By Shannon Calhoun
Anyone else out there going through a financial freak-out moment? I've been feeling financially stressed for awhile. I also feel disappointed with myself when my money situation isn't as good as it could be.
If you're also feeling like you've lost control of your finances, here's what works for me. I set a goal.
Not just those desperate “I’m going to cut my food budget in half, and stop buying clothes, and never have fun again until this is all sorted out” type of goals. What I mean is goals that are Specific, Measurable, Achievable, Realistic, and Time-bound. You know: SMART.
The beauty of SMART goals is that you can apply them to any kind of situation. And if you're serious about a goal, this is the gold standard for goal setting. It forces you to take a deep breath, think rationally and strategically, and make a road map to get where you need or want to go.
Below is my SMART goal for my credit card, just one of three things giving me the financial shakes right now. (The others, if you want to know, are my personal loan balance, and my shrinking savings account.)
Specific: I will pay off my credit card balance of $4,800 by the end of next year.
Measurable. The balance is $4,800. I will make $320 monthly payments until it is paid off.
Achievable. I have 3 months (payments) left this year. This means I will have to make $320 monthly payments for the rest of the year, plus take into account the interest. I also know I get a bonus in November and could use that to make extra payments.
Realistic. I would like to pay $500/month, but I know that isn’t realistic based on my monthly budget. I know that I have the income to make $320/month payments – if I don’t overspend in other areas, thanks to a new income source. If I have extra money or overtime, I could always pay more.
Time-bound. I want to pay it off by December 31 of next year.
Seeing a goal expressed this clearly helps me feel more in control of my finances—and myself.
I know I can, and you can, get ourselves back to solid ground by identifying what got us here (home repairs, vacation, and overspending on non-essentials) and making a plan to get back to where we want to be.
When money gets tough, make a plan, take that first step forward, and feel your anxiety drift away. As you pay down your debt, think about how you can apply SMART goals to other parts of your life. Identifying personal goals and making progress is a great feeling!