The First Steps
Dec. 17th, 2009 02:02 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jamethiel posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
actyourwageSo, there are things you want to do in life. Get out of Debt. Own a house. Maybe an overseas holiday.
Unless you have really good money management skills already, these things are not easy.
So I want you all to take ten or twenty minutes and think about what you want out of life that money will help you towards. Go on, I'll wait. Write them down.
Now analyse your goals in terms of time. When will you realistically be able to achieve this? Start ranking your goals in terms of short term, medium term, and long term. Put anything you don't think you can ever achieve in long term. (As a guideline, short term is something you can achieve in the next month, medium term is something that will take a couple of months to a year and long term is over a year)
Set them out in a list. Have it written down. Writing things down makes them more concrete, and also helps you keep your priorities on track. For example, have my list.
Short term
1. Have enough money for a medical appointment sitting round at home in cash.
2. Either repair or replace my iPod.
Medium Term
1. Get out of credit card debt
2. Save the money necessary for a dental appointment
3. Save up three months salary as an emergency fund
Long Term
1. Own a house
2. Pay off my HELP (Higher Education Loans Program. It's a loan the government gives you for university study)
When I started off this list, my credit card debt was a long-term project. By breaking it down into steps and doing them every month, I'm about 8 months out from being out of immediate debt.
Your next step is to break each goal down.
1. Set a definite goal (I will be out of debt. I will own a house)
2. Work out what you need to do to achieve this. Be specific. For me to be out of debt, I needed to:
-Reduce the interest rate on my credit card. (I did this by transferring to another bank that has a honeymoon rate of 5% for 15 months. Which gave me the timeframe for my next step)
- Calculate what I had to do to get out of debt in that 15 months. This had to be achievable--it couldn't take every last penny, otherwise I would end up spending and be worse off than I was before. Half of money is psychological and knowing yourself (FYI, if you have the details of your interest, compound period and a time goal, I have a formula that can help you calculate your payments to achieve that goal)
3. Set a series of short term goals that are stepping stones on the path. "By the end of next week, I will have finished researching credit cards and will have identified the best one for me" or "On the day I get paid, I will pay x dollars to my credit card"
4. When you finish the goals, give youself a pat on the back. This stuff is hard. Also, you may find that you need to track your progress to keep your motivation up and yourself on track. I use a "Percentage debt paid" column in my budget spreadsheet, with monthly tracking and how much I've got to go.
So, I'd like to hear from you! What are your goals?
Unless you have really good money management skills already, these things are not easy.
So I want you all to take ten or twenty minutes and think about what you want out of life that money will help you towards. Go on, I'll wait. Write them down.
Now analyse your goals in terms of time. When will you realistically be able to achieve this? Start ranking your goals in terms of short term, medium term, and long term. Put anything you don't think you can ever achieve in long term. (As a guideline, short term is something you can achieve in the next month, medium term is something that will take a couple of months to a year and long term is over a year)
Set them out in a list. Have it written down. Writing things down makes them more concrete, and also helps you keep your priorities on track. For example, have my list.
Short term
1. Have enough money for a medical appointment sitting round at home in cash.
2. Either repair or replace my iPod.
Medium Term
1. Get out of credit card debt
2. Save the money necessary for a dental appointment
3. Save up three months salary as an emergency fund
Long Term
1. Own a house
2. Pay off my HELP (Higher Education Loans Program. It's a loan the government gives you for university study)
When I started off this list, my credit card debt was a long-term project. By breaking it down into steps and doing them every month, I'm about 8 months out from being out of immediate debt.
Your next step is to break each goal down.
1. Set a definite goal (I will be out of debt. I will own a house)
2. Work out what you need to do to achieve this. Be specific. For me to be out of debt, I needed to:
-Reduce the interest rate on my credit card. (I did this by transferring to another bank that has a honeymoon rate of 5% for 15 months. Which gave me the timeframe for my next step)
- Calculate what I had to do to get out of debt in that 15 months. This had to be achievable--it couldn't take every last penny, otherwise I would end up spending and be worse off than I was before. Half of money is psychological and knowing yourself (FYI, if you have the details of your interest, compound period and a time goal, I have a formula that can help you calculate your payments to achieve that goal)
3. Set a series of short term goals that are stepping stones on the path. "By the end of next week, I will have finished researching credit cards and will have identified the best one for me" or "On the day I get paid, I will pay x dollars to my credit card"
4. When you finish the goals, give youself a pat on the back. This stuff is hard. Also, you may find that you need to track your progress to keep your motivation up and yourself on track. I use a "Percentage debt paid" column in my budget spreadsheet, with monthly tracking and how much I've got to go.
So, I'd like to hear from you! What are your goals?