Resolution: I want to become debt free in 2014. This is where people usually stop. They may cut some spending the first couple of weeks but then they lose motivation and the New Year's Resolution disappears. You have to create some short-term goals and a timeline like the one below:
- Goal 1 - Identify which debt sources should be paid off first. Always start with the smallest balance and then work your way up, using the free balance from the first source to go after the next, bigger source. If balances are the same, then go after the one with the highest interest rate.
- Goal 2 - Divide the total, or the amount of debt you want to reduce by, 12 months. If you owe $12K, or want to reduce your debt by $12K, then you should shoot for $1K a month.
- Goal 3 - Get your calendar out and mark each quarter and write it down. Every two weeks, or every paycheck, remind yourself about the Resolution consistently.
- Goal 4 - Make yourself accountable.
- I always recommend using Facebook, Twitter and/or Instagram. On January 1st, download little images you can post each month or each milestone so you always see what you were supposed to do when you look in your Pictures or Documents folder. Post it on Facebook and ask your close friends to keep you accountable. If it's a health goal than you should post progress pics as positive attention is addicting.
- Make sure your spouse, if applicable, is on board and talk about it frequently with others. Then when they see you next, they will ask you about how you are doing on it.
- On a notepad or a Word document, write your January 1, 2015 Facebook post telling everyone that you stuck to your 2014 New Year's Resolution. Read it frequently.