Part of my problem is that I never had any written goals or direction. To be quite honest, for the better part of the last 6 years I have been kinda going with the flow, doing whatever I felt like doing at the time. While this may be considered a good thing (my 40 things to do before I turn 40 list only has three things left on the list to be crossed off and I just turned 30 last October) it has not aided my financial security. This year I am prepared to change the tide of my easy come/easy go mentality and be more, ah, grown up regarding my finances.
1. STOP USING CREDIT CARDS
Of course, this is a no brainer. I have paid cards off before only to have the balances back because I never stopped using the cards. There is nothing I need a credit card for. If I can not afford it with cash, I will just have to wait until I have the money available to purchase it.
2. FOLLOW MY BUDGET
For the last two years, I have had a budget. The problem is that I have been back budgeting. After I spent money, I would ensure that I recorded it properly so I knew how much money I had. Well, let's face it, I was basically using my budget as a checking account register and not much else. This year I have changed my budget into weekly columns. Each expense that I have is entered into the appropriate week it is due. I am in tip based employment, so it is imperitive that I track my earnings each week. It is a bit harder to budget without a set income, but it is not impossible.
3. HAVE ONE MONTH'S WORTH OF EXPENSES IN CHECKING ACCOUNT
Instead of living week to week off of tips, I instead want to have a month's worth of expenses already in my checking account on the first of each month. This will mean that I will be living on the previous month's income, which also means that everything I make in the current month I have to save for the next month. This will be quite helpful for me because I will know exactly how much money I have available after paying expenses each month and I do not have to hope and pray that I make enough money in any certain week to cover my expenses. It also means that I will know how much extra money I have to apply towards debts at the first of each month. My snowball may not be consistent, but at least I will know exactly where it is that I stand.
4. SET UP SINKING FUNDS
There are things that I know I have to pay for that are not monthly expenses. Clothing, oil changes, tag fees, school supplies, birthdays, tuition, and Christmas gifts are just a few examples of these items for me. I have in the past not seen the forest for the trees, paying every dime I had available towards debt only to take out the card and charge for these types of things. Having sinking funds set up will alleviate the "need" of using credit cards, which I am not allowed to do anyway because of goal one.
5. PAY $10,000 WORTH OF DEBT OFF IN 2009
This includes minimum payments. I believe that this goal is doable considering my income situation and other financial obligations, but it will take my paying attention to the pennies.
6. SPECIFIC PAYOFF GOAL DATES
Target Visa/end of February 2009
HSBC/end of April 2009
Mohawk/end of June 2009
The reason I bumped HSBC before Mohawk even though I owe less on Mohawk (baby steps, anyone? :) ) is because I have 0% intro rates on those debts. HSBC's intro rate expires at the end of April and Mohawk expires at the end of June. The amounts are not overly large, but I really do not want to pay 23% interest when the rates reset. I know it seems kind of illogical considering I have the Providian card past $10,000 which does accrue interest and paying that card down faster would amount to less interest paid, but I am looking for the "victories" to keep my motivation on the upswing.
7. VACATION IN AUGUST
Again, another expense that probably should not be taken on while I am getting myself out of debt. I do not expect anyone else to understand my justification for this expense. I will give a back story for why I want and will go, however. I spent ten years in the military and have what I consider best friends who live all around the globe. Once every two years we all get together somewhere to reunite (with the exception of those who are deployed at the time). We rent a house in the location we chose and all stay in the same place. We split the total cost between 15 people, which makes it more affordable for everyone. With two wars going on, I will not miss a chance to see my friends only to have something happen and regret not seeing them when I had the opportunity. I will, however, cash flow my trip.
8. FIND ACTIVITIES I ENJOY THAT ARE FREE/LOW COST
This will not only help my bottom line, it will also open up the creative side of my brain. There are zillion of things to do that are free or low cost. This may interfere with number 40 on the list, go to Tahiti, but I still have 10 more years to accomplish that goal.
Those are my financial goals for 2009. I believe they meet the SMART criteria. As long as I stay focused and diligent, there is no reason why I should not be able to meet all of these.