Here's our latest addition to the Best Advice I Can Give -- Blogger Edition series.
Today's post comes from Canadian Financial Stuff where he says:
This seems to be the January battle cry for retail stores, "Since you didn't get what you wanted for Christmas, come here and squander more money, please", or something to that effect. If you didn't get what you wanted for Christmas? What if you wanted Peace on Earth, or have your hip replacement surgery scheduled? Can Canadian Tire do something about that for me? I don't think so, but who knows?
Debt Reduction is like losing weight, you need to stop listening to your impulses and keep to the plan. Now if you planned to go to the after Christmas sales (like at the GAP), and spend the money you didn't spend at Christmas, that is a valid (and a good) plan. My kids got gift cards for Christmas and then proceeded to buy 2/3 more clothing than they could have before Christmas at the GAP (makes an old man proud to see his kids learning the value of being cheap).
If you planned on spending a quiet January hidden in your nice warm bed, not worrying about bills, stick to that too. If you don't have a plan for January, feel free to borrow this one, "I plan to not buy any more crap that I don't need", it's a pretty good plan, which actually could be used for any month of the year.
If you continue to SPEND more than you MAKE you can either get a job as a politician or you can be sure you'll never be able to retire, or stop worrying about your debt. Keep that in mind, when you think next, "I didn't get that Deluxe Cheese Straightener I wanted for Christmas, and it's on sale!".
As I'm sure you could guess, I love this advice -- especially since spending less than you earn was my #1 top 10 post topic of 2005.
Americans for the first time since World War II have a negative savings rate; this unwillingness to spend less than you make has been driven in part by the rise in consumer credit, the ability to use a house as an ATM through constant refinances, and overall low interest rates. This year we're seeing an increase in credit card minimum payments and rising interest rates slamming shut the door to refinancing. In addition, over the next 18 months we'll see over 3 million homeowners watch their mortgages adjustment for the first time just in time for a softening real estate market. Cutting up your credit cards and resisting the urge to spend money on all but the most necessary items is definitely a good plan.
Posted by: Jay Fleischman | January 19, 2006 at 08:54 AM