2013: The Year You Reduce Your Debt

by Gary on January 18, 2013

Not to the surprise of many people, the Mayans were wrong and we are now beginning a new year. The internet is full of New Year’s Resolutions and tips on how to tackle 2013. It seems every self-help guru of sorts has their own step by step process on how to make 2013 your best year yet for fitness, finance, love, family and the topics go on and on. Everyone who has ever made a New Year’s resolution knows that most goals are not met. Sometimes the goals were simply too lofty. Other times the goals were made, but no plan was ever implemented to achieve them. Motivation is a key factor and if the right motivation is not driving you then the goals quickly go by the wayside.

Financial Resolutions

Still, becoming more financially responsible so that you can get out of debt should be a goal for every American. The ramifications of overwhelming debt and what it can lead to should be adequate motivation. No one wants to deal with debt collectors or file for bankruptcy.

This is an important goal that will affect you and your family. It should not be treated as just another pipe dream. You may have laughed off last year’s goal to get back into shape every time you ate that extra midnight snack, but debt is not a laughing matter. That extra late night burrito slowly killed your chances of rock hard abs just as every swipe of the credit card may kill your chances for a debt free life.

Each individual knows his or her financial situation. Instead of dealing with specifics on how much to spend per month or what percentage of your pay should go to expenses or housing or entertainment, we are going to provide guidelines that you can use to mold your specific get out of debt plan.

Set Clear Definable Goals

“Spend less money” is not a clear goal. Look at what you spent on certain items last year. Break it down into monthly and even weekly spending. Then see exactly what you are going to “spend less money” on so you have a clear objective which you can measure your spending by.

Set Reasonable Goals

If you are on year 4 of a 30 year mortgage, absent any huge financial gains you are not going to be able to pay it off by the end of 2013, so “paying off my home” is not a reasonable goal. However, paying off credit cards might be a reasonable goal. A reasonable goal might be as simple as organizing all credit card payments, student loans or other consumer loans so you know exactly how much your payments are each month. It is amazing that many people make payment after payment, but do not know how much it all adds up to. If you set reasonable goals, you are more likely to achieve them which will not only improve your financial health, but will also improve your mental health by giving you the satisfaction of setting and achieving a goal.

Set up Checkpoints

Monitor your progress on a regular basis. If you wait until July to see where you stand, you might be way behind and will most likely lead you to quit. Alternatively, you might be ahead which gives you the opportunity to raise your expectations for the year as a whole. It is crucial to mark your progress to stay on track. Meeting small goals throughout the year keeps you motivated and moving towards the ultimate overall goal.

Use a Support Group

You do not have to share all the gory details of your 2013 resolution with other people, but you can make a deal with a friend, spouse or family member to check on each other each week or month or quarter to see how the plan is going. If you report one month that you have lost motivation and are behind, your partner might give you the proper motivation speech, slap on the back or kick in the rear that you need to get back on track.

Incentivize

Set up some reward at the end of the year for meeting your goals. Now if your goal was to pay off your car, it would not be wise to reward yourself by buying a new car, but people are more likely to work hard and achieve goals if there is some incentive in place.

This is an over-simplified plan to make and achieve your 2013 New Year’s Resolution. It is an outline that you can take and apply your specific situation and goals to. Excellent financial health should be everyone’s goal. Make this year your year to achieve it.  Good Luck!

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