Tuesday, January 25, 2011

Day 103 - Step 9: Set A Goal

January 25, 2011

I have developed a guide to help you (and me!) achieve the mindset and principles required to successfully become debt free.  This is the ninth in a series of posts about my Twelve Steps to Debt Freedom.
Step 9: Set A Goal
Filomena Scalise / FreeDigitalPhotos.net
If you are ready to move on to Step 9, stop for a minute and congratulate yourself.  You have conquered the toughest part of the battle.  You have figured out you have a problem and taken significant action towards correcting it.  The remaining steps are downhill from here.

So now that you have created your budget and analyzed your finances, what are you going to do with this knowledge?  You know you want to pay off your debt but do you have any idea how long it might take?  Now is the time to start setting goals for your self with respect to your debt payoff.  Now is the time to figure out exactly what you want to accomplish.  Here are four tips to help you get started.

Make your goal measurable.   Don't just set a generic goal to "pay off your debt".  Figure out exactly how much you want to pay off and how much time you think it will take.  Be specific so you are able to measure your progress and feel a sense of accomplishment.  My goal: Pay off $60,000 in debt in 365 days.  Prior to setting this specific goal, I paid off $22,000 in 18 months - nothing to sneeze at.  But now that I have a time frame and a specific amount to pay off, I have paid off $22,000 in 3 months!  Maybe it's my competitive nature or fear of failure, but I truly feel quantifying my goal by adding a time frame and amount to it has made all the difference.

Make it a "stretch" goal.  What amount of debt can you pay off with minimal effort?  Now either pick an amount beyond that or consider paying it off in a shorter time frame.  Accomplishing your goal should take some extraordinary effort beyond what is easily accomplished.  Otherwise it's not a goal - it's more like waking up every morning and congratulating yourself for tying your shoes.  Challenge yourself.

Write it down.  This part of goal setting has really been beaten to death by so many people.  But guess what - it freakin' works!  If writing it down on a piece of notebook paper sounds pointless, get creative.  Keep track of your progress in a journal, make a giant poster, start a blog (sound familiar?), write yourself a letter.

Keep track of your progress.  I may be classified in the slightly nerdy category for thinking this is important, but I LOVE to track when and how much debt I pay off each month.  Seeing a debt balance move quickly to zero - like in my Debt Tracker - reinforces the progress I am making and gets me very excited and confident about reaching my goal.  If you are more of a visual person, draw a thermometer with your debt payoff goal at the top..  For each debt payment, color in a portion of the thermometer to represent your progress.

Setting a goal prevents you from falling into what I consider ignorant bliss.  Lack of thought or action about your goals and your future is dangerous to your well being.  What happens when you choose not to think about the food you put in your body?  Most likely you will gain weight and wake up one day with significant health problems.  What happens when you don't think about the debt you owe?  Well, you probably will never get rid of it and wake up one day with significant finance problems. 

You are never too old to set another goal or to dream a new dream.  - C.S. Lewis

What's your goal?  What's your dream?  Leave a comment and let me know!

Stay tuned......

Read About Step 10: Stop Using Credit Cards
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