I’m Guilty. The articles that are often the hardest to write are the ones that make me look in the mirror. And I’m guilty. I’m guilty of letting inertia get the best of me. I would like to think that I’m pretty good with my time, energy, and effort- but often I find that I can get lazy. Or at least inefficient. I find that I tend to do the same things over and over. I get quite comfortable with my routines and the products and services that I use most often. I don’t even dislike change. However, the minimal amount of effort that change requires often necessitates a battle with inertia. For anyone who hasn’t thought about science since 4th grade (myself included)- Inertia can be described as resistance to any change in the state of motion. In essence, we tend to keep doing the same things over and over unless an outside force changes our direction.
As humans, we have a tendency to gravitate towards comfort and consistency. Even if things are pretty bad, we’ll continue to do them due to laziness or fear of change. It is even worse when things are ok but could be a lot better. I tend to fall in that second category. I get complacent when things are going well but could be better. When I’m saving and spending with plenty of margin I don’t worry about change. When work is going well I don’t think about honing my skillset. When my life and marriage are good I don’t often think about better.
Inertia happens all the time in areas of our personal finance. We often continue to make inefficient decisions with our money and fail to take any action. Here are some of the more popular activities where inaction can be expensive.
What does inertia look like?
- Paying $45 a month for a gym membership you don’t use
- Being annoyed but continuing to pay for a fancy cable package when the “special rate” expires
- Paying $5,000 extra in interest because you are scared to call the credit card company and ask for a rate reduction
- Working a crappy job you don’t enjoy because you don’t want to actively seek an alternative
- Paying $200 a month for a cell phone bill
- Paying $500 a year extra on your insurance because you are too lazy to get a new quote
- Leaving your money in an expensive fund with fees in the $1,000s
- Having 10 half done nagging house projects
- Not riding your $200 bike because it has a $3 flat tire
- Hidden Ones: Letting your ‘old’ laptop or smart phone sit in a drawer unsold depreciating until it has no value
Any of these sound familiar? Have you ever done any of these? I know I have.
A plan to do something
The hardest part for me is often getting started. Once I start the process, the transactions are often better than expected. However, the thought of going through the process is enough for most of us to simply procrastinate in taking action. Take the example of car insurance. I spent about 10 minutes doing a few different online quotes only to realize that I was overpaying by quite a bit for identical amounts of coverage. Although it sounds like a commercial, just a few minutes of effort literally saved me hundreds of dollars.
One of the little action tricks or productivity tips I’ve used to work on easily procrastinateable items is blocking off 2 minutes to get started on a task. Often, once I’ve started, I tend to just finish off the task. If I need to call and ask AT&T to see if I can get a better deal on my internet package simply dialing the number will be enough for me to complete the task. Once the call has begun I’m already through the hard part. Similarly, if I need to sell something, I just take a few minutes to list it. At this point, it only takes me 1-2 minutes to post the listing. Once it sells it is not that big of deal to ship it off but it is a task that I often put off. Leo even suggests just flossing one tooth. Get started.
We actually have a policy now to requote all of our insurance products each year in the first week of January. It doesn’t really take that much time, especially considering the return on the time invested. If yearly doesn’t work for you, at the very least consider it every other year. What other areas of your life are you wasting time and money?
Little effort, Huge return
The great part about all the little inefficiencies in ours lives is that they are all great opportunities. It takes cutting hundreds of lattes to equal the financial savings of a five minute conservation with a credit card company over rates. If you have 250k invested in a retirement account, a 1% reduction in fees would be thousands of dollars saved annually! I’m pretty sure that is a lot more than your monthly cable bill. It only takes a few minutes to learn a little or ask someone who is quite knowledgeable about a subject. In only takes 10 minutes of reading a blog post to learn how to cut your cell phone bill in half. Most of the steps are not very hard.
Low effort, big wins are one of the holy grails of personal finance. There are so many areas where inertia costs us dearly. It really is about identifying the high effort, low commitment items and attacking those first. I’ll also make one final note on this debate. Positive habits can have the same effect. Once we start running or working out every day we simply get into the habit. Once we start eating healthily and paying attention, inertia kicks in. We can also use this concept to our advantage!
Getting started is hard. We tend to resist effort and change. But it is worth it. What areas of your life have you noticed inefficiency creeping in? Can you think of anything that would only take a few minutes but could save you hundreds or thousands of dollars? What is the low hanging fruit in your life? I still have some work to do. I’ve got a few low hanging fruits that need to be plucked. I have plenty of waste in my life and I know I tend to get complacent over time. I know I need to quit procrastinating, get off the couch and break the powerful force of inertia.