The Graham Cracker Effect

If you’re anything like me, the more you have your grubby hands all over your money, the more likely that money will find it’s way to Amazon.com or BestBuy or Target.  So the goal should be to stop “touching” it so darn much, and activate a sort of financial cruise control, if you will.

When we started really putting our savings into overdrive (yes, I’m trying to use as many car metaphors as I can in this post), we started out with a whole lot of manual transferring and moving (there I go again).  Payday would come and I would see that big juicy number in our account.  But in the back of my mind, I knew that number was about to get much smaller.  I still had to transfer to all of our different investment accounts.

No matter how motivated you are to put money away, there’s still something psychologically unnerving about entering a large dollar amount and then pressing “TRANSFER”.  In the early debt-free days, as we learned how to start saving our money, I fully admit it wasn’t always easy pressing that “TRANSFER” button.

“Yowzers, that’s a chunk of money.  I could have totally purchased two flights to Hawaii with that money.  Or a new convertible top for my car.  Or built a new patio cover for the back porch.”  Or I could…Or I could…Hrmph.

That’s when I finally realized that I needed to get everything AUTOMATED.  A hands-free, no-touch, never-saw-it-in-the-first-place kind of setup.  So that’s what we did.  And yes, it was a little bit scary.  We decided to start by directing a portion of our paychecks towards maxing out our 401k ($17,500 x 2) and Roth IRA ($5,500 x 2) contributions, and see how that felt.  But with just that first step, we knew it meant we were putting away $46,000 a year that we previously weren’t saving, so we felt pretty bad@$$ with just that alone.  We got everything set up, filled out various HR forms online and pressed “SUBMIT”.

Then…I started worrying.

“Are we going too far, too fast?”

“Are we going to feel broke all the time?”

But that first pay period passed, and as unbelievable as it sounds, we really didn’t miss it.  Yes, our final net pay was much lower. Of course. But like with many other things, you work with what you’ve got, you spend what you have.  In fact, I like to call it the graham cracker effect*.

* Mr.Nickels l-o-v-e-s him some graham crackers.  I used to buy a box of graham crackers on random occasion, and he would eat them at a rather normal pace.  The box would be gone in about a week and a half.  Then we started shopping at Costco. I found the exact same graham crackers in a 4-box package, for slightly less money than I was spending on the singles I was buying at our local grocery store.  So I plopped them in my cart.  Now, standard logic would tell you that if 1 box lasted approximately 1.5 weeks, then 4 boxes should last roughly 6 weeks.  But that’s not what happened.

This is two weeks worth of graham crackers at our house…ok, I’m exaggerating. A little.

Apparently, the consumption rate of graham crackers increases in direct proportion to their current availability in the pantry.  In other words, the more we have, the more he eats.  We ran out of ALL 4 boxes of graham crackers in just 3 weeks.

My point is that many of us have a tendency to spend what we have, whether it’s a big amount or a small amount.  If you give yourself $500 to spend for the month, you’ll find a way to spend it.  If you give yourself $1,000 to spend, you’d find a way to spend that in a month as well.  So it’s time to push yourself.  If you currently don’t contribute to a 401k/403b/457/TSP/IRA, start.  Begin with a percentage you think you can handle, or if you get a company match on your 401k (my company matches the first 6%, for example), that should be your minimum.  Then sit back and see if you miss it.  I can almost guarantee you won’t.