There are couple things that I do that rationally don’t make much sense, but I do them to keep myself honest. While objectively speaking I’m pretty fiscally responsible, and generally very rational with money, I know in the end I have my shortcomings like most people. What do I do that doesn’t make sense?

  • I rather use my overdraft on my checking account rather than pull from the savings account attached to the account. I have a Citibank account and the overdraft is effectively a line of credit that’s currently 19.75%. Yikes. My fund levels are usually back to normal within a week (once I get paid), so I never pay that much interest, a few dollars at most. Still, it’s interest that I don’t really have to pay
  • I’ve consistently not changed my exemptions so instead of paying the right amount taxes, I used pay too much for most of the last 5 year. I rather get refund than owe taxes even though I’m effectively giving the Government a free loan that I could otherwise earning interest on myself.

Those two example are mental shortcuts I use to keep myself honest. I don’t like transferring from my savings account because I fear I might not put back in. The balance on my credit line is impetus for me to spend less and therefore get my balances back in order. While ideally I should pay the right amount taxes, I rather pay more through the year and shrink my paycheck instead of having a false sense of wealth that might come when not enough is deducted from my paycheck.

Other people put further limitations on themselves

  • They Don’t Use Credit Cards, even though the reward system is so compelling
  • Some people only pay with cold hard cash forgoing even debit cards

And some other take even more extremes

  • Refuse to hold debt of any kind even when it might make sense to borrow
  • Save money, but refuse to buy stock holdings

None of the actions above make rational sense in absolute terms. However, I think some of them can be appropriate actions for certain individuals. Others such as refusing invest in stocks may be truly costly mistake. What do you do that doesn’t make sense rationally, but still makes sense for you?