Slack Eats Stress — Why Mortgages Scare Me.

A post I'm surprised I'm writing.

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I wrote a blog post a while back (elsewhere) where I railed on a public sector organization for clearly not understanding Parkinson’s law and introducing all of this slack into their processes and resource management that was clearly leading to a continual slide.

If you can’t be bothered to click on links, Parkinson’s law is the idea that work “expands” to fill the time you allot it, but I think it pretty clearly can be expanded to most places where you have a resource being consumed. If you have more of a resource, there is an incentive to be increasingly inefficient — because people are lazy and efficiency takes work!

What’s funny is that the entire idea of today’s blog post is that slack is sometimes good. Let me explain what I mean and perhaps we can figure out together why these things are not the same.

Travel Also Eats Stress.

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When I sometimes contemplate the idea of purchasing a home (or really, taking out an enormous loan from the bank and then purchasing it together), something which I think a lot about are the budgetary implications — while a lot of people could “afford” a lot of things, they often put themselves in positions that I think I would be uncomfortable in.

You can imagine signing up for a mortgage, like many people do, and having very little left to go around. On paper you might be able to pencil everything in, and even include a little contingency, and then you have a month where two things need to use the contingency budget — that is a stressful experience. People sometimes jokingly call mortgages "forced savings plans”, but most adults don’t want to be forced to do anything, even things they might otherwise enjoy!

What might be odd is that when I think about my own finances, I really like have as much slack as possible. I don’t have a mortgage, or a car payment, or various other debts, so the slack really is just that: Money I don’t need every month that I can invest. This is really counter to the Parkinson’s Law, and “forced savings plan” dogma — but, I am quite disciplined and I understand lifestyle inflation (I have a rule which I stick to quite religiously that I rarely buy things that aren’t replacing something I’m getting rid of, or which is broken), don’t spend on things, and don’t drink or go to clubs (and I have a kid taking up 70+% of my time), so I just don’t have the latitude or pathways to spend a lot on other things.

Where this kind of makes a material difference is, say, I go to dinner — and in the case I don’t have a lot of slack that means I use up my “fun” budget for the month, or a big chunk of it, and now my ways of exercising “fun” become much more limited for the next several weeks. The nice thing about having a slack budget is that you can go to the cafe with a friend when you go on a stroll (and be spontaneous) without starting to sweat because you don’t have the budget room (and don’t want to be the person constantly sitting there not “participating”). Of course, you don’t want to be eating out every night (for more than just financial reasons!), but I think when people push themselves to the limits of what they can afford (as housing has a tendency to do thanks to all the concealed and somewhat random costs), they are creating a very stressful life for themselves. Slack eats stress!

So, if we go back to the question of what separates my personal finances from a certain agency that is getting less and less efficient with its budget, I think the thing is that unlike the agency, I usually am not in a state where the vast majority of my budget is expected to be spent (even if inefficiently). Of course, if you have the ability to save a lot every month, you could just automate the process of sending your money into various investment accounts and fake the pressure — but training discipline has a lot of value, and if the sense that I could go and get a few fancy dinners makes me more relaxed, I think thats a great thing.

I do think part of the reason the slack feels nice (if we define slack as being having a lot of cashflow to play with because you keep your expenses low), is that there is a sort of shame one feels when they spend too much and it comes back to bite them — say, you get a fancy meal, and you have to really scrounge together funds for a bill you have to pay. When you’re on a tight budget and you spend too much, you can imagine feeling really bad about that if you lost your job and are really struggling to make ends meet — which makes you want to avoid that situation (it should be said that the ultimate “slack” is a sizeable emergency budget).

The risk is… well just what it is with Parkinson’s law: It’s easy to start with slack, and then make eating into the slack the normal thing, now you actually have quite a bit less slack. It’s all a dance where you try to spend on things that make you happy and fulfilled while also trying to be sensible and disciplined on where to draw the line.

And I guess that there is the difference between life with some budgetary slack and without. When you are on a strict budget, you have little room to make broad adjustments. It would be like autopilot or cruise control where any deviation from target is immediately and aggressively corrected — not fun! When you have some slack you can feel things out: spent more this month? Try to spend less next month, but it’s not the end of the world if you don’t. You’re trying to be disciplined, but you aren’t worried of repossessions if you aren’t!