“Should I write down all my debts? Should I get a second job? Should I hope I’ll win the lottery?” All of those are good second places to start, but the best way to begin is to sit down and write out your goals. Any goal you have that has to do with money.
Create three categories, short (within a year), medium (up to 5 years) and long term (6+ years). Then put a cost to the goal and the date you want to achieve it by. What you’ve done is create a framework for your financial plan. By creating a financial plan you will finally have the one tool that works in gaining control of your money.
For example, most people who have credit card debt (I like to call them debt cards) and lines of credit, pay them down, build them up, pay them down and build them up again. Because of this yo-yo affect you have no idea when you will get out of debt, or even if you ever will. With no light at the end of the tunnel, there no incentive to change your behaviour.
If instead, you were to put all of your debt in the MCC “Get Out Of Debt” calculator, you would have an actual debt free date to look forward to. You would add this information to your Goals page under the heading most applicable, short, medium or long term. The next time you are tempted to add to your debt you could simply add the new amount into the calculator and see how much it sets back your debt free date. That may be just the reality check that makes you decide against the purchase.
You can also add your mortgage to your goals page. That way, when it comes time for renewal you might decide you don’t want to lengthen the time you will have your mortgage by adding any debt to it.
Goal setting can be a very powerful tool for taking control of your money. Canada’s Money Coach, always here to help you. Give me a call to learn more 613-875-5834.