New Year’s resolutions always sound like a good idea. We like making them because it’s such a specific and distinct point. The idea of a NEW year gives us an excuse to break from the past and, in some ways, start with a blank slate on a given area of our lives.
They rarely work, though. So let’s take a page from self-help advocates everywhere and do something that actually works, which is get started RIGHT NOW.
Let’s use these last days of 2012 to do a bit of reflecting, assess what went well and what we could improve for next year with regards to our money.
Specifically, let’s see how we did on our goals and what we can do better using what we’ve learned this year.
How Far Have You Come?
First, let’s get some perspective. Figure out how much you owed on January 1, 2012, and how much you owe now. Was there significant progress? If so, take a moment to pat yourself on the back for a job well done.
If your debt number hasn’t moved much, at least you’re paying attention. Time to figure out what happened and what you can do better for next year.
What Worked From Last Year’s Plan?
Think back to all the steps you took to help accelerate your debt payback. Did you work some overtime? Start a home business? Skip a vacation? Cancel a gym membership? Whatever it was, calculate how much extra this allowed you to contribute to your debts and figure out what else you can do in a similar vein for next year.
What Didn’t Work From Last Year’s Plan?
If you slaved over a home business that never really made any money or chose a cheaper cell phone plan only to rack up even larger bills by going over your minute-limit every month, write that down.
We want to work effectively, and if something’s not working it’s time to make a change.
Start Planning 2013
You should have a pretty clear idea of what your expenses will be in 2013. Barring drastic life changes, it should be easier to budget household expenses, car expenses, and other life-event expenses.
Using your current income, play with the numbers and figure out where your debt level will be at the end of the year.
Does this meet your debt repayment goals, or are you falling short?
What if you get even more aggressive?
The Best Question To Ask Yourself
Paying off debt is a question of priorities. Deciding what you’re willing to give up to speed up your debt repayment is one of the most telling factors that will ultimately determine how long your debt repayment takes.
That’s why you should always be asking yourself:
What ELSE can I do?
Never assume that your situation is locked-in. You can always earn a bit more money or cut another expense. You may not WANT to, but the options are there.
Try Something New In 2013
As part of your pre-2013 homework, brainstorm a list of other strategies you can try. List additional income streams you could investigate, as well as expenses you could trim.
Make a plan to implement at least one from each side and then do it. If it doesn’t work, adjust it later, but starting something new right now will help you get excited about all the progress you’ll make in the new year.