When it comes to setting goals, it’s easy to simply dream about things you would like to do or achieve.
If you don’t make the goals realistic or manageable, they just stay dreams.
I’ve always set SMART goals to turn dreams into reality.
SMART goals are:
In May of this year, we set a big goal to pay off our mortgage in 5 years (by May 2020).
This goal fit with the SMART goals formula:
Specific – We want to pay off our mortgage in 5 years.
Measurable – Pay off the balance of the mortgage.
Attainable – We knew discipline, frugality and a bit of creativity, this was a realistic goal for our family.
Relevant – We feel like this is a very relevant goal since our mortgage is our only debt and we want to be completely debt free.
Time Bound – We want to do this by May 2020.
We started out very excited and felt like we were working towards an achievable goal. However, since it was such a big goal (knocking out thousands and thousands of dollars in debt), it felt like we weren’t making any progress.
So, we broke the goal down further. In July (2 months into the process), I divided the amount we owed on our home by 58 months (the time remaining until May 2020). This gave us a monthly goal to work towards.
Having the monthly goal makes our big goal very doable. Each month, we have a specific amount we’re working towards paying off. Reaching this amount each month is still a bit of a stretch but we hit the monthly goal in July, August, September and October!
Working towards the monthly goal keeps the momentum going. Each month that we reach (and sometimes exceed) our goal, we are excited which encourages us to keep going. While it’s fun to see the big number go down, it still seems to move slowly so it’s more fun focusing on the monthly goal than on the total principal that we still owe.
Do you have financial goals you want to achieve?
Maybe you want to pay off debt, save an emergency fund or start a college fund for your kids. Or maybe you need to finally sit down, create your budget and set financial goals.