Posts Tagged ‘New Year’

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New Year Debt Resolution Step 8: Ask Others For Support

Thursday, January 8th, 2009

This is the eighth 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.

In this series of posts, we’ve been covering the basic steps that you can take to get out of debt.  Yesterday we wrote about how the mere act of telling others about your goal can help you have greater success.  You can take this further by acting others for their support.

Just like having a workout partner can help you stick to a fitness plan, having a debt buddy can help you stick to your debt reduction plan.  In 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.

Having the support of others increases your changes of success by 10%.  That’s pretty significant when you consider the low levels of success with New Year’s resolutions.

How can you ask others for success?  Here are a few ideas:

  • Find a debt buddy-someone who wants to reduce debt as well-and work on your goals together.  Meet periodically and discuss how you’re doing on your goal.
  • Identify activities that have caused you to go into debt and ask others to help you in these areas.  If shopping is a problem, talk to those with whom you usually shop to help you with your goal.  Have them suggest other activities or ask them to help you monitor your spending when you’re shopping.
  • Tell your family and other close supporters about your goal and encourage them to ask you how you’re doing.  Share your progress and setbacks with them so that they can encourage and support you.

Above all, don’t keep your goal to yourself.  As you share your goal with others, you’ll find that you’re not alone.  Over 45% of Americans have a debt problem and debt reduction was the #1 New Year’s goal in 2008 and should be in 2009 as well.  It’s likely that others you speak with will identify with your situation and be more supportive than you would ever have imagined.

Tomorrow, in our final post in this series, we’ll discuss how you can track your results to make sure that you continue to make progress over time.

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.

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New Year’s Debt Resolution Step 3: Agree On Family Priorities

Friday, January 2nd, 2009

This is the fourth article in a two-week series on the steps for setting effective New Year’s goals for getting out of debt. You can share your debt resolution with others here.

Earlier in this series, we outlined 9 essential steps for getting out of debt.  We’re on Step 3, having covered thrillers such as Cutting Up Your Cards and Getting Organized.  Now that you’re on day 3, you may be thinking: “Where’s the Magic?”  There isn’t any.  I can’t give you a magic elixir to make the debt go away, but I can tell you that you cannot succeed unless you take the next step.

Magic Step 3:  Agree on Priorities with Your Spouse

You will fail if you don’t do this.  I don’t care if you’ve individually volunteered to do all the work to get the family out of debt, if you haven’t really talked it over with your spouse and agreed on the priority and implications, you’ll fail.

Don’t believe me?  Maybe you know a horror story- but here’s one if you don’t.  A friend of ours recently committed to paying off debt after realizing that he husband hadn’t paid sufficient attention to the family finances and they had run up six-figure credit card debt.  She took over the finances and even took away his cards.  But a few weeks after she did so, he came home with $500 of exercise clothes.  She couldn’t believe it.  She thought they were paying down debt.

Despite being on the brink of bankruptcy, they simply never agreed to priorities.  Our friend has vowed to cut her husband off from all opportunities to spend, but we think it would be easier if they could simply agree.  Here are a few steps that can help:

  1. Discuss your current debt situation, including your total monthly debt payments
  2. Discuss how debt impacts your lives.  What does this keep you from doing?  What goals could you pursue if you didn’t have debt?
  3. Identify why you have debt?  Have you had an emergency?  Are you overspending?  What elements of spending are driving up debt?
  4. Compare your reasons for debt to the future goals that you would like to attain
  5. Discuss how each of you feels about these competing goals and the tradeoffs you will have to make to pay off debt to get to your future goals.  If you’re not bought in, keep talking until you find a solution.  For example, if getting out of debt would require that you forego a vacation, do you both agree on the priority?  How about clothes?  Golf?  New cars?  You get the picture-this one can be tough, especially if one party feels like they’re sacrificing more.
  6. Agree to work together to reach your goals.

Completing this step isn’t easy.  You may find that the first attempt ends with finger pointing as you identify the causes for debt.  A second session may end abruptly because you don’t feel that the sacrifice is being borne equally.  If you can’t make it through in one session, pick it up in another.   Just don’t give up.  You’ll find that this is a process that never ends if you’re doing it correctly-you should always collaborate and prioritize financial decisions with your partner.

After doing these steps, you should know why you’re in debt and how this is affecting your ability to reach future goals.  You should have agreed on the relative priorities of your goals and how paying off debt fits into that picture, and based on this, a rough plan for how you might start to pay down debt.  If that’s the case you’re ready to start setting goals for getting out of debt.

We’ll show you how tomorrow.  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.

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New Year’s Debt Resolution Step 2: Get Organized To Reduce Debt

Friday, January 2nd, 2009

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

Earlier in this series, we outlined 9 essential steps for getting out of debt.  These basic steps won’t promise debt reduction without work, but based on our work with other borrowers we know that it’s impossible to get out of debt without paying attention to basic principles.

Step 2:  Get Organized

Hooray!  Filing and bookkeeping!  Starting the New Year with a Bang!

All right, I understand that this step may lack the fireworks that you were expecting, although after yesterday’s thriller we suspect that we needed to tone it down.  However, it’s a simple truth that you won’t be able to make progress on your debt until you know where you are.  And you can’t make progress without tracking where you’re going.  And you can’t do any of this without a functional organizational system.

Many people with debt problems pass through a stage where bills pile up simply because they seem overwhelming.

Excited yet?  I am.  But then again, I have a strange passion for office supplies.  Hold on to your holiday noisemaker-here we go:

  1. Set up files for each account.  Seriously.  Get the little manila ones and label them, one of each account.  Go to Office Depot right now.
  2. Gather up your latest statements.  If you don’t have a paper copy of the statement, go online and print it out.  Continue getting paper statements for each month, since people tend not to look at electronic statements as carefully.  Review and file them.
  3. Set up a spreadsheet or paper tracking system with a column for the following fields:  balance, APR, payment date, minimum payment, amount paid, and expiration date of any intro APRs.  Make sure you sum each column at the bottom to get total amount.  Create a separate sheet for each month going forward.  As a simple matter, you’ll have to pick whether to bucket accounts by month or payment due date.  I recommend that you track the accounts by the month in which the payment due date falls, as that’s more closely correlated to cash flow.
  4. Create a summary sheet with space for your total debt and total credit card spending at the end of each month.  If you’re visual, create a graph.  If you don’t use excel, just use a ruler and create a manual one.
  5. Know your cash flow.  Know how your outbound debt payment cycle compares to your inbound cash flow by comparing your debt payments to your paycheck dates.  Just knowing the rhythms of your cash flow can help you avoid late fees.

After doing these steps, you should know your total debt, your total monthly required payment, what you currently pay on your debt, and how much you charge each month on your card.  You have a system to track it going forward, and you know your cash flow will look throughout the month.  Congratulations, you’re now ready to move to the next step.

We’ll tell you what it is tomorrow.  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.

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New Year’s Debt Resolution Step 1: Quit Spending On Credit Cards

Thursday, January 1st, 2009

This is the third article in a two-week series on setting effective New Year’s goals for getting out of debt. You can share your debt resolution with others here.

Yesterday, we outlined 9 essential steps for getting out of debt.  These basic steps won’t promise debt reduction without work, but based on our work with other borrowers we know that it’s impossible to get out of debt without paying attention to the following basic principles:

Resolution Step 1:  Quit Spending on Credit Cards

I apologize in advance for even putting this steps first step in the process, but we are constantly surprised by the number of people who set goals for reducing debt but keep spending on their cards.  There are a lot of reasons to keep using the plastic:  convenience, rewards, cash flow, etc.  There are endless reasons for using plastic, but only one not to:  it’s nearly impossible to get out of debt if you’re spending on your cards.

We have a friend who decided a year ago that her debt load had reached a critical point and that she was going to finally buckle down and pay off debt.   She called me back a few weeks ago to check in for advice.  In the space of a year, she and her husband had taken out 5 more cards and racked up another $20,000 in debt.  She may be an extreme case, but it’s hard to increase your credit card debt if you don’t spend on them

So quit spending.  Do whatever it takes to get them out of your wallet and make them hard to use.  If you can put distance between the plastic and the urge to spend, you have a better chance.

  • Cut them up
  • Burn them
  • Freeze them in a block of ice
  • Wrap them in duct tape
  • Bury them in the back yard
  • Feed them to your dog

Be creative and have fun with this task.  Challenge a friend of family member to see who can come up with the best way to destroy cards.  If you have a great story or idea, post it here.

Through the remainder of the next two weeks, we will discuss basic techniques for getting out of debt.  Be sure to follow these posts as we show you how you can buck the odds this year and take steps to build a debt-free future.

We wish you all the best in the upcoming 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.

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9 Steps to Achieve New Year’s Debt Reduction Goals

Wednesday, December 31st, 2008

This is the second article in a two-week series on setting effective New Year’s goals for getting out of debt. You can share your debt resolution with others here. You can share your debt resolution with others here.

Yesterday, we talked about the reasons for putting debt reduction in your list of New Year’s resolutions, including better heath, relationships, confidence, and security.  Perhaps most important, eliminating consumer debt can save the average borrower about $4,000 per year in interest costs.

How would you feel with an extra $4,000 per year?  Would it change how you get along with your spouse?  Would you feel less at risk financially?  Would you have more self-confidence?

If the answer to any of these is yes, start today.  We know that the process of paying off debt can be daunting, so we’ve laid out nine essential steps that we’ve identified through working to help others pay down debt.  It’s not as hard as you think and we’ll walk you through the essential steps in upcoming posts.  But in case you can’t wait to get started, here are the 9 essential steps:

  1. Stop using your cards
  2. Get organized
  3. Set family priorities
  4. Get SMART.  Set SMART goals for debt reduction
  5. Make a plan
  6. Simplify for success
  7. Tell your goal to others
  8. Ask for support
  9. Track your progress

Through the remainder of the next two weeks, we will discuss these techniques for getting out of debt.  Be sure to follow these posts as we show you how you can buck the odds this year and take steps to build a debt-free future.

We wish you all the best in the upcoming 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.

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