Comments on: BVC #10 – Psychological Money Games

By: princess_peas

princess_peas — Mon, 01 Jun 2009 23:47:36 +0000

As a trainee accountant, my current best idea is simply writing all my spending down and keeping a proper cash book the way I would if my personal money was a small business. Being quite new to getting my finances in order, too, what I am also doing is to set a weekly spending limit for cash, but then the following week, reducing it by some and trying to stick to the reduced amount. I am trying to get the amount of money I need down to the lowest level, but although I could go a week of zero spending, or at a real push, two, if it goes over, it will then go really over, is my concern.
But anyway. The other thing is, I like my cash at home, in a jam jar on a prominent shelf. This is savings, I might add. I want to see the jar getting fuller, more than I want to see increases in numbers on a statement. If my jar gets full, or I reach a big figure (eg. £50 or even £20) in the jar, then it will go into the bank.
I tend to have only one day a week running errands – saves on busfare – I take a list that I assemble during the week, and sometimes I tick things off that I don’t buy, because I decide I don’t need them. That’s a great feeling. But on all the other days, I take the money out of my purse, apart from what I am actually going to need on that day (or the next day if I do it at night), so that I don’t have the opportunity to impulse spend. The place I put it is on the same shelf as my savings jar, so I think to myself, “if I can leave that in there all week then maybe I can put a NOTE in the savings jar this week!!” (Being british, our lowest note is £5.) I haven’t managed it yet, but maybe I will this week!

Maureen, I really like your idea too, and seeing as i especially hate pink highlighter above all the other colours, maybe using one will help me even more.

Sean, I think that is a really great idea, but my only problem is, if there is only a small amount of discretionary money available in the budget anyway, I would feel cheated if I couldn’t ‘earn’ more. I would seriously do them more times than was necessary as well.

By: Splendor

Splendor — Wed, 20 May 2009 18:35:52 +0000

Thank you! I love the 100 boxes idea!

By: Christine

Christine — Fri, 15 May 2009 21:00:34 +0000

I think the debt snowball especially works for people whose debt is spread out over many credit cards. We juggle a half-dozen cards now, which just increases the chance that we’ll make a mistake or one of the cards will do something weird to us. So we are paying off the lower-balance cards first because it will simplify our lives more quickly and make it easier to be financially responsible.

By: sugee

sugee — Fri, 08 May 2009 01:13:57 +0000

Excellent post! Great ideas.

By: Wizard Prang

Wizard Prang — Wed, 06 May 2009 21:28:22 +0000

Well said. I agree with Dave Ramsey for the most part, but his “no one made a million with points” argument is a straw man. The correct question is “how many millionaires used Credit Cards?”

By: Wizard Prang

Wizard Prang — Wed, 06 May 2009 21:25:27 +0000

I take that a stage further. My salary is paid into a savings account and I transfer out what I need to my checking account. That has two benefits: first it saves me from “Yippee-I’m-RICH!” syndrome, and secondly, and more importantly, I am no longer dependent on a paycheck, to the point where I sometimes only realize I got paid when I get an e-mail from the bank..!

Some months ago there was a payroll SNAFU, and someone called us to let us know that we would get paid two days late. She was _really_ surprised when I said “no problem”.

By: Joyful Abode

Joyful Abode — Tue, 05 May 2009 23:55:54 +0000

Awesome video! I just “discovered” your blog today via The Simple Dollar and I’m subscribing.

I wanted to tell you about my money game… People tend to argue over whether it’s better to pay yourself first or pay yourself last. I do both; I pay myself first AND last.

I have a large budgeted amount that goes into savings at the beginning of each month, but as the end of the month nears, I go into my online banking, make sure everything is reconciled, credit card is paid off, and bills are paid, and transfer the remainder into savings before the next paycheck is deposited.

It always gives me an extra boost to get to transfer MORE than our budgeted amount into savings… the “extra” comes from not spending as much on groceries or gas or other estimated items.

By: Maureen

Maureen — Tue, 05 May 2009 19:19:31 +0000

I really enjoyed that video and am a strong believer in the power of psychological money games to combat spending. It is so much about a psychological state than how much you have. In response I’d like to add a tip. I’ve been tracking since I was 16 (a turning point when I decided to take control) and four years on I’ve made huge mistakes, miscalculations, seen the effect of upsetting events on my spending but I’ve also learnt a lot about what keeps me tracking. I had no name before but I will name this the: “Less highlighter, the better”

My trick is to go through as I track every penny I’ve spent and categorise. Instantly I can see what I’ve spent on food, going out and transport. However it’s not always easy on the eye to see the real figures or categories so to make it easier I highlight in bright pink that which was an unnecessary expenditure e.g. a takeaway, coffee to go, new dress (I have plenty of clothes) etc. It may seem silly but as I flick through my spending book I can see blocks of pink and blocks of normal biro. The less pink I see the better I feel about the control that I decided to take. It’s psychologically encouraging to see little pink when the month has gone by.

Also highlighting is reminding you that you just bought something unnecessary and yes you must treat yourself now and again but with this system you can make sure you don’t go overboard.

I think this is effective because when I studied psychology at a-levels I remember always being told to make my notes colourful and to actively use coloured pens. The brain doesn’t like looking at a page of black biro but it’s a whole lot more interesting to look at a rainbow filled page! (for some!)

Good advertisement. Now I’m going to watch your video on emergency funds!

By: Shelley

Shelley — Tue, 05 May 2009 13:58:35 +0000

I follow the emotional logic of each of your ideas — the snowball, the no spend days (sometimes procrastination has its benefits!) and the 100 boxes. I don’t have any debts now and most of my days are no spenders, since I’ve retired. My game is to meet my needs from what I already have. For example, I try to use up the food in a part of the freezer before buying any more; make Christmas gifts from the fabric I have in my stash; make birthday cards instead of buying them. I read blogs instead of buying magazines. Having time to use some creative ideas is one of the many long range blessings of living frugally. Keep up the great work!

By: Pinyo

Pinyo — Mon, 04 May 2009 20:55:36 +0000

Awesome video! I love the three games, especially the 100 boxes and no spend days.

By: barry

barry — Sat, 02 May 2009 23:08:42 +0000

Debt does not have a “one size fits all” solution, unfortunately.

I agree with ALL of the games you outlined, as they are all helpful tools. If you feel that you’re wasting your money using Ramseys’ “Debt Snowball”, then don’t do it! But don’t get discouraged and quit trying either!

Unlike many in the “live debt free camp”, I regularly use “rewards credit cards”. I do absolutely nothing new or exciting with my cards. I buy nothing that I wouldn’t have paid cash for. I simply take the 1.5-5% cash back and deposit it into my high rate checking account as soon as I can. If I’d “cut up my cards”, I wouldn’t have this opportunity.

No, no one has ever made a million dollard from the cash back on their cards. But it’s “Free Money”…more or less.

By: SJ

SJ — Sat, 02 May 2009 08:01:03 +0000

Getting into high-rate debt is *rarely* rationally or mathematically optimal, i.e. look @ credit card debts eww…

That’s why I think it’s an acceptable idea, people are irrational getting into debt so use irrational tricks to get out.

If the rates are low and about the same, then the delta shouldn’t be that bad…

By: Jennifer @ Money Saver 101

Jennifer @ Money Saver 101 — Thu, 30 Apr 2009 21:44:57 +0000

I know, I know. I do this too. It’s awful. I need to keep better records, in all honesty. How I manage to save so much money is beyond me. If I can really organize better, I can’t imagine how much more I could be putting into savings!

By: Mike

Mike — Thu, 30 Apr 2009 13:31:52 +0000

Hi Jim,

Good video. It’s true; So often the mental game is such a big part of savings. By breaking things down to a level we can relate to, we gain momentum and hence, make headway.

Mike O’Sullivan

By: Josh

Josh — Thu, 30 Apr 2009 04:50:03 +0000

Re. the Debt Snowball: It’s true that it’s not mathematically optimal if you assume that you will be spending the same amount on debt repayment over the term of all the debts, but if you pay the smaller debts off first, the money it frees up gives you more flexibility inin paying off the remaining debts if your income unexpectedly goes down.