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7 May 2018

The Law of Fiscal Inertia 101

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by Guest Author

It’s way harder to start something new than it is to keep doing what you’ve been doing—even if that old habit sucks. Isaac Newton said that. Or something like it.

The law of fiscal inertia holds true whether you’re a chronic over-spender, a nascent budgeter or an English physicist. Changing the course you’re on is hard. We fear change. Even the good kind. That’s why we always put stuff off until tomorrow.

But that thing you’re putting off? It’s bound to stay put off.

For me, living by the “I’ll do it tomorrow” method is how I nearly got evicted from my tiny apartment in Brooklyn. It’s why I silently uttered the “Well, I hope this works out” prayer before every credit card payment. And it’s why I was plagued by this seemingly intractable, free-floating anxiety for most of my life—up until a few years ago when I discovered YNAB.

Until that point, I’d buried my head in the sand (and by “sand,” of course, I mean “suffocating mountains of debt.”)

My finances were a mess because I continually delayed putting them in order. The way I saw it, I was broke. I didn’t have enough money to cover all my expenses in the first place, so I paid what I could, when I could, and I did my best not to feel overwhelmed by the stack of second notices sitting unopened on my desk. Knowing exactly how broke I was didn’t seem like it would make much difference, so I refused to take honest stock of my expenses.

But it did make a difference—a costly one. It cost me in interest rate hikes and late fees. Worst of all, it cost me my peace of mind. The irony was that peace of mind is exactly what I was trying to achieve by ignoring my problems. Turns out treating financial anxiety with ice cream and Netflix isn’t super helpful when you’re living paycheck-to-paycheck.

Something Had to Change: Me

As I was trying to figure out how I could manage my student loan payments and how long I could survive on brown rice and Top Ramen, a close friend and a trusted source told me he had started keeping a budget. Cool story, bro. Must be nice to have so much money you need to figure out what to do with it all.

In spite of my seething envy, however, I listened and was ultimately convinced. It’s not like I hadn’t fantasized about moving into a better apartment—one of those “drenched in natural light” spots. I just hadn’t found the perfect time to start saving for a security deposit.

And that’s the thing: We’re always looking for the perfect time to squirrel money away for a new car, an apartment, a house or to start a family. Perfect timing rarely happens, but it is something that you can create. It’s called prioritizing, and the first step is opening your eyes. That’s what my buddy convinced me to do.

So, I logged into my bank account and got started.

I Started with a Single Brick

Getting a hold of my finances seemed like a monster of a task at first. Looking back on it, now, I’m reminded of a passage from Zen and the Art of Motorcycle Maintenance, by Robert Pirsig.

Pirsig, a college English teacher, tells a story about one of his former students. She’d struggled to write 500 words about the United States, so he asked that she narrow her focus to Bozeman, Montana, her hometown. Once again, she struggled with writer’s block. He suggested she try writing about the main road in town. Still nothing. It wasn’t until Pirsig prompted her to write about a single brick of the local Opera House that her struggle passed, and she was able to complete the assignment—all 5,000 words of it.

And that’s how I started my budget, with a single brick: my humble bank balance.

Then, I identified the next brick: what bills I needed to pay before my next paycheck.

Over the next few months, my wife and I developed a nerdy routine. We sat down every Friday night and took stock of our finances. We made sure every dollar to our name had a job.

My New Normal

I started thinking about my money more often than I ever had before. It was uncomfortable, at first. Was this how the rest of my life was going to be, constantly obsessing about money? Keeping track of every cup of coffee I buy?

Yes, and no. Keep it up, and your new money habits become second nature. OK, but what about the obsession with money? That’s where my life underwent a profound adjustment. First off, it wasn’t actually an obsession, it was just awareness. (Not burying your head in the sand is a strange sensation, to the uninitiated.)

After months of this new discipline, I noticed something. Every month, I’d write the rent check and drop it into the mail … that was it. I wasn’t overwhelmed with anxiety. I didn’t say my usual, “hope this works out” prayer. I knew it would work out. I knew we had the money in the bank and, even more importantly, I knew we had more money in the bank. Not only could I pay this month’s rent, but we also had the gas and cable bills budgeted for.

Something else happened, too. Just by being more aware of how I was spending money, I started spending less, without feeling limited.

This Isn’t The Lotto

There’s no trick to saving money, you just have to spend less than you earn. Keeping a budget will help. Making YNAB’s Four Rules a part of your daily life is not a get rich quick template. It’s better—it’s a stay solvent forever method.

For as long as I’ve been aware of money, I was always paranoid about not having enough of it. My first money-related memory is from when I was about five. I’d been given a lecture about the value of a dollar (and that I couldn’t go to the video store and rent Chuck Norris’ epic, Sidekicks, again).

I no longer live that way (the paranoia part, not the Chuck Norris fandom, obviously). Now, Newton’s First Law of Motion is working for me, instead of against me. I’ve developed some healthy spending habits. And I still get my ice cream and movie nights.

Ryan Sit is a writer and journalist who previously covered politics and money at Newsweek magazine and criminal justice at the New York Daily News. He’s a New York City transplant from the San Francisco-Bay Area in the perennial search for good tacos. Check out his work at TheRyanSit.com

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Your Next Step

Remember, budgeting is not restrictive. You won’t be spending less, you’ll be spending right. You can do this! Today. Right now. What do you have to lose? Except all that debt and stress. (Ok, so kind of a lot.)

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