While I'm pretty much an internally-driven person, rewards can work for me. Since trying to reduce spending, it's a little bit harder to find those things, but I think I've found a reward that can pay off.
I now have about six months of expenses plus the costs of the patio refinish saved. My only debt is my house, and it's a doozy of a debt. (More on that below.) Yes, I'm still watching Ramsey Show clips, so framing things that way in terms of the debt and steps.
Last year, I wanted to snowball my mortgage payment essentially - I had planned to recast the loan each time I had $25,000 saved, so that the monthly payment would decrease and I could save that 25K even faster each round. But then my loan sold to a different lender, and they charge to recast, like $250. I'm not wasting $250 for the snowball psychology of reward.
So then I thought I'll just keep saving up in a high-yield savings account, and that 3.7% will grow those funds until I can pay off, so I split my paycheck between the checking account that bills are paid from including mortgage (which is an account I am getting $800 rewards to use for a year - which is insane to me $800 free money just for opening and using and account for a year) and the savings account.
But the interest rates are going to go down and they're not going to keep up with inflation. And I know I'm only talking about maybe three to six years of it sitting there before I sell the house or pay it off, but I'm an impatient person.
A question on the Ramsey Show got me rethinking this plan, and I think I've come up with a new one to keep me interested. The amount that goes into my checking account for bills each month is for my budget amount plus cushion, because cushion makes me comfortable. I would never want to overdraft an account. Usually as the cushion gets bigger, I divert back into savings.
But instead, I'll start paying it directly to the mortgage. I keep track of every transaction and do a reconciliation at the end of each month, so I know exactly how much I spend each month and how that lines up with the budget. I will subtract the amount spent over the previous month from the amount deposited from paycheck, and the difference will be an extra principal payment each month.
By making extra principal payments, I will see the principal balance of my house drop more quickly, which hits the reward center of my brain. It's not the strongest hit, but it's a hit. I will see the connection between frugality and outright home ownership, which will hopefully keep me motivated every time I take my lunch to work instead of eating out, choose inexpensive food items, bicycle instead of drive, forgo consumer spending, do things for myself instead of hiring out, shop around for less expensive insurance and other needed products, etc. etc.
And once I have more of a nest egg in case of some unexpected issue like needing to move and put a downpayment on a house before I can sell this one, I can increase the amount of those extra principal payments to the entirely of the difference between what I earn and what I spend.
I've owned maybe eight different houses in my life, and only one did I own outright, and goddamn I loved that feeling. I bought it for like $42,000 and then spent a ton of mine and Dear Friend's money to fix it up, and wrecked my wrists through the scraping of texture off all the walls, but it was mine and I loved that house in the "bad part" of New Orleans. I'm perfectly fine making my own insurance and tax payments. There is something so liberating about not owing the bank for my housing, and so focusing on that can hopefully help get me through the unpleasantness of being a wage slave in a toxic workplace.
Regarding this house loan being a doozy of a debt, that's only really because I spent my youth perhaps irresponsibly. I mean, I never drove up consumer debt (though I had some massive student loans) and I spent within my means, but I would work awhile and then take off a big chunk of time to travel, fix up a house, etc. If I had stayed teaching, I'd be just about retired now with a full pension. But I have no regrets - I knew at the time that I would have to work longer when older because I was enjoying myself when young. So that's where I am now, with not a ton of equity in a house in an expensive community. The house cost me triple what my house in New Orleans cost me, and that had an attached apartment that covered much of my mortgage - when I had a roommate (and the house was better set up for that), I was living for cheaper than free. This house though, it's just a huge chunk of mortgage each month and that's depressing. So now that I have most of my projects done, I want to really focus on paying the damn thing down.
Frugality though is to be weighted with life enjoyment. For instance, I'm getting my hair cut today, which costs $100. I like my stylist and want to support her and her decision to price tip-inclusive. I really really like having very short hair, but it gets so shaggy if I don't get it cut regularly, which is quite an expense. I'm not going to pay $100 every two months - plus, I like her a lot, but it's kind of an exhausting experience for me, to have my hair cut. It takes a lot of spoons. So in the past, I had just let my hair grow and I cut it myself - I went a couple of years, maybe more, not seeing a professional. But I don't look great with long hair, and I find it a both to have to wash and dry it, etc. I so love the quickness of the pixie cut - it so much better fits my lifestyle, except not the frugality part of my lifestyle. So, I have to figure this out, and what I'll do today. Just trim it up to grow out, or pixie cut it to feel free, or somewhere in the middle that is more forgiving of haircuts only every few months? Because while in many ways I live like I'm poor, I'm actually not poor, and what is money for if not to enjoy things like short hair?