I think it’s important to focus on simple, achievable goals.  As such, here are my top five financial priorities and principles -

Priorities -

• I will maintain adequate cash reserves, sufficient to replace my income for 12 months.
• I will remain debt free, paying upfront for all purchases.
• I will save for retirement, focusing on both pretax and after-tax accounts.
• I will teach my children sound financial principles, and help them pay for college.
• I will look for opportunities to bless others, both with my finances and my time.

Principles -

• I will live on a budget.
• I will respect every dollar that I make, and the work that went in to making it.
• I will look for opportunities to save more money.
• I will look for opportunities to earn more money.
• I will value people more than possessions.

As I work my way through each month, I keep each of these principles and priorities in mind.  I’m constantly asking myself -

Am I making decisions consistent with my priorities and principles?

It is easy to fell overwhelmed by the amount of information and financial noise.  For me, it’s imperative that I remain focused, keep things as simple as forward, and stick to my priorities and principles.

How about you?  Have you created or thought about a list of priorities or principles?  If so, leave a comment and share.

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Financial Priorities And Principles

I’ve been thinking about motivation.

Where does it come from?  How can it be maintained?

My primary motivation to get out debt was born out of a desire to have more control over my life.  To be frank, I was tired of living with the constant burden of interest payments.  Deciding to do something about my debt, I began to make major changes in my spending and saving habits.

I’ve come to the conclusion that there were forces, external and internal, that combined to push me towards my decision to get out of debt.  First, a few months before I began to get out of debt, I began to listen to Dave Ramsey.  Day after day, I would listen to his radio program, and week after week, I was encouraged by the stories of those folks who were getting out of debt.  Regardless of whether you agree with Dave’s techniques, you have to admit that he is a dynamic motivator.  Second, I began to think about my situation, and a great anger began to build, deep in my spirit.  I was angry – with myself – for working so hard, for so long, and having so little to show for it.  Third, I looked around, and realized that I was a father, with two kids, and a wife, and I needed to do a better job of preparing our family for the future.  These forces combined to, quite literally, create the motivation that I needed to get out of debt.

But what kept me going?   I had tried to get out of debt before, only to fail.  Why was this time different?

Looking back, the biggest difference was, that in the past, my only goal was to “get out of debt”.  There’s nothing wrong with this goal, except for the fact that it’s too vague.  This time, when getting out of debt, I broke my goal down into specific, manageable micro-goals.  So, instead of saying “I want to get out of debt” my next micro-goal became “I want to send $200 to American Honda Finance, this month”.

By focusing on these smaller, realistic micro-goals, I was able to stop thinking about my total debt balance, and really focus on the next creditor on my debt reduction plan.  Shoot, not only could I focus on the next creditor, I could focus on the very next payment.  In other words, I kept my nose to the grindstone, and tried not to look up until I had completed each of my micro-goals, and ultimately, my final goal.

After getting out of debt, I didn’t stop setting micro-goals.  Instead, I picked an amount that I wanted to save, set a date for saving it, and then broke that amount down into monthly (and eventually weekly) micro-goals.  I created a system that gave me almost instant feedback, making either payments or deposits, not on a monthly or quarterly basis, but on a weekly, or even daily, basis.  I never lost my motivation, because I was constantly creating, then achieving, micro-goal after micro-goal.

If you are struggling to stay in-the-game and remained focused, consider breaking your goals down, into smaller and smaller micro-goals, until you are forced to remain engaged.  I’ve written about the success I had making multiple monthly payments.  This technique not only reduces your average daily balance, but it keeps you focused on your debt reduction game-plan.

After getting out of debt, and saving up an emergency fund, things get a little trickier.  Why?  Well, the main goals – and thus the micro-goals – aren’t so clear.  Do I want to save for retirement?  Yes.  Do I want to save for kids’ college?  You bet.  How about saving for a new house, is that important?  Oh, yeah.

I have had to learn how to focus on more than one goal at a time.  This is a little more difficult for me, because I like the immediate impact of putting all extra available income towards one goal!  (In other words, it’s more fun to see $600 deposited into my saving account than it is to see $200 deposited into my Roth, $100 into my daughter’s ESA, $100 into my son’s ESA, and $200 into my wife’s Roth.)  Slowly funding these accounts, quite frankly, isn’t nearly as fun as rapidly building an emergency fund, but it’s something I’ve learned to do.

I think, when you first begin to focus on your finances, it’s important to be like a laser, and focus on the very next micro-goal on your list.  As you mature, it gets easier to spread your focus, just a bit, and focus on several micro-goals at once.  If, however, you’ve been doing this a while, and you feel like you are losing that focus, take a breather, block out all of the other goals, and go back to one, specific, manageable micro-goal.  I think that you will soon find that familiar motivation that got you started in the first place.

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Micro-Goals And Staying Motivated

As you read this, you already know something about yourself, something very important.  You know, without even having to think about it, if you are the kind of person who makes impulse purchases.  You also know, with equal certainty, if this tendency to make impulse purchases is negatively affecting your financial situation.  Over the next few weeks, I’m going to write a series of articles about breaking bad financial habits – and I’m starting with a big one – impulse purchases.  To be sure that you receive each of the articles in this series, sign up for my site feed, via RSS or daily email.

First, it might do us some good to think about why we make impulse purchases.  I, for one, tend to make them when I’m bored.  Others, I’m sure, make them when they’re depressed.  You, on the other hand, might only make them when you are happy – or as a way to reward yourself.  Whatever the reason, it might be a good time to think of other ways to deal with your emotions, besides spending money.  When I get bored, for instance, I’ll head to the gym or go outside for a walk.

It’s also important to think about the situations where we are tempted to overspend.  I tend to spend more when I’m out with my family – especially if I’m at the grocery store, it’s getting late, and the kids are hungry.  Perhaps you spend more when out with certain friends, or away on vacation.  Some might be tempted to overspend when at the mall, or shopping online, or while watching late-night television.  As we think about impulse purchases, keep in mind the situations where / when you struggle, and apply the techniques we are going to talk about to those situations.

Speaking of those techniques, here we go -

1.  Make a commitment to yourself and agree that you will be more responsible with your finances.  Four years ago, I promised myself that I would get out of debt.  That commitment required me to make lots of sacrifices.  Each time I would think about frivolous spending – I would remember my commitment.  It sounds simple, but it really does work.

2.  Learn to love your budget.  Seriously, get over your fear of “the big bad budget”.  We love our budget, because it not only guides us through the month, putting limits on our spending, but it also allows us to plan for little “splurges”.  We use the You Need A Budget software to manage our finances.  YNAB is a long-time sponsor of No Credit Needed and I’m proud to promote their product.  Whatever method you use to plan your spending, honor your plan!

3.  Consider an accountability partner.  You might want to think about sharing your goal – your new commitment – with a close friend, or group of friends.  It really does help to have someone with whom you can talk.

4.  Cultivate friends who respect your financial decisions.  This one can be tough, but I think it’s very important.  If you struggle with overspending, especially overspending as it relates to group outings or activities, you might want to make a few new friends.  This doesn’t mean that you have to rid yourself of your old friends, but it might mean that you need to change the nature of your relationships.

5.  Think about implementing my $100-a-day-rule for preventing impulse buying.  Click to read the post, but here are the details.  If I want to make a major purchase, I have to wait 1 day for every $100 that I want to spend.  A $400 television requires 4 days of waiting – and researching.  This simple, even silly, rule really has helped me.

6.  Never make a purchase that you ordinarily would not have made, simply because someone is offering you special financing / special rebates / or special discounts.  In other words, never walk into a store, intending to spend $50 on paint, and then walk out with a $800 table saw, simply because the saw was “on sale”.  Sales will come and go.  If you haven’t planned for it – which means budgeted for it – don’t buy it.  (This might mean, that once in a while, you will miss a great deal.  On the whole, however, it will also mean that you have remained under-budget and that you’ve avoided foolish purchases.)

7.  If you are married, talk to your spouse about ways that you can help one another avoid impulse purchases.  It’s funny.  A wife can plan to be frugal – and a husband can plan to be frugal – but then the two of them, when shopping together, can tend to be non-frugal.  It’s like going on a diet.  You might be willing to stick to your plan, but if your wife is having a piece of cake, you might be talked into having a piece of cake.  Instead of working against your family goals, agree to be frugal, together.   Be on the same team.

8.  Make a big deal out of reaching financial goals.  We are emotional creatures.  If we struggle with making impulse purchases, it’s probably because we like the immediate emotional response we get from buying something.  Let’s shift that response away from purchases, and let’s celebrate savings.  Stay connected to the process, and you’ll be less likely to spend money on things you don’t really need.

I hope some of these techniques help, or at least get you to thinking.  If you have any suggestions, for how we can overcome our tendency to make impulse purchases, I’d love to read them.  You can leave a comment, here on the site, and you can also connect with me via Twitter.  Simply follow me, and then shoot me a tweet.

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Breaking Bad Financial Habits – Impulse Purchases

It’s almost May, which means that one-third of the year 2009 is gone!  I don’t know about you, but time seems to have flown by, and it seems like only days ago, I was writing down my 2009 resolutions.  (Remember those?  Yeah, that’s that pesky list of things we promised we would do in 2009.  I wonder what percentage of folks will actually follow through and do something about their resolutions.  40%?  20%? 5%?)

If you are like me, you probably have motivational highs and lows.  One day, you are really in to saving money and getting out of debt, the next you are looking at a new set of golf clubs, trying to justify an unnecessary (but really cool!) purchase.  (Confession time – As I type this article, I have another browser-tab open to golfsmith, where I am looking at a sweet new set of Cleveland irons.  A man can dream.)

So, what can you do you do, if like me, you are prone to get off task and lose your motivation?  Well, since I’m pretty much an expert at the do-over, I’ll share.

1. Stop beating yourself up.
2. Remember your original goals / plans / motivations.
3. Balance your checkbook.
4. Recalculate the time it will take to get out of debt / meet savings goal / etc.
5. Find community.

1.  Stop beating yourself up.

It’s easy to feel like you are the “only one” who has ever failed.  The truth is, lots of people fail when it comes to money management  (Have you read the financial section of the newspaper in the last, oh, two years?  Oh, that’s right, in many places, you can no longer buy a newspaper.  See, lots of people fail when it comes to money management!)  Also, stop feeling sorry for yourself.  If you are reading this article, you probably have more financial resources than 75% of the people on this planet.  Instead, regroup and get ready to move forward.  (Interestingly, I was in a financial funk around this time last year.  Click here to read more about how I regained my focus and moved forward.)

2.  Remember your original goals / plans / motivations.

For me, it all comes back to family.  I’m doing “this” so that my family can be secure and so that my wife and I can (one day) enjoy a happy retirement.  When you get offtrack, it’s always important to re-visualize (is that a word?) your original plans and and goals.  Think about how wonderful it will feel to finally pay off that last credit card.  (High-five to Trishia from Blogging Away Debt.  You rock!)

3.  Balance your checkbook.

I know it sounds a little silly, but when you have been struggling, it feels good to get back to basics.  And nothing is more basic than balancing the checkbook.  As soon as you do that, you’ll then be able to move on, and take a new look at your budget, check your savings account balance, and begin to focus on your retirement investments.  Start simple, get everything “in balance” and then move to the next, more complicated tasks.

4.  Recalculate the time it will take to get out of debt / meet savings goal / etc.

I love to use the financial calculators over at dinkytown.  Spend some time with their 350+ calculators, and you’ll be re-energized.  I know, I know.  It can be depressing to know that your original goal / timetable was too aggressive.  And it can be frustrating, dealing with an emergency or financial setback.  Do not compound your difficulties by wallowing in your frustrations.  Do some calculations, get the problem “out of your head” and “on to paper”.

5.  Find community.

We all need accountability and encouragement.  I find both from folks in my church, and from the world of friends that I have online.  In fact, that’s why I started this site.  (Can you believe I’ve been doing this for FOUR years?  Wowsers.)  You need to find someone, or some group of people, who can and will encourage you.  Also, it never hurts to tell a trusted friend or two that you are “on a budget” or that you are “saving money”.  (Alert – There are some people who will think you are crazy for giving up your credit cards or skipping vacation.  Ignore and avoid these people.)  Also, it’s super awesome if you can get your entire family – every person who lives in your house and is able – to pitch in an do their part.  Remember, even the Lone Ranger had Tonto!  Find someone with whom you can share your story, and enjoy their support.  When you get down, give them a call.  (Oh, yeah.  Here’s a list of sites that can connect you with a world of folks who write about personal finance.  You are sure to connect with a few like-minded new friends.)

Tomorrow, we’ll put some “meat on these bones” and see if we can’t flesh-out some more practical steps to take when we are starting over.  In the meantime, take a look back and see if you are meeting your 2009 resolutions.  Leave a comment, and let us know.  Were you overly-optimistic?  Are you doing better than you thought you might do?  Any tips?  Struggles?  We’d love to hear from you.  Rock on.

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A Fresh Start

I really enjoy playing golf.  I try to play once or twice a month, and if I had more time and money, I would play more.  I am a pretty decent striker of the ball, but I do have one swing fault with which I constantly struggle.  I find it hard to follow through and really finish my swing.  The club, instead of finishing high and above my left shoulder will get stuck, and I’ll either block shots to the right or pull-hook them to the left.  I’m always working to correct this swing fault.

Not only is it important to follow through when swinging a golf club, it’s also important to follow through when managing our personal finances.  How many times have I set out, with good intentions, only to fail to actually implement those intentions?  I’d rather have a B- plan coupled with A+ effort than an A+ plan coupled with D- effort.

I wrote several articles last week about setting goals.  Today, I want us to think about follow through – actually taking those goals and making them our reality.  As a rule, I’m a details person.  I like to be thorough when tackling a challenge.  There’s just one problem that I – and people like me – face.  We get stuck.  We work really, really hard to create our plans and organize our systems, but then we fail to follow through.  Sure, it’s easy to pay off debt – on paper.  It’s easy to save up for retirement – on paper.  And it’s easy to plan for college – on paper.  The real challenge, the real hard part, is doing the actual work.

For those of you who follow with follow through, here are some tips and tricks that I use to keep myself on track.

Simplify – I know it’s hard, but try to whittle down those forty seven goals and plans into one or two manageable tasks.  Remember, perfection is the enemy of progress.

Rapid Organization – Take twenty minutes, right now, and get rid of the clutter on your desk, that pile of papers near the microwave, or that list of emails in your inbox.  For those of us who struggle to complete tasks, it’s good to take fifteen or twenty minutes and just bull-rush through as many tasks as is possible.

Accountability – Find someone who can hold you accountable.  I have several friends, and a world of blog readers, who hold me accountable.  You need someone, at least one person, who can ask how your progress is going.

Rewards – Go ahead and reward yourself once you have accomplished a task.  Promise yourself a nap, or a movie, or a round of golf, but only after you have completed the tasks that need to be completed.

List – This one really helps me.  When I have several personal finance related matters to take care of, say filing taxes, balancing the checkbook, and filing documents, I’ll list them, putting them in order of priority.  Just having this list, on hand, really helps me clear my mind a focus.  For instance, a few years ago, I knew that my wife and I needed to write our wills.  I kept putting this off, until one day I created a list of all the things that I needed to do.  Create a will was at the top of my list.  So, that day, I picked up the phone, called my lawyer, and scheduled an appointment.  A few weeks later, our wills were complete, and I was able to mark that off of my list.  It felt good to get something done.

Inspiration – For me, I get inspired by the success of others.  That’s why I read several hundred blogs a month.  If you are feeling down or depressed, because you’ve failed to follow through, go back to the original source of inspiration, and get fired up again!  I love the do-over.  Instead of wallowing in should-have, get inspired and move forward.

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Follow Through

Now that I have written about creating your ultimate financial goal and establishing your long-term financial goals, it’s time to think about short-term and intermediate-term goals.  I’ll also use the terms open-ended, close-ended, and overlapping funds.

Our Financial Plan

If I were to go back in time, say four years ago, and map out my financial plan, here’s what it might look like -

Financial Plan

Year 1

• Establish $2000 mini-emergency fund
• Eliminate all debt
• Contribute enough to 403(b) retirement to receive match
• Purchase adequate insurance (health, life, disability, property, automobile, etc.)

Year 2

• Establish fully-funded emergency fund
• Increase contributions to 403(b) retirement account
• Establish Roth IRAs for my wife and for me
• Establish Education Savings Accounts for our children

Years 3 – 10

• Fully-fund retirement accounts
• Fully-fund education savings accounts
• Increase savings for automobile replacement
• Increase savings for future home purchase

As you can see, these are pretty concrete, easy-to-understand goals, especially the goals for year 1 and year 2.  The real fun begins at year 3, or after you have paid off your debts and established an emergency fund.  (By the way, I have yet to find a financial expert who didn’t recommend paying off consumer debt and establishing an  emergency fund.  For our family, these were our first absolute-must goals.)

Close-Ended Goals -

Close-ended goals are time-based.  Establish the goal, establish an end-date for that goal, accomplish that goal, and then leave that goal behind.  Examples include paying off consumer debt, or paying for kids to go to college.  Close-ended goals can be long-term, intermediate-term, or short-term.

Open-Ended Goals -

Open-ended goals are goals which have no set end-date and are ongoing, lifestyle-related goals.  Examples include living debt-free or being a financial blessing to others.  Once again, these goals can be long-term, intermediate-term, or short-term.

Overlapping Funds -

Overlapping funds are funds which can be used for two or more goals.  An example would be, money in a savings account which could be used to pay for a newer automobile or used to purchase a new home.  As we prioritize our savings and move forward, our ultimate plan is to eliminate the need for overlapping funds.  We want enough money in our savings account to pay for a newer automobile and to purchase a new home.

Putting It All Together -

First, I create short-term, close-ended goals, like paying off my debts and establishing a fully-funded emergency fund.

Second, I create intermediate-term, close-ended goals, like fully-funding retirement accounts and fully-funding education savings accounts.  (Note – While saving for retirement will be ongoing, year after year, the time period for fully-funding each account is very specific, thus creating a close-ended goal.  This close-ended goal is established each year.)

Third, I create intermediate-term, open-ended goals, like increasing non-retirement savings and increasing charitable giving.  (Note – I could make these close-ended goals, if I liked, but I prefer to keep these goals open-ended, funding them with money left over after retirement and education savings contributions.)

Fourth, I acknowledge that certain funds, inside certain accounts, could be used for multiple purposes.  For instance, money in my savings account, which is earmarked for a newer automobile, could be used, in a pinch, to pay for college.  Money in a retirement account, while earmarked specifically for retirement, could be used to help out in the event of a catastrophic emergency.  My plan, however, is to fully-fund each of my goals, so as to eliminate any of this overlap.

Fifth, as I eliminate the need for overlapping funds, and each dollar is associated with a specific goal, the purpose of each goal is combined to help me achieve my long-term goals.

Possible Scenario -

I’ll use myself as an example, to see how this might all work out in the real world.

Short-term, close-ended goals -

Eliminate consumer debt and establish fully-funded emergency fund.  (Done)

Intermediate-term, close-ended goals -

Fully-fund retirement and education savings accounts.  (Done)

Intermediate-term, open-ended goals -

Increase non-retirement savings (for future home purchase and auto replacement).  (Ongoing)

Eliminate Need Of Overlapping Funds

This one is tricky.  Right now, I have enough in my savings to survive for one year, should my wife or I lose our jobs.  I also have enough, in savings, to be able to purchase a newer car, should the need arise.  I do not, however, have enough to also cover the down-payment on (or purchase of) a new home.  I can do one – buy a newer car -or the other – make a down-payment on a new home, but I cannot do both.   My plan, in the long-term, is to completely eliminate this overlap, so that I never have to think – “I could get the money from here, if I had to…”  Does this make sense?  I want enough money to cover the expenses associated with each goal.

Understand The Relationship Between Goals

Each year, one of my intermediate-term, close-ended goals is to fully-fund my 403(b) retirement account.  Even though this goal is close-ended for each year, the effect of accomplishing this goal, year after year, is long-term and open-ended.  In other words, every year, I have a goal of fully-funding my 403(b).  This is a goal, in and of itself.  However, doing this year after year, in reality, is helping to meet a long-term goal – retiring with enough money to purchase a nice home and live financially independent.

The truth is, none of our goals, whether short-term or long-term, close-ended or open-ended, exist in a vacuum.  Each goal affects the other goals.  That’s why it is so important to focus on on overlapping funds.  You can have all of the goals that you want, but if you do not have enough money, in the right accounts, earmarked for specific goals, your goals will prove meaningless.  I like to think of it as budgeting for the future.

I want to thank those of you who entered for a chance to win a free debt reduction book.  Winners have been chosen and I’ll announce them over the course of the next few days.  I apologize for the delay in posting, but I have been under-the-weather.  I feel much better now, and I would like to thank those who emailed or tweeted to ask how I was doing.

Side note:  I’ve mentioned it several times before, but just to clarify for new readers.  I live in a home provided by my employer, as part of my compensation.  One of my goals is to someday pay cash for my own home.  Should the time come and I need to purchase a home before I can pay for it with cash, my goal would be to have enough in savings to make a 20% down payment.

One last thing about overlapping funds -  When you get started, every dollar that you have will be overlapping.  This cannot be avoided.  For instance, say you have $10,000 in your savings account, with $5000 earmarked for emergencies, $1000 for automobile replacement, and $4000 for future home purchase.  You are driving down the street, your engine dies, and you need a newer car.  More than likely, you’ll try to find a car for less than $6000, the amount in your emergency fund plus the amount earmarked for automobile replacement.  What happens, the next day, when your refrigerator dies?  You “have” the money, but it’s not specifically earmarked appliance replacement.  Of course, you are not going to worry about whether the money was originally intended for appliance replacement, you are simply going to purchase a replacement refrigerator.  The money, in reality, was overlapping – it served more than one purpose.  Our goal, our plan, is to eliminate this scenario.  Over time, we want to have enough in our emergency fund, enough in our automobile replacement fund, enough in our new home purchase fund, and enough in our appliance replacement fund, to cover the expenses associated with each type of need.  Noting, obviously, that until we get to this place, having money in our account, even overlapping money, is much better than having no money in the account at all!

Final Note – By definition, the emergency fund is for unplanned-for expenses, and thus the money in the emergency fund is overlapping.  Problems arrive when we use money in the emergency fund for non-emergencies.  Personally, our emergency fund is only to be used in the event that my wife or I were to lose our job.  All other purchases and savings needs are included in our monthly budget.

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Setting Personal Finance Goals – Eliminating Overlapping Funds

Yesterday, I encouraged you to sit down and develop your  Ultimate Financial Goal.  Today, I’ll write about the next step in our week long series about Setting Personal Finance Goals.

Disassemble The Dream

As I mentioned yesterday, our ultimate financial goal is really our ultimate dream – where we would like to be, a what we would like to be doing at some point in the future.  Today, we have to disassemble our dream, break it into its constituent components, so that we can then figure out how to best achieve our ultimate goal.  For this, we will need to take a look at the drawing we created yesterday.

At the center of my drawing, there is a picture of a house.  The house sits in the middle of a nice-sized yard, is surrounded by several neighboring houses, and is just the right size to have grand kids over during the holidays.  The first component of my ultimate goal  becomes my first long-term goal.  I want to own a paid for house that I can live in after I retire.

Also on my drawing, there are pictures of a golf course, a church, a family-tree, and a vacation home.  Using these pictures, and adding them to the goal of owning my own home, I have now created five, practical, long-term goals.

While I am at it, I’ll prioritize my long-term goals, and list them here -

1. Own My Own Home For When I Retire
2. Share Financial Blessings With My Family
3. Share Financial Blessings With My Church
4. Enjoy Life Through Recreation
5. Own My Own Vacation Home

I’m sure that you can see what I have done here.  I’ve taken my dream, my ultimate financial goal of being financially independent, and I’ve brought it down from “the sky” and given it some “reality”.  Now, instead of one hard-to-define dream, I now have five, concrete, easy-to-define, long-term goals.

Not only have I developed some long-term goals, I’ve also prioritized them.  My reasoning is rather obvious.  I may not have enough money to accomplish goal 5, but I want to be sure that I have enough to accomplish goal 1.  Yes, we want to dream, but we also want to be realistic in our planning.  If the recent economic meltdown has taught us anything, it is that life is unpredictable.  All we can do, in reality, is to create our plans, work hard to achieve our goals, and move forward.  Personally, I am trying to create long-term goals that are realistic, regardless of the state of the economy.

From this post on, we’ll simply take the above detailed process, and learn to apply it to each of our long-term goals, disassembling them and creating intermediate-term goals, short-term goals, and daily-goals.  The process, at each step, is the same.  I’ll also discuss those pesky goals – like paying for our kids to go to college, or buying a newer car – and how those types of goals relate to our long-term goals.

These first few days, we have really been inside our own heads – dreaming, planning, goal setting, and thinking about the future.  Tomorrow, we begin the difficult process of figuring out what we actually have to do in order to achieve, in many cases, some rather lofty goals.

Debt Reduction Book Giveaway -

Don’t forget, as part of this week’s series on Setting Personal Finance Goals, I’m giving away five debt reduction books.  Click over and find out how you can be eligible for a chance to receive your very own free debt reduction book.

Final Notes -

As you list your long-term goals, you may notice that your list just keeps getting longer and longer.  For right now, try to keep your list limited to less than 10 long-term goals.  Tomorrow, I’m going to delve into the difficult task of prioritizing long-term and intermediate -term goals.  For instance – How do we balance college funding for the kids (an intermediate-goal for most) with a long-term goal, such as buying a vacation home?  Right now, create a list of long-term goals, goals for that time in your life usually defined as retirement.

As I work my way through this series, I can actually see it blossoming into a 2-week-long project.  What sounds like a simple topic – setting personal finance goals - is actually a very complex topic, one which fascinates me.  I hope you are enjoying this series, and I really do appreciate all of the positive feedback.

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Setting Personal Finance Goals – Developing Concrete Long-Term Goals

After reading yesterday’s article about Setting Personal Finance Goals, I hope that you are pumped.  I know I am, and I’m really looking forward to sharing this series with you.

For the purpose of this week’s series, we are going to think big – and then we are going to learn to think small.

I want you to do something for me, and while it will feel quite cheesy, I really want you to give it a shot. Take out a piece of paper – some plain white stock from the printer will do just fine – and grab a pencil.  Now, on your piece of paper, I want you to draw your ultimate future.  Just for the sake of keeping things simple, let’s assume an age between 55 and 70.  (We’ll talk a bit more about the whole age thing in a future article.)

Your drawing can be as simple or as elaborate as you would like, but it should include – where you would like to live, the type of house you would like to live in, the type of automobiles you would like to own, the property your house wold sit on, and the people who might be living with you.  Over in one corner, you might draw the boat you hope to buy, or the golf course you would love to be a member of, or the destinations you would like to visit.  Whatever comes to mind, and is significant, put it on your piece of paper.  Take as much time as you need, and really imagine where you would like to be in your future.  Oh, and for now, imagine that money is no object.

It’s amazing what these drawings reveal.  For some of you, you will be amazed by how elaborate your hopes and dreams already are.  For others, you’ll marvel at how simple, how gloriously ordinary you hope your life will be.  I’ll be honest.  The picture on my piece of paper is kind of… boring.

I have drawn a house, with a simple two-car garage, and a workshop in the backyard.  The house has a pool, and a shaded patio, with some place to cook dinner on nice evenings.  The house is big enough for our three kids, and their future spouses, and our future grandchildren.  It has a massive den, and an equally impressive dining space.  The yard is big enough for a good game of touch football, but no so big as to become a burden to keep up.

On the left-hand side of my paper, there’s a faint sketch of a golf course.  I love the game, but I really don’t care if I ever join a club or not.  I’d just like to play, two or three times a week, with a couple of my good friends.  On the right-hand side, there’s another faint drawing, of a house, or condominium, at the beach.  I would really like to go there, for two or three months each year, just to relax and enjoy the beauty of the ocean.

At the top of the page, is a church.  A bright, functional space, where I can gather with my fellow believers, and worship our King.  I couldn’t imagine thinking about my future without dreaming of what Father might have in store for us, so I just drew a church, knowing that wherever we live, and whatever we do, we’ll always be drawn to a local body of believers.

Near the bottom of the page, I just drew a tree.  This tree represents my family-tree, and the hopes and dreams that I have for my kids, their kids, and their kids’ kids.  For some reason, I gave the tree a name – hope.

See, I told you this could get quite cheesy.  I hope, by now, you see the point of this exercise.  What you see on your piece of paper – that’s your dream, your desire, your ultimate financial goal! There it is, right in front of you eyes, more real than it has ever been.  As simple, or complex, or radical, or basic, or boring, or outrageous as your dream might be, it’s still your dream!

Don’t you understand the power behind what you just did?  Please, do not ignore the significance of your dream.

Do you realize that we are living in the middle of a dream-less society?  People have given up.  They are no longer dreaming.  And when we fail to dream, we fail to plan  And when we fail to plan, we fail to care.  And when we fail to care, we fail to live.

I hope that you are dreaming.  I hope you’ll take your drawing – your beautiful dream – your ultimate financial goal – and place it on your refrigerator’s door, or in your briefcase, or in your purse.  When you feel down, and discouraged, take a look at your drawing.  That’s your goal – your ultimate financial goal.  And that’s what you’re moving towards.

Debt Reduction Book Giveaway -

Don’t forget, as part of this week’s series on Setting Personal Finance Goals, I’m giving away five debt reduction books.  Click over and find out how you can be eligible for a chance to receive your very own free debt reduction book.

Final Note -

I’m sure you noticed, but I really didn’t talk about money, much or at all, today.  That’s because, more money isn’t our goal, more money is simply a means for achieving our goal.  Much more on that, starting tomorrow!

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Setting Personal Finance Goals – Ultimate Financial Goal

I have a terrible sense of direction.  My wife jokes that I could “get lost going from the front yard to the back.”  You can imagine how thrilled I was, a few years ago, to receive a GPS as a birthday gift.  Now, I can  jump in my car, and safely get from point A to point B, without needless stops at points C, D, and E!

What’s the old saying?  The first step to solving a problem is to admit that you have one.  I had a problem.  I knew that I wanted to be financially independent, but I had no idea how to get from where I was (in debt, broke, and frustrated) to where I wanted to be (free from debt, in control, and at peace).  Admitting my own ignorance was the first step.  Frankly, knowing what you don’t know can be just as empowering as knowing what you do know.

Instead of wallowing in my circumstances and giving in to my frustrations, I set my mind, and determined to do something about my situation.  One of my favorite comedians, the late Jerry Clower, used to say, “There ain’t no shame gettin’ the seven year itch… the shames in keepin’ it.”  There’s no shame in being ignorant, the shame is in staying ignorant.  I started to read everything I could get my hands on about debt and debt reduction.  I read -

• Dave Ramsey’s The Total Money Makeover: A Proven Plan for Financial Fitness

• Debt-Proof Your Marriage: How to Achieve Financial Harmony (Debt-Proof Living) – Mary Hunt

• Debt Free Living – Larry Burkett

• Complete Financial Guide for Young Couples: A Lifetime Approach to Spending, Saving and Investing – Larry Burkett

• Debt-Proof Living: The Complete Guide to Living Financially Free (Debt-Proof Living (Paperback) – Mary Hunt
  

Armed with the information gleaned from those books, I sat down with a piece of paper and outlined my goals for for the future.

I started out with a single, ultimate goal – financial independence.  I then broke that goal down into several intermediate goals, and then broke those intermediate goals into several smaller goals.  I then created a financial road map, my personal plan for achieving each of my personal goals.

Over the course of this week, I’ll be writing several articles about goals, goal setting, and creating your own financial road map.  If you have not done so, please consider subscribing to No Credit Needed, via RSS or free daily Email, to keep up with each post in the Setting Personal Finance Goals series.

Debt Reduction Book Giveaway

To get you started, and to keep you motivated, I have also decided to give away five debt reduction books – winner’s choice from the list above.  There are several ways you can be considered for the free book giveaway – Feel free to enter the giveaway in each of the following ways -

Win By Commenting -

Simply leave a comment below, with either a question or comment about goal setting.  On Friday, I’ll randomly select two winners from all commentors.  Those reading via RSS feed or daily Email will need to visit the site to leave a comment.  Feel free to leave as many comments as you wish, but your name will be placed “in the hat” only once.  Comments take a few minutes to appear.  Spam laden comments will be deleted and will not be eligible for the giveaway.

Win By Tweeting -

You will  need to have a Twitter account, follow me Twitter.com/NCN, and then Tweet the following message – copy and then paste it.

Win Free Debt Reduction Books – Follow @NCN and re-tweet – Details: http://tinyurl.com/anbtct

On Friday, I’ll randomly select a winner from all tweets.  Remember to include @NCN in your tweet, so that I can find it.

Win By Subscribing -

Subscribe to No Credit Needed via daily Email.  On Friday, I’ll randomly select a winner from those who have subscribed via daily Email, so be sure to include a valid email address when subscribing.

Win By Blogging -

If you have a blog, simply link to this article, or any article in the Setting Personal Finance Goals series.  On Friday, I’ll randomly select a winner from those bloggers who liked to an article in the series.  After the winner receives the book, he or she is free to give that book away to their own readers, should they choose to do so.

Details -

Entries will be accepted through 10PM Eastern on Friday, March 13th. I will contact the winners via e-mail and/or Twitter.  Note that the winners will receive their books directly from Amazon, so you’ll have to provide me with your U.S. mailing address (no PO boxes, please) so that I can give it to them. Void where prohibited.  Winners will be allowed to select a single book, of their choice, from the above listed debt reduction books.

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Setting Personal Finance Goals – Debt Reduction Book Giveaway

My wife and I have been debt free for more than three years.  Here’s how we turned our lives around and changed our family’s financial future.

We began to spend less than we earned.

Brilliant, no?  It sounds so simple, but the reality is, many Americans spend more each month than they earn.

We put our credit cards in our wallets – and just left them there.

We stopped using our credit cards.  We didn’t cut them up or freeze them in a bowl of water – we simply made a decision to stop using them.  This might have been the single most important thing we have ever done.

We began to live on a budget.

Following a zero-based budget, we were able to control our spending and maximize our savings.

We began to dream of a debt-free future.

Within the first week of our financial turn-around, we were already convinced that, one day, we would be debt free.  This confidence, though tested by circumstances, never changed.

We created a system for organizing our financial documents.

Organization is so important.  In the past, we might forget to pay a bill or we might lose an important document.  Now, we have a system for organizing our documents, scheduling payments, and balancing our accounts.

We worked together.

I am the nerd and I like spreadsheets and calculations.  My wife is practical and she specializes in household management.  We combined our strengths, encouraged one another, and refused to argue, ever again, about money.

We created a specific goal.

Our first goal?  We wanted to be debt-free.  Having this specific goal, something to aim for, really motivated us.  We gave ourselves a specific goal, and a specific date to achieve it.  Surprisingly, even though we missed our original goal date, instead of being discouraged, we were further motivated.  The goal itself, the dream of being debt free, really kept us going.

We began to think long-term.

This was key.  Instead of living month-to-month, we decided that we wanted to live decade-to-decade.  Making the decision to be forward-thinking, we were able to give up temporary wants, and focus on long-term plans.  We matured, you might say.

We read.

We read, and continue to read, all that we can about personal finance.  Inspired by the success of others, we press forward.  We are not where we want to be, but we are confident that we are headed in the right direction.  Even surrounded by the negative news of the day, we have great hope for our future.

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How We Changed Our Family’s Financial Future