How SMART Goals Can Help You Deal with DebtDec 20, 2016
As 2016 draws to a close, have you started thinking about your financial goals for 2017? With consumer debt levels sitting at record breaking levels, finding help to reduce debt and increase their ability to saving is likely a top priority for many families in Alliston and across Ontario. But, saying that you want to make paying down your debt a priority is only one part of the equation. You need to create SMART goals that will help you make it happen.
What are SMART goals and how can they help with debt? SMART is an acronym that stands for Specific, Measurable, Achievable, Realistic and Time-Framed. You can make your debt reduction goals more achievable by making them “SMARTER.” Here’s how:
Start by taking a general goal, such as “reducing debt,” and make it more specific. For example, instead of saying you want to reduce all of your household debt in 2017, you may choose to focus on a specific debt, such as your credit card debt or your mortgage debt. Narrowing your focus will allow you to make your goals more concrete, and it will help you better identify and understand the steps you will need to take in order to achieve it.
Make sure your goal is measurable
When creating SMART goals that will help with debt, it’s also important to be specific about the amount of debt you want to decrease. That’s where the measurable part comes in. Instead of identifying the broad goal of reducing your credit card debt, it’s important to also identify an amount. For example, you may indicate that your goal for 2017 is to reduce your credit card debt by 50 per cent.
What steps should you take to make it achievable?
Once you have created a specific goal and added a concrete amount that makes it measurable, it’s important to highlight the steps that will make this goal achievable. How do you plan to reduce your credit card debt by 50 per cent? What steps will you need to take? Is it necessary to do some research in order to understand the best and most effective way to reduce this type of debt? Will debt help from a debt professional, such as a Licensed Insolvency Trustee or credit counsellor, provide you with the assistance needed to make this goal more achievable?
Consider the “what ifs” to make your goal realistic
Another thing to consider: how realistic is your goal? Is it possible to pay down all the credit card debt you currently owe, while also managing your other expenses, keeping up with other debt payments and continuing to save for other important financial considerations like retirement, education and emergencies? It’s also important to consider the “what ifs.” Would it still be possible to achieve this goal if other expenses were to increase? Your household budget may already have been affected by the higher hydro rates in Ontario. If you find that it would be a struggle to manage your other financial priorities, while focusing on your debt plans, revise your goal in order to make it more realistic and, as a result, more achievable.
Determine a time frame for your goal
The last step of creating a SMART goal that will help you reduce your debt in 2017 is adding a time-frame. When do you hope to accomplish this goal? How long will it realistically take? Setting a time-frame helps you to stay focused, motivated and keeps you accountable to your debt plans and resolutions for reducing your debt.
How to reduce your debt? Set a SMART goal! Share your SMART goals for debt reduction in 2017 with BDO Alliston using the hashtag #BDODebtRelief. You can also create goals that will help you with your debt using the Financial Consumer Agency of Canada’s Financial Goal Calculator.