Making Big Goals
Just this past week I had the pleasure of sharing my story about how I paid off my student loans on Budgets are Sexy. I listed 5 tips that helped me achieve paying off my student loan debt. One of the tips I want to talk about today is setting a goal and going big with making goals, here’s tip #2 in full detail, if you want to check out more head on over to Budgets are Sexy and tell J. Money “Good Day Sir” from Even Steven Money.
#2. Set a Goal and GO BIG
Setting a goal for paying off my student loans was one of the biggest steps for me in paying off my debt. It meant I was finally serious.
When you set your goal, set a goal that you WANT, not a goal that you think you can do – Go Big. Making $200 payments each month might be what you think you afford, but it is not setting you up to Go Big. Saying I want to pay off my student loans in 12 months – over $2,000/mo! – is Going Big.
Setting a goal tells you where you are today, and where you plan to go tomorrow. Without one, you are wandering the road of life with a backpack full of debt, and each step gets heavier and heavier with no end in sight.
Don’t Forget GO BIG
Over the past month I have been analyzing and putting numbers in spreadsheets and figuring out every which way to take the “Free Money” from my budget and put it towards investing (401K, IRA, taxable investment) or paying off debt( mortgage, rental mortgage, personal loan) and I realized something today, I wasn’t doing exactly what got me here, I wasn’t going BIG.
Every goal that I put into my spreadsheet was small and based on my previous goal that I just accomplished, I was short changing myself. I decided that my goal needs to be BIG. I am going to pay off the last part of my personal debt, a loan to my parents, except I’m going to go as big as possible, which based on some calculations is paying off every single dollar of my personal debt (not included are mortgage and rental mortgage) by the end of the year. I’ll look to detail more in August when the plan officially begins. Essentially I have declared 2015 the Year of Debt Freedom.
Debt be Gone
As I have previously mentioned I have literally been going back and forth on what I should do with the next step in my financial picture. While it would be nice to pour a few extra thousand into the 401K or IRA, the thought of being able to say I have no debt besides my house is one I want to write on the chalkboard a 1000 times to show everyone. I actually get a little tingle of happiness inside me thinking about having no personal debt makes me want take the week off and go grab a beer type of happiness. It’s been decided, I’m going to stick with what makes the most sense to me and that’s paying back my personal loan to my parents. It’s the best thing not only for me, but for them as well. I ran some numbers, (Spreadsheet Geeks Unite!) and found a plan that can have the last remaining personal debt paid off by the end of the year. Starting the beginning of 2016, my payments will be my mortgage, utilities, groceries, cell phone, and eating out/entertainment. That’s nothing. I’m basically saying I need food, water, shelter, and a cell phone to make it in this world. Even putting the words down makes me feel like I could be thrown in the concrete jungles of Chicago and come out a survivor. Debt be Gone.
Pride and Our Money
During the repayment of my student loans, I came to a cross road. I had the option to have Mrs. Even Steven help pay off my student loan debt, save a few dollars in interest, and complete the repayment to the student loan provider months earlier than my personal payments could do. I know many of you who are married treat debt, income, and savings as “Our Money”, we have decided to do things a little differently in the Even Steven Money household. Each debt that came into the marriage we are personally responsible for, so every cent of my student loans was paid by me and me alone. Mrs. ESM is the most supportive wife in the world and besides words of encouragement, she has done things over time like pay all of the utilities, instead of splitting the cost, split our tax refund 70/30, and become the saver of the family who keeps a nice size emergency fund/savings while I keep next to nothing, especially since I sold my Emergency Fund recently to pay off my student loans. For my student loan cross road, I decided it mattered more to me that I was paying off my student loans myself than getting done earlier and saving money, sounds counter intuitive I understand. I think it may have been pride and the need for accomplishment, I didn’t want to look back in a few months and see my last payment come from Mrs. Even Steven, I wanted it to be all mine.
This time around, pride is not a factor in any way. I want the personal debt to my parents gone, NOW! So the plan is to have Mrs. ESM throw a little fuel on the fire to start the debt repayment fireball, this will save money on interest (while this is a loan from my parents, the money was borrowed from a financial institution) and make the repayment to my parents go that much faster. I will still be ultimately responsible to pay back Mrs. ESM but she has given me an interest free loan to be paid back at my leisure or less than 1 year (My leisure=My plan, 1 year or less=Mrs. ESM plan). In the end it comes down to Mrs. ESM giving a helping hand and I gladly will accept this go around.
At this point in my financial life, I can say with some conviction that we are doing pretty well for ourselves, while I don’t share net worth or our income with our readers we have come a long way from my days of Mercedes Benz, credit cards, and my first job out of college. In that same breathe I say that we are doing pretty well, but one always needs to be ready for a financial storm and not the cool Debt Tornado™ debt repayment strategy that I have made popular;)
The loan that I owe to my parents is at a small interest rate with a small monthly payment that I have been making for what feels like since the year the Cubs won the world series……1908 for you playing at home. It is not my place to share other people’s financial incomes, debt, or net worth, but I can share that a similar loan amount is available to pay with a higher interest and a higher monthly payment. The decision was made that paying this higher interest rate and higher monthly payment off would help my parent’s financial situation more than it would to pay off the smaller interest rate and monthly payment. This was actually one of factors that put me over the edge in my decision to invest or pay off my remaining personal debt. The opportunity to help my parents financially in any small way makes me feel good and like this is clearly the right decision for me, regardless of numbers and spreadsheets. I’m very happy to be able to pay off my last personal debt and even happier to help out my parents at the same time.
I am still taking the month of July off financially, I’m not making any extra payments or big decisions, I am going to sit back enjoy not having a student loan payment in the world. When August comes around, I will be back to my Go Big strategy in my debt repayment plan and I look forward to it, I hope you are too.
Are you Going Big with your goals? What would you do in my situation? Pay off debt or Invest?