# resolutions

## More Than Resolutions: Meet a Financial Goal

by on January 27, 2010

Join us all month for 31 Days of Organizing for a Better 2010!

As I mentioned before, financial goals are some of the most popular resolutions that people make every year. We’ve talked about getting out of debt and building your savings, but what about other financial goals, such as saving up to buy a home, working on your retirement fund or enjoying a nice vacation? It doesn’t matter whether your goals are big or small, setting goals is an important part of financial planning. Today, Crystal from Money Saving Mom is sharing three reasons we should all be setting financial goals.

Our family’s goals this year are to fully fund our emergency fund, save up for the addition of a screened-in porch and go on a cross-country adventure. We all have different financial goals, but the steps each of us can take today to achieve them are the same:

## 1. Write down your goals and timeline.

Calculate the exact amount you need for each of your financial goals and write those numbers down. Remember that it’s better to overestimate and have extra money than to underestimate and end up using debt to bridge that gap. Include a timeline of when you’d like to achieve each goal by, break it down into monthly amounts and add it to your budget.

It can be tempting to simply name a goal without taking the time to see if it’s even possible, but you’re much more likely to achieve it if you think it through.

For example, if you want to take a vacation to Disney World, you need to first calculate how much the trip will cost you, being realistic about the expenses for food, park entrance, accomodations, souvenirs and so on. Let’s say you set a budget of \$3,000.

Next, set a timeline for achieving your goal. If your trip is planned for March of ’11, that gives you 13 months to achieve your goal, but you probably want to be sure it’s fully funded by February so that you’re not scrambling at the last minute.

Divide your goal by your timeline to calculate your monthly goal amount. Based on the numbers above, you need  to save up \$250 a month. At this point, you need to decide if your goal and timeline is reasonable based on your budget .

It’s okay to set a goal that stretches you, but be realistic or you’ll just end up discouraged.

## 2. Share the vision.

If you’re married, it’s so much easier to achieve a financial goal if you and your spouse are on the same page. It’s hard to scrimp and save if only one of you has a vision for your goals.

Finances are one of the biggest sources of marital conflict, but they don’t have to be. Commit to working through your differences and finding common ground. Figure out what your overarching goals are — to live debt free, to live below your means, etc. — and then what your short- and long-term financial goals are. Make sure you approach your goals as a team and dream together! Crystal has also been sharing how she and her husband met their goal of saving up to pay cash for their first home, and I’m sure she’d agree that it would have been a lot harder, if not impossible, if they didn’t share that vision!

## 3. Put money toward your goal first.

Just as you should set up automatic transfers to your savings account, you should figure out how much money is in your budget for a specific goal and set up those transfers automatically as well. If you have variable income and can’t set these transfers up automatically, pay your basic bills and then immediately transfer whatever you can to savings. If you leave money in your account for a rainy day, you will most likely spend it. Get it out of your account as quickly as possible!

## 4. Check your progress monthly.

Monthly check-ins are a critical part of achieving any financial goal. Take time to check and write down your progress so that you stay motivated to keep moving forward. It can be tempting — especially when you’re unable to meet your monthly goal — to simply ignore it and pretend it’ll all work out in the end, but it doesn’t usually work that way. Evaluate your progress (with your spouse if possible) and be realistic about the status of each goal.

## 5. Adjust as needed.

It may be that the \$250 a month from our Disney World example above is too much for your budget right now, and sitting down to evaluate it on a monthly basis gives you time to either change your goal or consider other income opportunities to help you achieve your goal. Too often we ignore problems with our finances with the hope that the problems will just go away if we don’t acknowledge them. Instead of approaching your budget and financial goals that way this year, tackle them head on and be proactive as you look for ways to achieve your goals.

What are your financial goals is 2010? Have you written your goals down and set monthly goals to help you achieve them?

The 31 Days of Organizing for a Better 2010 series is sponsored by Get Organized Wizard. Find ready-made action plans, organizers and checklists for more than 200 projects in the Life & Goal Organizer.

## More Than Resolutions: Pay Off Debt

by on January 19, 2010

Join us all month for 31 Days of Organizing for a Better 2010!

It’s said that the average American household has more than \$8,000 in consumer debt, not including cars or homes. That’s a lot of money to owe other people, especially when you factor in month interest payments on that amount!

There is no time like the present to make a decision to tackle your debt in 2010 and create a plan to actually do it. Jessica from Life as Mom is sharing the reasons her family wants to continue to live debt free, and she’s got some great reminders if you’re looking for motivation to pay off your debt.

Here are five steps to help you get get organized and ready to work toward your goal:

## 1. Write down all of your debt.

Open each credit card statement and write down the amount you owe as well as the minimum monthly payment. Next, add medical bills, family debts and any other debt obligation you owe. You must start with this step in order to have a clear picture of where you stand today. Although the results may shock or scare you, don’t let yourself be paralyzed by the amount of debt you have. Instead, let it motivate you to make the changes necessary to get out of debt before you sink even further.

If you only have a little bit of debt, it may actually be harder to get motivated to pay it off, but let me encourage you to do just that. Without debt and the accruing interest, you can build your savings and live without the extra pressure of those monthly payments.

## 2. Choose a method for paying off your debt.

There are several methods that people use to pay off their debt. To be honest, I’m not sure it matters which method you choose, as long as you consider what motivates you and will keep you moving toward your goal.

Many, many writers throughout the blogosphere advocate Dave Ramsey and his methods, including his popular book, The Total Money Makeover. Not only do his methods make sense, but he is also inspiring and engaging, which helps motivate those who follow his plan to actually achieve their goals.

Dave Ramsey advocates the snowball method, which Alyssa from Kingdom First Mom explains in more detail today. By starting with your smallest debt and paying it off first — regardless of interest rate — you’re able to create momentum as you pay off each one. Continue rolling your debt payments together toward the larger debts so that you’re able to knock them out faster.

Other financial advisers advocate starting with the debt with the highest interest rate so that you’re eliminating that interest expense as quickly as possible. The downfall of this method is your highest interest rate may also be your biggest debt, which means you won’t get to experience the thrill of paying something off nearly as quickly.

Some people prefer to increase their payments on all of their debts at once. With this method, you’re making  progress against all of your debts at once, but like the second method, you won’t get to experience the emotional high of paying off as much debt along the way, which is what often keeps people motivated to keep going.

Think carefully about your personality before choosing a method and then pick the one that you believe will work best for you. Remember that you can always change methods midstream if it turns out it’s not working the way you thought it would!

## 3. Brainstorm additional income opportunities.

If your debt is large and unmanageable, it may call for drastic measures in order to make headway and avoid financial disaster. Part-time work at a local store or company is one option, but there are many other income opportunities to consider as well:

:: Babysit in your home

:: Clean homes or offices

:: Start a home party business (such as Pampered Chef)

:: Set up an Etsy shop

:: Sell on eBay

Look for an income opportunity related to something you’re passionate about so that you’ll stay motivated to continue working and paying off your debt.

## 4. Look for ways to cut expenses.

As you increase your income, you should also be on the lookout for ways to decrease your expenses, which will leave you more money to funnel toward your debt. Some of these changes may seem like a sacrifice (giving up Starbucks?!), but living without the stress of growing debt is worth the sacrifice!

This isn’t a financial blog, so I won’t go into much more detail here, but there are dozens of financial blogs to help you understand your finances, live frugally and stretch your budget. Here’s a list of the top 100+ to get you started!

## 5. Track your progress.

As Alyssa shares in her post, visually tracking your progress can be a huge motivational tool as you work toward paying off your debt. You might set up a white board like she and her husband did, or you might prefer a spreadsheet that you keep on your desktop and update every month. If you’re creative, you could even use illustrations to show how much you’ve paid off and how much you have left. Again, how you do it doesn’t matter nearly as much as simply doing it.

It might be uncomfortable. It might make you want to curl up in a little ball and cry. But those are both much better alternatives to simply ignoring it and allowing it to continue to accrue.

Do you have an inspirational story of paying off debt? Is it one of your goals for 2010?

The 31 Days of Organizing for a Better 2010 series is sponsored by Get Organized Wizard. The Design Your Life e-program is a comprehensive self-improvement program that delivers ongoing structure, motivation and accountability for taking action.

## More Than Resolutions: Build Your Savings

January 18, 2010

Join us all month for 31 Days of Organizing for a Better 2010! Over the past couple years, the economy has wreaked havoc on millions of families’ financial stability. Layoffs, the housing bubble and reduced spending have impacted many, many people and illustrated the importance of having money in savings for times such as these. […]

## More Than Resolutions: Create a Budget

January 2, 2010

Join us all month for 31 Days of Organizing for a Better 2010! When it comes to the most popular New Year’s resolutions, there’s probably a tie between those related to health and those related to finances. Obviously both of those categories have a huge impact on every area of your life, so it’s no […]