Happy February! It’s the most depressing month of the year for, oh, so many reasons. Maybe you don’t have a hunny on Valentine’s Day. Maybe you just hate winter, and it won’t go away.
Or maybe, just maybe, you haven’t quite met your benchmark for your New Year’s Resolution. That makes you want to quit.
DON’T DO IT!
Especially if your goals were financial. There is still so much time to catch up. Would it have been nice to start in January like you planned? Sure. But starting in February is so much better than waiting until next year. Let’s look at some examples, numbers, and long-term consequences to give you a better idea.
Credit Card Debt
Let’s say you have credit card debt. We’ll go with $4,000 of it. You’ve got an ugly 24.99% interest rate, and your minimum payment is $200/month. Your goal was to pay $500/month and have the whole thing paid off by November, but that didn’t happen in January. So now you paid off $200, but got charged $83 for interest, brining your current balance to $3,883.
Really, that’s no so bad. As a matter of fact, if you just start doing what it takes to pay off $500/month now without racking up any new charges, you’ll have your balance paid off in December. (If you continue only paying $200/mo, it will take you until April 2017 and cost you almost $445 more in interest.)
Building an Emergency Fund
Maybe you have a goal to build a $10,000 emergency fund this year, or add $10,000 to one that already exists. You figured out you’d have to save $833.33 in order to do so, and in January you saved nothing. You’re already almost $1,000 behind, so why keep trying?;
Because believe it or not, you’re not very far behind at all. In order to make up your January payment, you’d only need to save up an additional $75.76/month. So now instead of $833.33, it’s $909.09. If moving into the next hundreds group is too much for you psychologically, stay with the $833.33 and forget about January. You’ll have $9,166.63 at the end of 2015 (plus any marginal interest that your savings account acquires.
If you give up, you’ll have $0.
Maybe you’ve made a goal to start investing this year. You have $500 in your Roth IRA from when you ambitiously opened it in December in anticipation of the New Year, but you didn’t add the $300 last month like you wanted to. You only added the minimum of $50 that you’re required to. Now we’re in February. It’s a short month, and you’re feeling like a failure. You’re thinking about just contributing that $50/month. Maybe you’ll try again next year.
Look at the numbers before you give up. Let’s say you’re 20 years away from retirement. If you only save $50 a month and we assume an 8% return on your investments, you’re only going to retire with $29,787.66.
If you decide to do $50 this year, and then actually live up to your resolution of $300/month next year and every year thereafter, you’ll be sitting on $154,126.45 on the big day.
If you get your butt in gear and save $300/month starting today, you would have $165,842.14 when you retired, if all of our metrics were correct. (Which is impossible to predict perfectly without a magical, crystal ball.)
If you start today instead of waiting until January 2016, you will have invested $2,750 more, but gained an additional $11,715.69.
Start getting that money into your retirement today. Missing January wasn’t that big of a deal, but waiting until next year is a mistake near $10,000.
February Can Be Happy
It can be a rough month, or it can be an extremely motivating and wonderful one. Let the shortness of the calendar prompt you to get out there and side hustle, negotiate, or Craigslist your clutter all that much more quickly in order to meet your goals. Don’t let January get you down. It may have been a disappointing month, but 2015 is going to be your year.