Credit card debt has a way of creeping up on us, particularly after the holiday. January can be a month filled with anxiety, particularly for those that loaded up on credit to load up on gifts for loved ones. The joy that was spread was most likely worth it, but paying for the wonderful experiences the holidays provide takes discipline.
In that context, choosing to reduce one’s discretionary spending to zero (or some low pre-defined level) could help with this task. Such an endeavor makes for a great New Year's resolution, even for those with money to spare. Building up one’s rainy day fund is always a good idea, and January is a great time to start.
Choosing to put the e-commerce sites down (or deleting apps if one has to), forgoing dessert, or choosing to make February a catch-up month for those missed lattes at the local café is a great way to save a substantial amount of money. The more one can put aside to pay down high interest debt or build up a rainy day fund, the better off one will be should rainy days come.
We live in a world where debt is cheap. In fact, right now debt can be obtained for levels which historically are bonkers. Making sure one has a significant margin of safety to withstand higher interest rates is always a good idea. If inflation rears its ugly head and we get a repeat of the 1970’s and 80’s, those who cut their expenses and had that rainy day fund will be thankful for it.
Invest wisely, my friends.
