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We all want goals. Goals give us a purpose, something to strive for.
I think you will agree with me when I say that people set goals every day, but most of the time
If you are one of these people, you are not alone. I have been there too.
It took me a while to master the best method in achieving my goals, particularly my debt payoff goals. Back in the day, whenever I get tired of our debt, I hopped onto Google and searched for debt payoff goal printables.
When I find one that I get excited about, I immediately download, print and swear to use it.
However, after downloading, I filled it out with all the information needed. And then put in in a nice binder along with my other printables. I even organized them neatly.
But then, nothing happened after that. The printable was left forgotten and my goals remained as goals, yet to be achieved.
Most of us are good in starting our goals but a few of us make it to the end.
In my desire to overcome this hurdle, I did my research and was able to come up with five simple debt payoff tips to start working and achieving my goals.
I started incorporating these tips in my debt payoff goals. And in such a short time, I was able to achieve my short term goals, which included two paid-off credit cards.
Until now, these tips continuously motivate me to keep on working towards my long-term goal, which is financial freedom.
In this post, you will learn five simple yet powerful debt payoff tips that will help you achieve your goal.
#1 Set Specific But Realistic Goal
One of the debt payoff tips is setting a specific and realistic goal. Having a goal in mind will help you get your focus in place.
In the history of goal setting, the most popular method is the SMART method. This method stands for S-specific, M-measurable, A-attainable, R-realistic/relevant, and T-time-bound.
This method was first published by George T. Doran in the November issue of Management Review. Doran, G. T. (1981). “There’s a S.M.A.R.T. way to write management’s goals and objectives”. Management Review (AMA FORUM) 70(11): 35–36.
In his paper, he discussed the main principles of the SMART goals.
How to use SMART in your Debt Pay off Goals
A goal should be:
Specific– Your debt payoff goal should include the specific amount of debt you want to pay off.
Measurable– You should be able to monitor your progress in achieving this goal.
Achievable– Your goal should be achievable but challenging enough to push you out of your comfort zone.
Relevant– Your goal should make a significant impact
Time-bound– Your goal should have a deadline.
When you apply the principles mentioned above, your goal should look something like this:
“My goal is to pay off $12,000 of Credit Card Debt in 12 Months to enable us to save for a Home Downpayment”.
Now, the goal is specific and measurable, since you have the actual amount that you are shooting for and the ability to measure the amount you end up paying. This goal is time-bound as well since your goal is to pay off a specific amount over a given period.
Whether the goal is achievable depends on your financial situation, but assuming it is, the goal fits that criteria as well. And lastly, the goal is relevant because it stated why there is a need to pay off the credit card debt.
Long Term Goal and Short Term Goal
In goal setting, it is imperative that you should have both a long term goal and short term goals. Long term goal can seem so daunting and can appear too far away to get to.
But when you break it down into short term goals, you will be able to see your progress more clearly. Short term goals help you stay on track to achieving your long term goal.
If we use the example above, one of our short term goal would be:
“I will pay off $1000 per month towards credit card debt.”
Or, “I will make extra $250 per week to pay credit card debt”.
Both of these short term goals are geared towards achieving the long term goal.
#2 Choose A Debt Payoff Method That Works For You
There are different types of Debt Payment Method. Some of these are Debt Avalanche, Debt Snowball, Debt Snowflake, Hybrid method, and others.
Debt Avalanche lets you pay off the debt with the highest interest rate first. This method works for you if you want to save on interest.
Debt Snowball lets you pay off the debt with the smallest balance first, regardless of the interest rate. This method will work for you if you are someone who needs quicker results as encouragements.
Debt Snowflake is a variation of the Debt Snowball, in which you make small but frequent payments to one of your debts. This method will work for you if one large monthly chunk of debt payment is hard on your budget.
Hybrid is a method between the Debt Avalanche and the Debt Snowball, in which you will still list down all your debts, starting with the highest interest first. But this time, you will move the debt with the smallest balance to the top. This method will work for you if you care about interest rate but at the same time needs quicker results for encouragement.
Everyone’s financial situation is different so it is very crucial to choose the method that will work best for you. Having the right approach for your case will help you stick with your goal to the end.
#3 Set a Monthly Debt Payment Budget
Another important debt payoff tip is setting a monthly debt payment budget. It is always easy to just set a monthly debt payment budget, but the hard part is to make it work. A carefully planned budget for debt payment is an integral part of making you achieve your goal.
There are three important characteristics of a good monthly debt payment budget.
- Realistic– A realistic monthly debt payment budget is a budget that is realistic to your financial situation. Do not set a payment budget that is way beyond your monthly income. It is the perfect ingredient in setting yourself up for failure.
- Comfortable. In order for a debt payment budget to be comfortable, it should be within your range of income. It should not take a huge chunk of your monthly income.
- Challenging. On the other hand, although your payment budget should be comfortable, it should not be too comfortable that it would not challenge you to push yourself out of your
Your monthly debt payment budget is one of your short term goal that plays a vital role in achieving your long term goals.
So, how do you come up with a realistic, comfortable and challenging monthly debt payment budget
First, make your monthly budget. If you don’t know how to do that, check out Best Guide to a Monthly Budget, where you will learn how to set up your perfect budget.
After setting up your budget, you will be able to identify how much is left to allocate for debt payment. Take note of the amount because you will need it for later, we will call it left-over money for instruction purposes.
Then, list down all your debts and their corresponding minimum payments. Next, you will add up all the minimum payments.
After that, compare the total minimum payments and the left-over money from your monthly budget.
Are they the same?
If the left-over money is higher than the total minimum payments, carry on.
However, if the total minimum payment is equal or higher than the left-over money, go back to your monthly budget and make some adjustments. Look for some areas where you can cut back. Do this until the left-over money is higher than the total minimum payment.
Now that you have left-over money that is higher than your total minimum payment, you will then add 10-20% more to come up with your Monthly Debt Payment Budget.
For example, if the total left-over money is $500, 10% of that is $50. My Monthly Debt Payment Budget would then be $550.
The amount that you came up with using the steps above is both realistic and comfortable because you took into account your monthly budget.
It is also challenging because you adjusted your monthly expenses and you added 10-20% to the budget amount. Doing this will challenge you to come up with an extra income each month.
Download this FREE Debt Snowball Tracker.
#4 Have A Visual Motivator
Now that you have a concrete action plan, let’s move on to the next debt payoff tips. You will now work on achieving your short term goals. You can either work overtime, find a second or third job or sell your stuff. You will do everything to meet your goal every month.
However, there will be times that the drive to keep working on your goals will be lower than when you first started, and you will find yourself unmotivated. And it’s ok. It happens to the best of us.
To prevent this from happening, the best thing that you can do is to keep track of all your progress.
You can do this by using a goal planner, where you can write your goals, thoughts, reasons why you want to achieve your goals and so on. This way will keep you focused and reminded on why you are working on this goal.
Another way to track your progress is to use visual progress trackers. These trackers will show you how far away are you from achieving your goal and how much you have accomplished.
- Simple– A progress tracker should be easy to understand and use.
- Interactive– A progress tracker should be designed in a way that involves your frequent participation, like shading or coloring your progress.
- Appealing– A visually appealing progress tracker will give you more motivation to keep working on it.
- Visible– In order to augment the purpose of progress tracker, you should place it an area where you see it all the time, like the fridge door or mirror.
Progress with the above characteristics will continuously motivate
#5 Celebrate Quick Wins
Now that you have set a SMART goal, the best action plan and an appealing motivator, there will be no reason for you not to achieve your goals.
To take your motivation to the next level, celebrate your quick wins. Every time you nailed one of your short term goals, do the following;
a. Acknowledge– Whenever you meet one of your goals, verbally recognize it and take time to appreciate it. Let yourself get excited. After all, you worked hard for it.
b. Communicate– Sharing your achievement to someone who cares will further your excitement.
c. Reward Yourself– Do something that you really like in order to reward yourself. It can be dinner at your favorite restaurant, a purse that you wanted for the longest time, or a spa.
By doing all these, you will train your brain to have something to look forward to, and as a result, it will increase your motivation.
Celebrating your quick wins will set you up for long term achievement and success, by making you feel good, happy and eager for more. It is a way to remind yourself that you are well on your way to your greatest achievement yet.
There you have it! These are the five best debt payoff tips that you need to achieve your financial goals. They are simple yet powerful and effective.
Everyone’s financial situation is different, but for every goal, the key to being successful with it is the same, that is COMMITMENT.
When you are committed to achieving something, everything will fall into the right place.
I hope you learned something from this post and you are now ready to jumpstart your debt payoff journey.
What other debt payoff tips can you add?
Don’t forget to download your FREE Debt Snowball Tracker.