This post is by staff writer Honey Smith.

Recently on GRS I’ve been exploring the concept of motivation. But what if you didn’t need to be motivated at all? What if you did what needed to be done automatically, without even thinking about it? You’ve probably heard a version of the saying before: We’re creatures of habit. But what are habits, exactly? How are they formed? Why are they important? And how can we form good habits (or break bad ones)?

Recently, I was listening to back episodes of the NPR program Fresh Air and came across a story on Charles Duhigg’s book “The Power of Habit.” Duhigg has also written about how to change your spending habits for GRS. According to Duhigg, one of the reasons that habits are so powerful is that they are governed by a completely different part of the brain than decision-making.

Why is this important? Because as has also been noted on GRS previously, making too many choices can result in decision fatigue and a loss of willpower. The more you can move your ability to complete desired activities over into the habit center of the brain (the basal ganglia), the more “room” is left in the decision-making center of the brain (the prefrontal cortex). In other words, if you can make an activity into a habit rather than a conscious decision, then you’re saving your willpower for when you really need it.

A quick review: The three steps of habit formation

In his GRS article, Duhigg explains that, while most people focus on the habit itself, “habit loops” are actually a three-part process. The first step consists of the reminder (also called the cue or trigger). This is what lets your brain know that it can activate autopilot.

The second step is the routine. This is what you actually do. However, for reasons that will become clear, it’s helpful to think of the routine in connection with the trigger. For example, you brush your teeth (after your shower). Or you buy a coffee (on your way to work). Or you have a glass of wine (with dinner).

The third step is the reward or reinforcement. This is where your brain decides that it’s satisfied with what just happened and that it will continue to act this way in the future because of it. You feel clean, you delay the start of your workday and get a caffeine rush, you relax at the end of the day, etc.

Forming good habits

The key to forming a habit, then, is ensuring that all three parts of the process are present. It’s not enough to focus on what you want to do/the habit itself. Additionally, since your willpower/motivation may crap out on you, they are insufficient for habit formation as well. You have to make sure that you’re providing yourself with both a trigger and a reward if you want a new habit to stick. One easy way to find a reminder is to piggyback on a habit you’ve already acquired and use that as the trigger for something else. Let’s say you’re a caffeine addict; you could check your Mint account while you drink your morning coffee. Another, similar way to find a trigger is to piggyback on something that always happens to you. For example, you get paid every other Friday, so you can make your extra student loan payment when your paycheck gets deposited, before you’ve had a chance to spend that money.

Finding a reward can be trickier. That’s one of the reasons that piggybacking on an existing habit may make things easier. If you check Mint while you drink your coffee, you’re using a reward your brain has already come to expect (caffeine) for another purpose. There are a couple of caveats when it comes to rewards. First, if your brain perceives the outcome of your routine as a punishment (making an extra student loan payment means you don’t have that money any more), then it will be harder for the habit to form. That’s why it’s so important to know what motivates you. It helps you pick the reward that you will most enjoy, thus encouraging habit formation.

Additionally, if you want to make something a habit, the reward for the activity can’t be a one-off moment years down the road. Knowing that in five years you’ll be debt-free isn’t going to help you create a habit. The reward has to be immediately experienced every time you complete the routine in order for the habit to stick. So in addition to picking a reward that you will enjoy, make sure it’s easy, sustainable, and won’t have any additional negative consequences. Eating a cake every time you pay a bill on time, for example, may encourage you to make your payments, but what good is that if you need to buy new pants every month?

Breaking bad habits

Breaking bad habits can be much simpler than forming new habits. Remember that habits depend upon triggers and rewards. This means that in order to change your routine, you need to remove at least one of those two steps. Removing the trigger is often the simplest way to break a habit. Do you find yourself shopping online after receiving a “daily deals” email? Unsubscribe from anything promotional, or even start a spam email account so that the deals are there when you want them but not triggering you when you don’t.

Identifying the reward your brain craves and finding another way to give yourself that reward may also help you break a habit, or at least modify the habit so it’s no longer financially destructive. For example, I had a bad habit of buying cookbooks and not trying enough recipes to justify the expense. Turns out if I enjoy admiring recipes slightly more than cooking them, the Pinterest strategy gives me the reward I crave without spending money to acquire Stuff. Habit broken!

Using habits as unconscious motivation

OK, because there’s a reward involved, maybe habits aren’t entirely motivation-free. But by spending a little conscious effort up front to move your actions to the back burner basal ganglia, you don’t have to think about those actions anymore. Seems to me if you can combine conscious and unconscious forms of motivation, you’re well on your way to success!

What habits do you have that help or hinder your ability to reach financial goals? What are your triggers? What rewards do you crave? Have you ever successfully created a new habit (or broken a bad one)?

This article is about Psychology

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This article is by editor Linda Vergon.

I think 2012 was the last time we “checked in” with readers to ask “How can we improve Get Rich Slowly?” Last week, we asked the Facebook readers what they thought, and we got some great comments. Jenny Fox wrote that “The personal stories are always good to read and you have excellent, thought-provoking articles, so carry on with that!”

A few people would like to get rich quickly, but at least 15 people agreed with Jason Dotson’s suggestion:

If only.

Some are still dealing with the crushing reality of poverty, and they don’t need stories about getting rich at all. They simply want to learn how to provide “… basic needs like enough food or enough for bills … a home to call our own.”

A lot of readers seem ready to invest but are unsure about how to get started, so they’d like stories that give an in-depth explanation about Roth IRAs or a 401(k). More than a few mentioned that they need information about how to analyze different investment options, and some would even find how to open an investment management account interesting.

Student loans are always on the minds of readers, but those inclined toward entrepreneurship want more out-of-the-box stories on how to create more income to balance out the articles that cover being frugal and saving. But in general, most everyone is just interested to learn how to make their money grow.

Beyond that, real estate investing, “tax stuff,” and interviews with people who got rich slowly made the list. Then some think a monthly reminder would be great, like “Don’t forget to budget for back-to-school items for the kids.” (Yep, Lisa Aberle’s on it already! Stay tuned…)

As J.D. Roth said in 2012 when he asked how we can improve:

“Basically, anything you can tell us about what you like about Get Rich Slowly — and what you don’t like — will help us build a better blog for the future. So, please leave a comment below to tell us how we can better help you.”

So readers, can you suggest an interesting topic or do you have a totally different idea about the site? What would you like to see? (And thank you. We’re really happy you’re here!)


This article is by staff writer Sam, the Financial Samurai.

I was in the 6th grade when I first laid eyes on her. She was a 1989 BMW 635i Coupe that did donuts in the school’s parking lot after class thanks to an obnoxious, rich 11th-grader who got the car as a birthday present. I was immediately smitten and promised myself one day I’d be able to buy such a car too.

The new 6 series BMW came out in 2005 and all the memories came rushing back. What cost only $35,000 then now cost $75,000 thanks to inflation and an infinite amount of new features. I don’t know about you, but $75,000 is a big chunk of change and is way beyond my 1/10th rule for car-buying I say everyone must follow.

I figured instead of spending $75,000, why not go back in time and actually buy that 1989 635i Coupe! My brilliant idea led me to Craigslist where I found my true dream car listed in “fantastic condition with only 160,000 miles”! That’s only 8,000 miles a year I rationalized, and off I went to see the seller 45 minutes away.

The gold 635i BMW was in great condition and the seller was only asking $3,800. After a test drive and over one hour of negotiating, I got him down to just $2,500. What a bargain, I thought, knowing that even if the car blew up the next day, I’d only be down $2,500. I gleefully drove back home in my dream mobile that I had waited for almost 20 years. Of course, as soon as I got home all the trouble began.

No room

Having bought and sold eight cars in the past 10 years, I fancy myself as a car aficionado or addict. Unfortunately, since I just had to have this new ride, I violated one of my basic rules: sell my existing vehicle before buying a new one. Parking is an absolute nightmare in San Francisco and, unfortunately, I’ve only got one-car parking. What a donkey.

So here I am, a guy who takes the bus to work with two cars and not enough space. What a pain in the rump as I had to move my car every several hours before 6 p.m. or risk getting a ticket. I ended up blocking my driveway most of the time instead, which immediately made my other car useless. At least I knew I wouldn’t be calling the parking police on myself!

After a couple months, I eventually sold my other car in order to park my baby, Sherman, in the driveway.

Unforeseen problems

I know that a 20-plus-year-old car will undoubtedly have problems, but sheer lust drove this purchase and I chose not to get an inspection. Bad move as my steering gearbox had a crack, which resulted in a massive amount of steering fluid leakage every time I stopped the car. Cost to fix? $1,200-1,500, which I didn’t end up fixing. I just bought 20 gallons of steering fluid for $30 bucks! Yeah, baby, yeah!

What’s worse than a leaky steering box? A sticky accelerator. I discovered on a routine drive around the city that my accelerator would get stuck on “lead-foot mode” every so often and I had to ram on my brakes and shut the engine off to avoid crashing into the car ahead of me. It was one of the scariest feelings ever and something that really made me question whether I’d ever want to own a classic car again.

This was a problem I had to fix, so I spent $400 changing out the electronics that control the sensors to the accelerator. I didn’t want to end my life running a red light and getting T-boned because I couldn’t stop in time. OK, all was good again — until a third major problem arose.

Soon after I fixed the accelerator, all the electronics would intermittently shut down, causing me to lose all lights and power steering. Of course a cop was behind me during one episode and I got a fix-it ticket. The ticket was only $15 bucks if I fixed the problem within 16 days. It was just a big hassle. Sweet, another $400 out the window.

The final unforeseen defect was a low idle, which caused it to stall. My dream mobile would just die at a red light and I’d have to crank the ignition multiple times before he would start again. How stressful and embarrassing. Back to the auto mechanic I went, who proceeded to charge me another $300 for a “classic car tune-up and idle adjustment.”

If only I had been thinking straight

I let my emotions get the best of me. I knew there would be problems with the car, but I didn’t care. I had successfully walked away with my dream car for only $2,500 and that’s all that mattered at the time. I ended up spending $1,200 more to make the car operable, and it still had a $1,200-plus steering gearbox problem which I refused to fix. Who needs steering anyway? All in all, I have probably seen the mechanic six times and spent more than 15 hours to maintain the car in my 1.5 years of ownership. In the end, it wasn’t worth the headache at all, no matter how sexy the car looked.

If I could do it over again, I would:

1) bring a friend as a voice of reason

2) spend $100 and a couple hours having the car checked out by an auto mechanic

3) wait a couple days before negotiating

4) check the online forums to understand all the major problems with the particular model and ask the seller about them, and

5) never buy a classic car again, unless it’s in pristine condition!

I ended up selling the car to another emotional enthusiast for $2,200. I told him about my problems and all the fixes I had made except for the steering box, which he saw on his own. I learned that I don’t have the time or the money to spend maintaining a car. A car should serve me, not the other way around. From now on, I will never let my car nostalgia get the best of me. Don’t let it get the best of you either!

Readers, have you ever let your emotions get the best of you when buying a car, a house, or anything that should have taken more thought before purchase? Is buying nostalgia not one of the most rewarding activities? How do you control your urges to splurge? Do you think Americans have a spending problem or an earning problem?

Regards,

Sam


This article is by staff writer Kristin Wong.

Lately, life has been a little hectic. I have a full schedule of work. I’m trying to plan a surprise party. I’m working on three different passion projects. My laundry needs to be washed. Hell, I need to be washed. It’s noon and I haven’t even showered.

I don’t mind a packed schedule, and I’ve learned to better manage my time. But for those moments when a lack of time gets the better of me, and my stress level rises, I’ve noticed something unsettling: I have a really careless attitude about money.

In short, I’ve been stress spending. Some of it is emotional, and some of it is spending out of convenience. Here are a few examples of my recent stress spending:

  • Instead of cooking, I’ve been ordering takeout.

  • I ordered some clothes online because I thought I deserved it.

  • I’ve been paying at parking meters instead of opting for free street parking.

There’s nothing inherently wrong with these expenses — if I were planning for them. But I blew my food budget because I felt like I didn’t have time to cook. And I bought a bunch of clothes that I didn’t really want to spend money on. And parking on the street in my neighborhood takes an extra minute, at the most, but I didn’t feel like thinking about it.

With each of these expenses, stress clouded my judgment.

The problems with stress spending

My stress spending didn’t bring me to my knees, no. But I like to practice conscious consumerism. Being a better spender has saved me quite a bit over the years. It’s also helped give me a better appreciation for the things on which I choose to spend my money.

Impulse-fueled stress spending has quite a few drawbacks.

It takes away from my goals.

I budget my expenses because I have savings goals I’d like to meet. The less I spend, the faster I can reach those goals. Haphazard spending is like stealing money from my future self.

Small amounts add up.

When I recently ordered a pizza because I didn’t feel like cooking, I actually patted myself on the back. I found a good deal on a greasy, unhealthy wad of dough: $6. “Hey, that’s not bad for a splurge,” I thought to myself. Except that, over the course of the past couple of weeks, I’ve spent more than I care to admit on takeout and fast food. Those small purchases add up, especially when you convince yourself they’re insignificant.

My spending decisions are unhealthy.

I mean that my spending decisions are both physically and emotionally unhealthy. I bought those clothes to make myself happy and relieve my stress. Whether it’s clothes or trips or cars, it’s OK to buy things you like, of course. But what I didn’t like about my spending decision was that I used it as a quick fix, instead of actually addressing my stress problem.

And then there’s the physical consequence. That pizza was cheap, sure. But it was also pretty unhealthy. And I’m not going to lie — I love unhealthy food, but in moderation. Most of the time, I eat like your garden-variety hippie. So my stress spending has also lead to stress eating.

It creates a cycle of bad decisions.

I stress spend. I get mad at my bad decision. This adds to my stress. I stress spend.

Stress, spend, regret, repeat.

What to do about it

OK, so you know that stress spending is not a good thing. So how do you put a stop to it? Here’s how I’ve been approaching it.

Stop the cycle.

Throw a wrench into your vicious cycle. Lately, when I sense my judgment becoming clouded, I stop whatever it is I’m doing and walk away and listen to a song I love. Whether it’s exercising, meditating or just zoning out on a song for two minutes, a moment of reflection can do wonders. It clears my mind and keeps my judgment sharp.

Don’t overwhelm yourself.

I have a bad habit of overwhelming my to-do list with an impossible amount of tasks so I can get a head start on the next week. But, if I’m stressed out trying to get a head start, I’m not sure that it’s worth it. I’ve learned to let go and cut down my list. There are some things I won’t get to today, and I’m learning to be OK with that rather than to lose sleep and, eventually, money over it.

Identify your triggers.

By understanding the thought process behind my stress spending, I can usually stop it in its tracks. When I want to buy something unplanned and frivolous, I’ve discovered that I always tell myself something along the lines of: “You work hard. You have money. You can afford not to give this much thought.”

When that thought pops in my head, my savings goal pops out. So I remember that now. That thought is my spending trigger, and it’s helped a great deal to understand that.

Another trigger? It’s 4 p.m., and I haven’t given any thought to dinner, and I still have stuff on my to-do list. This scenario is what leads to my ordering takeout. Now that I’ve identified that trigger, I can do something about it.

Have a backup plan.

For convenience-based stress spending, it helps to have a backup plan. Whatever you spend money on out of convenience, look for a way to avoid it, or at least find a cheaper alternative. For my takeout problem, this might mean cooking meals in advance, and then freezing them.

And here’s a confession: I have one prepackaged frozen meal on hand. Most frugal people will groan at this, and understandably so. It’s not a good everyday food option. But when I don’t have time to cook, and I’m stressed, a cheap Trader Joe’s meal beats takeout. It’s not ideal, but it’s a backup plan. I also know that, when I break out that meal, it’s time rethink how I’m balancing my time.

Of course, it’s better to focus on the long-term solutions and find a way to stop putting yourself in a position to stress spend in the first place.

Do you guys ever stress spend? How do you avoid or correct it?


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