Goals are plans of action. They are the things that you aspire to do and get your blood pumping just thinking about how to get there. Setting goals is one of the most crucial, if not the most crucial, steps in doing something you would really like to accomplish in your life.

Setting and reaching goals can be one of the most fulfilling things you can do in life. It doesn’t matter if it’s financial goals, personal goals, or even career goals. Many researches have just found that setting, planning, and reaching goals are key ingredients to living a more fulfilling life.

Just wishing to do something isn’t going to get you on the road to success. To hop on the fast track to getting out of debt you need to set goals.  The key thing to do when thinking about goals is setting SMART goals. No, that’s not calling your goals dumb. SMART goals are goals that are

S : Specific

M: Measurable

A: Attainable

R:  Realistic

T: Timely

Let’s break each of these down to help you understand them a bit better. The “s” in SMART goals is for specific. You need to have a pretty specific idea of what you would like to accomplish. Just telling yourself “I would like to pay down my debt” really doesn’t give you a good picture of what it will take to meet your goals. Are you talking credit cards, student loans, medical bills? Or are you talking all of the above. Be specific! A specific goal would sound like this

“I would like to reduce my credit card debt overall.”

This statement tells you exactly what your goal is, and what you are hoping to accomplish! There really isn’t any gray area, so you can tell if you hit your goal or not.

The “m” stands for measurable. This one is a little tricky because its really only talking about measuring the goal itself, not the time frame. That is coming up later. If you don’t know where you started or how much progress you want to make on your goal it’s really hard to see if you have accomplished what you set out to do. Let’s make our previous goal measurable!

” I would like to reduce my credit card debt 10% overall.”

Now you know exactly how much you need to reduce your debt to meet your goals. If you owe $1000 on your credit cards all together, if you get it down to $900 you have hit your goal! $900 is a concrete number you can shoot for! It’s not something floating around in outer space!

The “a” stands for attainable. This is one part of goal setting that I think is the most important to understand, and it does take a little more insight and practice to get this one right. You want to make your goals something that you can actually reach. If you set your goal to be to get out of debt in 6 months, and you are $20,000 in debt, unless you hit the lottery that goal really isn’t attainable.

On the flip side, you want to challenge yourself as well. If your goal is to get out debt, you wouldn’t want to say it would be great to be $5 less in debt. Yeah, you can hit that goal, but is it really helping you in the long run. Cheating yourself really doesn’t sound like a fun way to get things done.

So is “I would like to reduce my credit card debt 10% overall” attainable? At this point, we don’t know because we haven’t set a time frame, but it sure seems like it’s something that shouldn’t be too hard to accomplish.

Now onto the “r”. “R” is for realistic. This one is pretty closely related to the attainable part of goal setting. It’s great to shoot for the moon, but you want to have a realistic idea of the situation you are in, and if your goal is realistically something that you can reach. In the world of weight loss, it wouldn’t really be realistic to set a goal to lose 100 lbs in a week. Even if you didn’t eat all week it’s pretty much physically impossible to meet a goal like that! Just be honest with yourself on this one. Setting goals is supposed to help you develop an action plan, not set you up for failure.

Lastly, “t” is for timely. Setting a time frame is crucial! You don’t want the timeframe to be too long so you lose sight of what you are trying to complete, but you don’t want it so short that there is no realistic way for your to achieve your goal. Now make your debt goal  have a timeframe.

” I would like to reduce my credit card debt 10% overall in by August 17, 2012″

Notice there is  put a specific date. It would be too easy to just keep rolling the goal plan back if I had put in six months, and where’s the progress in that. Don’t take that to mean that you have to be rigid and pass/fail in your thinking. Just hold yourself accountable, but at the same time understand that life does happen and you might have to reset your goal if something does interfere with your plan.

Go ahead, challenge yourself. Set those SMART goals! That is the next step to getting a little bit closer to Couponing Your Way out of Debt.

Last week, we spoke about how to stop the bleeding and digging yourself further in debt. This is the first great step in successfully starting to dig your way out of the never ending abyss that is credit card spending and debt. Congrats, you have made it this far! How does it feel? I know I feel a lot better since I have put my credit cards in a place out that my grubby little hands can’t reach! I didn’t even hyperventilate!

Now that wasn’t that bad was it? Here comes the real test of your drive to coupon your way out of debt! Living beyond your means! You know what I mean. When you convince yourself you absolutely have to have that sweater, that video game, or any other item you are dying for, but come bill time find that you don’t have enough to cover your bills let alone pay down your debt. Even though I am a self professed Frugalista, I will share a dark secret with you. This is the ABSOLUTE hardest step for me. I can’t tell you how many times I have had to repeat this step to try and get squared away again. I am not going to lie and tell you it’s an easy step, but trust me when you do conquer it and start to get the ball rolling you will feel so much better!

This guy named Murphy lives in my life, you might have heard of him Murphy, Murphy’s Law. Yeah, well because of how my income is and my family lives we rarely have the ability to plan for Murphy’s arrival and it’s usually at the worst time possible. Just last week, we found that Mr. Crunchy had a flat tire on his car. Didn’t have the $100 to buy the tire saved up, so yep had to borrow the money from a bill. THIS is how my family gets into trouble.

What’s your point your asking? Well my point is, it’s those little “I gotta have it” moments that cause Murphy to bite you in the butt. Most of the time that leads us to whip out those credit cards again. Hey you, put that down remember last week? We are NOT bringing those bad boys out again! Not at least until they are clean!

Like I said, I have practice at this step and I have finally come up with some sure fire ways to help stop living beyond your means. The first step to doing that is to sit down and really take a look at what is coming into your household income wise and what is going out for absolute necessities. Just to clarify this is how I break down necessities.

Bills
Rent/Mortgage
Car Payments (if any)
Car/Home Insurance
Electric Bill
Gas Bill (if applicable)
Water and Garbage
Telephone (notice I didn’t say cell phone)

Other Necessities
Groceries
Clothes
Personal Care (basic hair cuts, personal care items)
Gasoline for automobiles
Mediciations and dr.s visit copays

Ok, now after you have all the NECESSITIES listed I want you to write down all the other stuff that you have in bills. This would be things like credit cards, life insurance, cell phones, gym memberships, etc. Any expense that you pay each month, write it down.

After you have it all written and have your monthly total of bills and expenses, I would you to subtract that from your monthly income. For you income, pull out a paystub. We want this to be as accurate as possible. Your calculations should look something like this.

Income 4000 (take home pay)

Necessities 2750

Non-necessities 1000

Total left after monthly bills:  $250

 

Wow, this should open your eyes! At least it did for me. In our case $250 is NOTHING leftover after all our monthly bills. That doesn’t include anything for things like eating out, Redbox rentals, unplanned expenses. It’s no wonder when you add up all our extra purchases here and there that we can’t do anything but tread water!

That is why asking yourself some basic questions can be really key to getting your finances back on track and getting yourself out of debt. The very first question you should ask yourself “is there anything I can take out of my monthly bills?” Is there anything you can live without? I found that Mr. Crunchy and I had to have our cell phones since we do not have a home telephone, but I found that we were grossly over paying for minutes and data. By contacting our cell phone company and adjusting our rate plan I was able to save $60 a month! Now we’re up to $310 left over.

I was also able to take a look at our cable bill. We were getting charged for a lot of channels that we don’t even watch! I sat down figured out what we watched, and then found a lower package that had all the channels we really loved to watch. It saved us another $60 bucks chaching! Now we’re up to over $370 left! If you are daring, see if you can go without cable all together there are tons of ways you can still watch your favorite shows! That could save you hundreds of dollars a month!

After you have gone through all your bills and wittled down what you can, it’s time to take that “live without” mentality and take it to the store with you every time you shop. This is going to take some slowing down and challenging your “norm.” (It was your norm that got you in this bind in the first place wasn’t it?) This step can be a little uncomfortable. I found the first few weeks were the hardest for me, but once you start feeling a little more breathing room in your budgets it is so worth it!

Here are a few ideas of things that you can hold true to in order to stop living beyond your means:

~ Plan to never shop unexpectedly. Make all your purchase planned purchases. That way you can maximize your sales, coupons, and of course savings

~If you feel an impulse buy coming on, ask yourself “Do I really need this?” (no looking fabulous at the company party is not a need)

~Listen to your gut. Is it screaming at you that you probably shouldn’t buy this? Then it might be smart to listen

~Any impulse purchase you DON’T buy, use the money you would have used and pay down a credit card or some other bill. The money was about to be gone anyway. You might as well put it to good use and help your cause!

The beginning steps are some of the hardest to take, but they are also some of the most rewarding! Ever baby step you take closer to your goal, you will take giant steps toward feeling debt relief. You will start noticing you can breath a little easier and are on your way to Couponing your way out of debt!

Join me for the installment in the Couponing my way out of debt series: Goal Setting: How to make your Dreams a Reality

Credits:

Thanks to Paysource.net for the photo

The decision to finally take charge and get out of debt is the first step in a life changing process. It’s not an easy step, nor a quick and easy process. Unfortunately the truth about debt is that it takes two seconds to get up to your eyeballs in debt, and can take YEARS, yes years, to get out of it. Nevertheless, you are here step one; choosing to change how you live and use coupons to dig yourself out of debt! Congrats, woohoo. You should throw yourself a party, well at least a virtual one.

Ever heard the saying that “a goal without a plan is just a dream”? This completely applies to getting out of debt. You aren’t just magically going to get there without having some set idea of how you are going to get there. Of course, it’s absolutely normal to have to adapt and change your plan over time, but having a plan is essential to changing that dream into reality.

Here I go, feet first into Couponing my Way Out of Debt. I am a completely visual person. Being able to SEE that I am making progress on this insurmountable pile of debt is a must. Without it, it’s no wonder a feeling like a SUV spinning it’s wheels in the sand consumes me. The only thing I gain with out something visual is eye strain and a migraine.

Ok, I am going to challenge you do to something scary. Don’t worry, I am doing it too. I want you to gather up every bill, credit card, bad debt collection you have and sit down with it. Yes, you are actually going to have to look at it. Be honest with yourself and what you have! Don’t rationalize and say “oh that one doesn’t count, I am gonna pay it off.” Grab them all. Then grab a notebook, and a computer (I heart Excel) and get it all on paper.

Writing it all down isn’t a step to torture you, it’s a step to show you where the beginning is. This is ground zero. Even if it turns out to be a rather large, scary number that you never dreamed in your worst nightmare you need to know! Don’t let this step send you into a spiral of despair. Think of it as the step where you CHOSE to take control. I don’t know about you, but one thing I am NOT is a victim. Our family has had a lot of bad things happen at really bad times, ie Mr. Crunchy’s unemployment shortly after moving to a new state, but I will always set my goals to move forward. (Even if life makes me take ten steps back)

Got your bills and papers? Great! Need a break? Too bad. You aren’t even done with the fun part yet. After you have written down all of your bills and balances, write the total down. Personally, I am going to write the grand total on a sticky and put it on my mirror in my bathroom and then put another one in my wallet. Why the heck am I doing that? No, it’s not because I am a masochist nor a sadist. It’s so I don’t lose focus. Every time I see that number it’s going to remind me how much I want to see that number go DOWN!

Now that you know where you are starting, it’s up to you to STOP THE BLEEDING! Think of it like this. Your in a sinking ship, and all you have is a pack of gum to patch holes with. Every hole you find, you patch it up, but another springs up. You’re soon to run out gun, but then you realize you are wearing spiked shoes that are CAUSING the extra holes! Don’t you think it smart to take off those shoes! It’s not  your plan that keeps failing to get you out of debt. It’s your inability to realize you have other habits that keep sinking your ship. (That’s usually why most people hop overboard after their attempts to get out of debt)

I challenge you, stop the bleeding. The first step in stopping the bleeding is to STOP USING YOUR CREDIT CARDS! Impulse buying is the biggest culprit of charging up credit cards. My first  step this week is to take all of the credit cards out of mine and Mr. Crunchy’s wallet. Think of the scene in Confessions of a Shopaholic. Take those bad boys and freeze them in a block of ice. Hide them in a place where even you will forget where they are. Sounds painful doesn’t it? It’s really not. Very quickly you won’t even realize that they are gone! I promise.

That’s it, grab your wallet hide those cards or for those that are really bold cut that bad boys up! Make credit card confetti. Feels much better doesn’t it. I know I do.

Notice that I did NOT say to close your credit cards. Part of lowering your debt is the added benefit of a higher credit score. If you shut down all the credit cards you are promising to no longer to use, your ratio of your balance to your credit card limit will automatically go to 100%. That really hurts your credit ranking. So, for this first step we are just going to make the cards inaccessible.

What about emergencies? Well, I have found in my career in banking and mortgages that very few purchases on credit cards are actually emergencies. Needing your nails done for your favorite cousin’s wedding does not constitute an emergency. Take a leap of faith and trust me. As you pay down your debt, and more of your cash flow opens up you will actually have the ability to save for true emergencies. Don’t worry about things that have not happened, and let it derail you from reaching your goal of lowering your debt.

Now that all the bandages are in place and the bleeding has stopped, you have made  significant step towards couponing your way out of debt! The next step is to stop living beyond your means. I will teach you a few tricks to spot needless spending, and how stopping it can help you or hurt you if you don’t.

Tune in next time to learn more about how to STOP LIVING BEYOND YOUR MEANS, until next time!

Since I was able to share a happy ending to my Couponing my Way Home Series, I thought it was time to start a new series to help you meet your goals. I have always had the goal of saving money and being frugal. It’s an ongoing process, but nevertheless the goal is there. Over the course of the next 10 weeks, I am going let you in on my next journey; Couponing my Way out of Debt. Yes, you read that right I have debt.

Even though I pride myself on being a relatively frugal person, I do still have times when I live beyond my means. I know shock and horror! I wish I could report that I could coupon my way completely out of debt in 10 weeks, but that isn’t mathmetically possible. What I can do is show you how I plan to make a large dent into some of our family’s debt over the next few weeks.

Coming from a finance education and professional background, I hear all the time how people can’t afford to pay off their debt or that if they can only pay $5 extra bucks a month, they might as well not try! That couldn’t be any farther from the truth. You can’t NOT afford to get out of debt, and every dollar extra counts. It’s interest you aren’t paying aka money you are throwing away.

Follow me on this 10 week journey to see how putting your mind to a short term goal like 10 weeks, can help you see how much you can pay down. The momentum might just be contagious and you will want to continue your journey to getting out of debt beyond the 10 weeks!

Couponing My Way out of Debt will be a 10 week series starting on January 27th and ending with the 10th edition on March 30th! Watch as I share my triumphs and stumbles and pick myself up to move one step closer to my goal of being 100% debt free!

Here is what you can look forward to during this series:

1/27/12: Week One: Stop the bleeding! The First step in getting out of debt

2/3/12: Week Two: Living Beyond your means, and how to stop!

2/17/12: Week Three: Goal Setting: How to make your dreams a reality

2/24/12: Week Four: Cutting back and still living: How to embrace the new you.

3/23/12: Week Five: Need versus Want: Questions to ask before making that purchase

3/30/12: Week Six: Changing your Mind set: Frugal is the new chic

4/06/12: Week Seven: Crunchy takes on Dave Ramsey: Is it for you?

4/13/12: Week Eight: Income Tight? A few tips and tricks to bring in more income

04/20/12: Week Nine: Building up that Nest! Getting out of debt and saving at the same time

04/27/12: Week Ten: Ten weeks and beyond!

I am really excited to get started on this journey and to walk it with you guys? What do you think, can you challenge yourself to learn and follow along? Stay tuned. Check back every Friday here at Crunchy Frugalista to see how I am doing Couponing my Way out of Debt and to get tips on how you can get there too!