5 Simple Steps To Making Your “Get Out Of Debt” Resolution Stick - Part 1
We are now officially two full days into 2009… How are you doing with your New Year’s resolutions? Hopefully you’ve managed to stick with them so far!
In today’s post, we’re going to look at the first step in my 5 step system to make your resolutions stick. This first part is called Being Realistic About Your Goals (or as my daughter used to tell me “Get Real!”)
One of the biggest problems with most people’s New Years Resolutions, whether they want to get their debt paid off, quit smoking or lose weight, is that they set unrealistic goals.
They decide to quit smoking “cold turkey”.
They decide they want to lose 20 pounds and they’re going to stop eating junk food and start exercising every day.
They want to get all their debt paid off by an unrealistic date and they’re going to stop overspending and change their financial habits completely, starting January 1st.
Unfortunately, this is almost always destined for failure. Whether it’s quitting cold turkey or changing your spending habits overnight, trying to make a drastic change in your lifestyle at the drop of a hat is extremely difficult.
Look at it this way…
If you have been accumulating debt for several years, you’ve probably got some bad habits built up around the way you spend and how you think about credit. It took you years to develop those bad habits, do you really think you can “undevelop” them overnight, when the clock ticks over from December 31 to January 1?
It just won’t happen. You might manage to get a few days or even weeks of forcing yourself to act differently, but if you don’t build the proper foundation under your new habits, you will most likely fall back into your old ways before long.
The better way to approach a major goal like getting your debt paid off is to spend some time planning - determine exactly what it is you want to accomplish, and how long it will reasonably take you to reach your goal.
If you’ve got $20,000 in debt and you can only afford to pay $500 a month toward it, you can’t expect to have it all paid off by the end of the year. 12 months of $500 payments is only $6,000 - $14,000 short of your total debt (and that’s not taking interest into account).
You need to sit down and figure out how much you can realistically afford to pay towards your debt every month, what kind of lump sum payments you can most likely count on through the year (like an income tax refund for example) and what order you’re going to pay off your various debts. Then you’ll have a good idea of how long it’s going to take.
Plus, you’ll have an action plan you can follow.
Instead of just starting the year thinking “I’m going to pay off my debt” but not really knowing how you’re going to do it, you’ll have a plan you can follow.
- You know how much you will pay towards your debt every month
- You know what kind of extra payments you can make through the year
- You’ll have an idea of when you’re going to see the fruits of your efforts
Nothing is written in stone of course. Things will come up unexpectedly, both good and bad. You might suddenly come into some extra money to pay off your debt, or you might have unexpected expenses pop up that will force you to change your plans.
But having a realistic plan is going to make your goal a lot more achievable, and you’re going to be more likely to stick with it since you’ll (hopefully) be seeing the expected results.
In the next part, we’ll look at exactly how you can come up with your get out of debt plan.
Here are the links to the rest of the steps in the series:
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