Gather Little by Little

I read a very interesting post over at Bible Money Matters about setting your course for next year now. This article was about setting your financial goals for 2010 before it happens ;-). Too often, we tend to wait until the next year begins to start new financial projects. Then, we forget about fixing SMART (Specific, Measurable, Attainable, Realistic, Timely) objectives in January and we wake up in spring without accomplishing much to date.

While I enjoyed the idea of setting financial goals in the fall before the craziness of the Holidays hits our lives, I wanted to share the method I tried in 2009 to attain my goals. It is quite simple and effective too! I simply ask myself 4 simple questions. I did it back in 2008 and my 2009 was a great financial success. I didn’t become rich, but I have achieved my goals. No matter if your financial objectives are too ambitious or humble; the important point is to achieve them.

So I am now repeating the very same routine in order to have a great 2010:

#1 Where Am I?

This is definitely a step that should be done prior to next year. You need to take time to draw your financial portrait on a piece of paper. This will also help to set priorities in your personal finances. So here’s my picture at the end of 2009:

– My wife stays home to take care of our children while going back to school. This was one of our goals in 2009. However, while we have what we wanted, this also means that we are now living with a single income.

– We have $260,000 in mortgage debts at a very low rate and our house is worth about $325,000. We took a lot of money out of our equity in order to do renovations. Now it will be time to pay it back.

– We have a car loan (yup, I have a new car and I don’t regret it”¦ this will be discuss later on in another post!). The good news is that it is interest free; the down side is that I monthlies to pay for the next 6 years”¦

– We also have a personal debt of $31,000 to repay to my parents that is coming due in November 2010. For various reasons, we were not able to put money aside in order to reimburse this loan so far and this will be my main priority in 2010.

– I have to increase my income through various ways (getting a promotion, getting a big bonus and creating an alternative source of income through my blogs). This is probably my biggest financial success from 2009 and I intend to continue on this path in 2010.

#2 Where I want to be?

This is the time to set the SMART objectives. You want something challenging, but not impossible. It has to be something you can track down and take action to make it happen. In my case, I have decided to find ways to pay off my parents next year.

While gathering $31,000 actually seems like climbing Mount Everest, making a 6 figure income at the age of 28 also seemed unattainable back in January 2009. But with a solid plan, I have managed my way to hit it.

So at the same time of the year in 2010, I want to:

– reimburse my parents in full

– increase my blog income by 50%

– keeping my 6 figure income (which is highly variable right now!)

– allow my wife to stay home for our children

#3 What has been done so far?

While this question looks more like a follow-up question, you can also use it while setting your financial goals for the year. What has been done so far will become what has been done in 2009 that brings me to where I am. You just have to orient the answer according to your new financial goals.

While I said that not much has been done to pay back my parents, I still have a few bucks put aside. I have about $4,000 that I managed to save through my employer’s profit sharing plan. Each month, I put $475 aside in my employer’s shares (this is including my employer’s contribution). So at the end of next year, I should be able to add another $5,700 to the $4,000 I have. This is almost $10,000 out of the $31,000.

I can’t say it’s not good, but I can’t say it’s enough either! I will have to find other ways to reimburse my parents.

With regards to increasing my blogs’ income by 50% (this will definitely help increase my chances of repaying my parents!), I am now working 4 days a week at my full time job and spending a full day of work on my websites. I hope this will be enough to bring my online income to the next level.

The rest of my financial objectives are more about keeping the status quo in my personal finances. This will be done through hard work both at work and on my websites.

#4 What can be done in the next three months to get closer to my goals?

By reviewing your goals quarterly, you are in a much better position to make sure you achieve them at the end of year. You can assess if you are going in the right direction and you have sufficient time to adjust to the situation and make modifications if needed to achieve your goals.

Final Thoughts

If there is one thing I have learned from stating goals is that they become insignificant if they are not written down and if you are not committed to them. Talk about your goals to your friends and family. This will create additional motivation (pressure from within, if you prefer) and will certainly help ensure you work on them ;-)

As I am still working on my plan to successfully reimburse my parents in 2010, I would welcome any ideas!

Author: Mike.

Image source: the us army