So I’ve set an audacious goal this year. I’ve decided that I want to be out of debt by the end of the year. I don’t have credit card debt because quite frankly I don’t like credit cards. However, we had a business and over the last couple of years we just couldn’t compete with the “large companies” so we closed its doors. That’s all good but it has taken my husband two years to get back to paid work.
He has been working, helping a friend renovate a very old building into a restaurant and lounge. Pay will come eventually but in the mean time we were barely making ends meet with my income supporting a family of 5 and 2 business expenses. To say we got behind is downplaying our finances….. BUT…..
Things are radically shifting around with my husband back in the workforce which of course is why we have set a goal to get out of debt. But as I said yesterday, goals require action steps. I believe you have to take baby steps toward your goals. So here is my example of how to set baby steps toward a bigger goal.
Baby steps toward our goal:
- Menu planning, it’s true that planning out your weekly meals and shopping once a week for your grocery items saves you money and that money can go towards bills.
- The little splurges add up so cutting coffees from coffee shops makes a difference. You can literally save hundreds in a year if you are a major coffee drinker as long as you get smaller sizes, get refillable cups, or cut them out altogether.
- This one may sound crazy to some but setting a fun money budget works for us. We have a set $ amount that my husband and I split from his pay checks ($100) that we can spend any way we like. Why is this important? Because if you are working your ass off to get out of debt and stick to a budget, if you don’t plan for fun money you will eventually give it up because you are working to please everyone else and you feel like you get nothing for all the hard work. Keep it realistic and allow for some fun and you are likely to keep at it.
- It may be counter-intuitive but I focus on paying the bigger bills off first. Most people like to pay off the small bills first so they fee like they are really accomplishing things. I want the biggest bills gone and then I use the larger payments from the bigger bills to quickly pay down the smaller ones.
- Payments- I may be a bit defiant but I look at my budget and decide what I can afford to pay toward bills (outside of power, water, etc), then look at what bills are my primary focus and divide what I have to pay by the number of bills. I figure out how long it will take me to lunch off those bills and I accept it for what it is. Sound funny? Well, debt didn’t happen overnight and I can’t assume it will clear up quickly.
There are many other little steps that I am using and putting into place but this gives you the idea that you can chip away at a large goal by breaking it down into smaller, actionable steps.