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Setting Goals for Financial Freedom in 2009
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Looking forward to a new year and the mantra of change, perhaps we can buy some time to review and regroup from 2008. Setting financial goals give us a destination to work toward, and are the first steps to moving toward where we want to be.
Setting goals doesn’t have to be an onerous process; instead, make it enjoyable. Visualize being out of debt, or purchasing that first or second property, reducing your dependency on your job, having more free time to travel or do other things. What will it take to get there? Have you started developing your plan? Jot down your end goal, and use that as a guide to develop the intermediate steps.
From time to time, it may seem that no progress is being made, but don’t be disheartened. Just as a new workout regimen may not seem to yield immediate results, the incremental results eventually become a tangible sign of your physical fitness. The same principle exists with financial health. You establish credit by paying bills on time and taking baby steps toward independence.
The point is this: where you are is where you are. Opportunities exist for the diligent. If you are trying to make moves this year, don’t sabotage your own efforts by going about things blindly. Doing things purposefully, after developing a strategy, provides momentum which can often afford you the opportunity to recognize and acknowledge your steps toward liberation.
So how do you do it? Let’s take something common like getting out of debt:
I. Where do you stand financially?
How far in debt are you? Who are your creditors? Make a list with the balances, the interest rates, and the minimum payments. As you see your debts staring at you, you will find motivation to start examining what it takes to eliminate your debt. Remember, it takes time, but if you are diligent you will get to enjoy the satisfaction of crossing items off of your list.
II. Stop Using The Cards
You have to reduce the principle. The only way you can do this is to make larger payments on the debt than contributions. By sticking to cash, most people find their spending habits change dramatically. Of course this takes planning—preparing daily lunch and finding other cost saving measures can be a hassle, but it is worth it in the long run.
III. Lower Your Cost Of Debt
Are your creditors charging ridiculously high rates? Perhaps you can do a balance transfer to another card with a lower interest rate. It’s tax season. Can you forego some of the things you wanted to do with your card? A refund can provide a head start to paying down any accumulated debts.
IV. Attack High-Interest Debt
Try to attack your debt in order of interest rate. Some people like to tackle the small amounts first, which is sometimes a good strategy when debts are small. If they are not, however, delay your gratification and go after the costliest debts first. You will always dig yourself out of a hole faster.
V. Track Your Spending
Through it all, continue to track your spending. By monitoring where your money is going you will have better insight when developing a budget, as well as plotting your next financial goals.
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