The No Debt Plan: Pre-Step #3: Goals

by Kevin on February 18, 2008

This is the third post in a series: The No Debt Plan.

A key step to getting yourself out of debt is to see the light at the end of the tunnel. You need something to motivate you along the way. Something to track and chart. A little thing to remind you of why you are sacrificing and living the frugal lifestyle.

Of course, those little things are goals.

Goals help you see past the day to day issues you face on your path out of debt. For goals to be useful, there are some stipulations. Those stipulations are called S.M.A.R.T. goals.

S.M.A.R.T. stands for specific, measurable, attainable, realistic, and timely. These are all sort of interlinked together.

  • Specific means the goal is not general. In terms of debt, a general goal would be “To become debt free” or “Pay off my credit cards”. A specific goal tells, as you would imagine, a lot of specifics. “To pay $25 extra principle on all three of my credit cards” is a specific goal.
  • Measurable means the goal can be counted or progress can be tracked. “Save money” is not measurable. “Save $25” is measurable; you can tell whether or not you saved $25.
  • Attainable and Realistic means you can actually achieve the goal. It is realistic, although challenging. This is very important as you tackle debt. If I am $25,000 in debt, and my goal is to have $1,000,000 in my savings account one year from now… well, let’s just say that is a nice goal. It is not realistic.
  • Timely means there a time factor associated with the goal. Again, a goal such as “get out of debt” or “save $1,000,000” does not have a date associated with it. You are much less likely to achieve the goal if there isn’t a time associated with it. Placing a date at the of the goal, no matter how far away, means you will be more likely to hit it.

So what are some solid, SMART goals? (Note: these aren’t our actual goals.)

  • To pay off the 16% interest credit card by August 1, 2008.
  • To save $300 per month towards our emergency fund for the first six months of the year.
  • To save $2,500,000 for retirement by age 58.
  • To pay off our home mortgage by April 2015.

The list could go on forever. I encourage you to try using SMART goals in your life.

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