Tuesday, December 30, 2008

New Year’s Resolution – To Be Debt-Free in a Year

New Years is always a time of introspection and resolutions. I’m currently snowed in with my family, thinking about the last 12 months, and the next 12. It’s been quite a year, but I want to focus forward. It’s been said that the best way to predict the future is to create it! How do we do that? By following our goals and resolutions. It’s a good idea to make personal, social, health, and financial resolutions, but I’m going to focus on the financial.

With a new child, my main intention is to create a great environment for him to grow up in. At first, I thought I meant enough toys and friends, room to play, and a clean, safe place to live. The more I think about it though, the more it comes to mean getting my finances together so I have lots of stress-free time to spend with him.

I resolve to create financial freedom for my family.

Hmmm. This resolution fails on several levels. First and foremost, a resolution must be inspiring, achievable, and measurable. This is certainly inspiring, and makes me want to get out of debt, but what is financial freedom, and how do I measure it? On what time scale is it achievable? So, looking at that, and the mention of debt makes it more clear what I’m aiming for.

I resolve to be free of credit card debt by the end of the year.

Now, let’s put it to the test. It is inspiring, because the feeling of not having to deal with debts, credit card bills, and phone calls when I’m late is a really great feeling. I can really latch onto that feeling to help keep me going when I start to lose focus. Is it achievable? It can be, if I follow through and stick to the program. And that’s why it has to be inspiring – to keep me on the program through the ups and downs.

Now, is it measurable? Certainly. Let’s say I have $10,000 of debt – that’s very measurable. I have to pay off $10,000 this year. But to keep on the program, we have to have a program. So we’ll break it down to $5,000 in six months, or $850 a month. Now we take those monthly goals, and put them on the calendar.

Debt, January 31st: $9,150

Debt, February 1st: $8,300 all the way to

Debt, December 31st: $0

The Way to Accountability

Now I know how to check on myself. Every month, before I turn the calendar, I can look at my goal and see how I’m doing. I will have monthly reminders, and my inspiration of a debt-free life to keep me going. The calendar creates accountability, and by putting it up, and telling my family about it, I create more accountability.

This is the last step – accountability. What happens if I fall off a little? Will someone call me on it, or do I just ignore it? Do that, and it will be easier to forget next time, and soon I’ll be right where I started next December.

But by following my five parts of a good goal, I can make it. Of course, this isn’t a replacement for hard work, it’s a way to direct my hard work. I just need to keep in mind:

  1. Inspiring
  2. Achievable
  3. Measurable
  4. Steps on my Calendar
  5. Accountability

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