Deciding you want to save money for an emergency fund, retirement or just for fun is a smart decision. But do you have a plan to get there? Use the SMART method to bridge the gap.
Picture: David Villarreal Fernández/Flickr
As personal finance blog Yes, I Am Cheap explains, the SMART method requires that goals be Specific, Measurable, Attainable, Relevant and Time Bound. If you can mark off all five boxes, you don’t just have a goal. You have a plan of attack:
Paying off your credit card is an enviable goal. I want to be right behind you in line with that, but where is your road map on how to get there? You know that you owe your credit card $1100, but how much do you need to pay to get rid of that debt? Are you planning on paying it off all in one shot? Are you devoting a portion of your monthly income to the debt? When do you plan on paying it off? Is this a year from now? How about two years? You need greater detail here.
Here’s what makes this SMART:
Specific: I will pay my credit card.
Attainable: Depending on this person’s income, $200 each month is completely doable.
Relevant: Everything here relates to the debt. If I had written, I’m buying a dress so that I can pay off my credit card there would be an issue with relevancy here. What does the dress have to do with your credit card debt? Also, if you know that your debt was $5000, paying $200 per month really isn’t going to pay it off, now will it?
Time Bound: Six months.
A lack of specifics is a great way to stay in debt. While you might not be interested or eager to pay attention to the details, you can be sure your creditors are.