Trying to Over-Optimize my Finances

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Trying to over-optimize my finances, and therefore valuing money over time is my money lesson for May 2020.  You could also call this a money mistake as it goes against aligning my money with my values, something that I’m constantly working towards.

I’m a huge fan of the word optimize.  It just sounds like something you should want to do.  For me, it creates mental images of efficiency and success.

The problem with trying to optimize my finances is that like anything, it can be taken too far.  But before we get into that, let’s recap last month’s money lesson – shopping with a list.

Last Months’ Money Lesson Follow Up

I’m happy to report that shops and stores are slowly starting to open up where I am and physical distancing measures are easing up (slightly).  So far we are effectively flattening the curve, something that I’m cautiously optimistic we can continue to do with the slow re-opening of the economy.

Because of this, I went grocery shopping for the first time in months.  Since March, hubby has been doing the grocery shopping because he is still going to work while myself and the little one have been self-isolating at home.

I wore my mask and followed all physical distancing and hygiene protocols at the store.  And I shopped with a list for the first time in a long time.   Not surprising, I spent way less on that grocery shop then I used to because I bought fewer impulse items.

Because I like the impact shopping with a list has on our monthly budget, I will (try) to continue to apply this money lesson on future shopping trips.

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Trying to Over-Optimize Money – The Lesson

I love a good deal and to be efficient and optimized with my personal finances.  I have created systems and automation to help make my life easier.  But this month I realized that sometimes I can get a bit carried away.

One of my goals for 2020 is to “find” $250 of free money.  This money can come from cashback apps or loyalty points. For the past few months, I have been trying to find new apps and programs that give cash back for various things.  

To date, I have “found” $196.32. Not too shabby.

My favourite programs/apps for finding free money are: 

Those three programs are fairly easy to implement and don’t take a lot of time or effort for the return.  

But then I also experimented with other apps that would give me 5 cents for filling out a survey – yes you read that right – 5 cents! This is what I mean by over-optimize.

I started to move my money around to different bank accounts trying to earn a few extra dollars in interest.  

And I looked for ways to make a few extra dollars here and there.  Never mind that these activities provided a terrible return on my time – I just wanted to be optimized. So much so that I began to over-optimize my money.

The Awakening

During one of our conversations about money, I was telling hubby about my latest idea to try and earn a few extra dollars from our money.  He paused and told me that I could do whatever I wanted with my time but it didn’t seem worth it to spend all this time trying to make $5 more.  

His opinion was he would pick up an extra shift of overtime than waste all his spare time with all the little things. 

As much as sometimes I hate to admit it, he was right. In my drive to optimize every money decision, we made I was driving myself crazy. I was valuing money over my time.

Valuing Time over Money

So what was worth my time? When I take a step back and really evaluate things I realize that there is still room for improvement in our monthly budget.  But the improvement is not going to come from wasting time doing 5-cent surveys.

Assuming the big-ticket items are taken care of – house and transportation, here are 3 optimizations that are worth your time.

#1 – Credit card hacking

  • There are a lot of great credit card sign up bonuses and benefits available.  We have had the same credit card for years and have accumulated over 350,000 travel points.  With travel now on pause for the indefinite future, maybe it’s now time to look for a cashback card.
  • Being smart with your credit card rewards and paying off your credit card every month can save you hundreds of dollars (if not more) a year.

#2 – Negotiating Your Bills

  • I have had great success with calling my service providers and asking for a better rate.  Often these phone calls take me less than an hour but result in hundreds of dollars of savings over the duration of a year. 

Related Post – How to Save Money with 5 Simple Phone Calls

#3 – High-Interest Savings Accounts

  • If you are someone who has any form of cash savings, then you need a high-interest savings account.  We have all our cash savings at EQ Bank and could not be happier with how easy it was to set up and the 2% interest we are earning on our money.
Trying to Over-optimize money - money lesson May 2020

Final Thoughts

Often I end my posts about money mistakes and money lessons with a series of action steps.  This month I am not going to do that. I think that the big action step with this month’s money lesson – trying to over-optimize my finances – is to pause.

Whenever I get an idea related to money and personal finance I’m going to pause and think it through from a time return on investment perspective.  Hubby is really good at this so I’m also going to continue to talk to him about all my crazy ideas.

What about you, have you ever swung too far on the pendulum and lost sight of the value of your time trying to over-optimize your finances?

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6 Comments

  1. Great read. My favourite useless action I see (as you mentioned) is the churning of promo high-interest savings accounts

    i.e. “tangerine for 3 months, then move to RBC for theirs, then back to EQ… Oh look, CIBC has a great promo for the next 4 months! Then I’ll switch back!”

    Let’s say you’ve been moving $15k all over the place securing a 3.5% rate instead of leaving it at 2% with EQ. Let’s also assume you have a 30% tax bracket. All in, you’ve earned $367.5 in interest for all your hard work, compared to $210 all in from EQ.

    So with a difference of $157.5 I sure hope all the effort was worth it. I think constantly moving money around and keeping tabs on it would take five hours of work a year. In that case, you’re working for $31.5/hour, and that’s assuming everything goes perfect, so no additional homework needed and no calls to customer service.

    Meh, $31.5/hour is a decent rate but if it’s capped to 5 hours a year then I’d rather keep my simplicity over the constant annoyance of reading terms of service and moving accounts all the time. I’m also biased, I think keeping that much cash handy is a sup-optimal choice already before begining this sup-optimal choice.

    1. Maria says:

      I totally agree Ryan. Trying to chase high-interest savings accounts is exhausting. This year we transferred our rolling emergency fund to EQ Bank and could not be happier. Could we get a few dollars more somewhere else? Maybe? But hubby is reminding me to value my time and not waste it chasing pennies.

  2. Great post! I also tend to fall into the over optimizer category. To be honest, there are way worse habits to have but this one can really take up so much time and energy. Like you said, the key is to focus on the big-ticket items and don’t sweat the small stuff. When you can go make a dollar, why spend your free time trying to save pennies?

    Though sometimes I do find extreme joy in getting a discount, even if it wasn’t worth the effort it is still a cheap entertainment as long as you don’t get carried away!

    1. Maria says:

      Kat – I too sometimes get extreme joy from getting a good deal. I love your take on that being cheap entertainment – I have never thought of that before. Although I do think it’s important to optimize your finances, I’m working on being more mindful to stay out of the over-optimize range.

  3. One money hack we’ve been using is opening new checking accounts. This year alone we’ve received $800 and are in the process of earning another $300. Normally the accounts have to stay open for 3 months but it’s fairly simple to set up and then close.

    1. Maria says:

      Wow, $800 just for opening checking accounts is pretty impressive. Is there a limit to how often you can receive the signup bonus with each bank? Could you potentially re-sign up again next year and get the bonus again?

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