apartment project underway I've been regularly spending money. And since there are 11 units, most of my spending has had an extra "0" behind it. I'm fine with the expenses because I have a very clear path of how I'm going to earn it back, but I'm still spending money regularly.

But the most interesting part is that I've noticed I'm ALSO spending more money on personal items. Since I track my spending, I can clearly see I'm outside my normal levels. Even factoring for planned expenses, like new iPhones, our spending is 25% higher than normal. Yikes!

Digging deeper, a majority of that is food related. Not surprisingly, when we get busy we tend to eat out more. It also don't help that lately I'm working across the street from a pizza parlor that seems to purposefully pipe in fresh cooked pizza smells into my window around 4pm. Yum! But I've also noticed we have a couple more gadgets hanging around the house.

For each new gadget I have a really good reason for why we bought it, but combined they add up to a significant amount of extra spending. Lots of these items we've wanted for a while (new washer/dryer, new thermostat, new phones, plus a few more), but we've held off. Now all of the sudden we're buying everything. Is it just the timing of when things break? Partially. But mostly it's because we're in the spending mode, and so it's easy to break down and buy the item: "A credit card in motion tends to stay in motion."

How to Break the Cycle
Ideally I'd make the decision to go on a spending fast. I would literally leave my cards at home for 3 days and stop spending money. Ideally. Unfortunately, that's not an option when you're in the middle of a large rehab project. Just leaving my personal cards at home wouldn't help because the act of spending money is still occurring. Another option is to go to cash only for personal spending, which will also slow it down.

My hope is that simply identifying the inertia will slow me down some. I'm also looking for triggers that make my "spendy sense" tingle. If I know that pizza smells are going to start wafting my way at 4pm, I should eat some nuts at 3:30 to reduce my hunger a little bit. It might also look like making formal shopping a list ahead of time and agreeing with Jessi that we'll stick to the list (we do that for food, but that needs to be done for Home Depot as well). When we see something we "must" have, we'll add it to the list of the next shopping trip. When the next shopping trip comes, we can decided if it's still something we must have.

The point is to change something, to put an "unbalanced force" in a different direction. I know eventually this project will end and my spending inertia will slow down naturally. Since I still have at least another month of this project, my goal will be to start getting my personal spending under control earlier.

Finally, if I worked for Mint, it would be fascinating to look at the data and see if large purchases are followed by a temporary bump in unrelated spending. Am I weird, or does Netwon's first law expand to spending as well?

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