This is the fourth of nine basic steps for setting effective New Year’s goals to get out of debt. You can share your debt resolution with others here.

A 2007 study by Richard Wiseman of over 3,000 people attempting to achieve new year’s resolutions found that for men, goal setting improved success by 22% and for women, 10% were more likely to be successful when they had the encouragement of others. In this step, we’ll discuss a framework for setting effective goals.

Step 4: Setting SMART Goals

I don’t mean to insult your intelligence, but most of us don’t think about goals in a SMART way. We simply throw down an objective such as losing weight, learning a new hobby, or running a marathon without a lot of thought to making the goal specific enough that it has meaning. In this post, we’ll cover the elements of effective goal setting and how these principles apply to getting out of debt.

SMART Goal Setting 101:

What is a SMART goal? Does this imply that other goals are stupid? Not really. It just refers to a process that ensures that your goal is specific enough to work well for you. SMART is an acronym for Specific, Measurable, Attainable, Relevant, and Timely.

Specific

Good goals are clearly stated, laying out both the outcome and the actions to be taken towards achieving the goal. If a goal seems too complicated, it should be broken into sub-goals that can be clearly stated.

Measurable

To make progress on your goal, you must be able to measure your progress. A good goal has an outcome and milestones that can be unambiguously measured.

Attainable

Good goals have an attainable outcome, inspiring a sense of commitment as opposed to overly-optimistic goals that feel out of reach. The best way to set attainable goals is either to start with a first goal that can easily be reached, thereafter moving towards more challenging targets that do not sap your motivation, or to start right off with a moderate goal that entails pushing yourself beyond your comfort zone – but only slightly. Once these initial milestones are achieved your confidence will rise and then your chance of successfully tackling more challenging goals will be higher.

Relevant

The goal should be meaningful and significant in your life and your broader life goals

Time-Bound

Good goals are time-bound-they have a specific target completion date that is neither too long nor too short. Set a realistic timeframe that will inspire confidence, but still give you a sense of accomplishment when reached.

How can you apply the SMART framework to your debt? Start by understanding your debt situation and the means at your disposal to attain it. Based on the previous steps, you should have a good sense for this at this point.

You can set a SMART goal for debt any way you choose, but here’s a goal that works for many:

Pay off my highest-interest credit card by MM/YY without increasing debt on other accounts.

This goal meets the SMART criteria:

• Specific (has a defined outcome)
• Measurable (you can clearly measure the result)
• Attainable (paying off one credit card is a simple goal that should be attainable)
• Relevant (paying off one credit card is a significant step toward getting totally debt-free)
• Timely (has a defined completion date)

Again, you can set many goals around debt, but this goal is a simple, definable, and attainable goal that will give you a sense of accomplishment when you’ve reached it. It’s the first step in creating a plan to truly get out of debt. Tomorrow, we’ll show you how to build on these simple goals to create a long-term plan for getting out of debt that also follows the SMART framework.

See you then.

Hope you’re having a great new year.

Scott Crawford is CEO of DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.