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How To Set A Financial Goal to Reduce Personal Debt

by nightmarez

Firstly, what do I mean by a financial goal?  For most of us,
that would generally be a goal to either increase income or
reduce consumer debt.  Of course there may be times in our lives
where we want to increase consumer debt to acquire goods and
services sooner or to reduce our income as a trade off to have
more time but in this article, let's set those situations aside. 
In particular, let's look at the scenario of reducing consumer 
debt by 50% in six months.

My standard formula for goal setting is to select a coach, have
the required resources in place and to have a plan-A and a plan-B
in place so let's see how a financial goal fits in with this.

Selecting a financial coach these days is difficult indeed. 
Most financial advisors will only try to sell you products,
thereby limiting their own risk in a highly litigious
environment.  If your goal is to reduce your personal debt by 50%
in 6 months the financial advisor might be dismissive if there is
no chance of selling a product into your situation.

Similarly, a debt financer will try and sell you a product that
appears to reduce your debt but in fact does very little. 
Finally there are educators, who provide information but are
prohibited by law to give financial advice.  While they can give
illustrations or tell you what they did, they cannot specifically
advise you what to do and therefore cannot really be your coach.

I am aware, however, of some wealth creation companies that
provide 'integrated' solutions providing all of the required
professionals in a single meeting.  By nature, however, the cost
of this service is out of reach of many. One solution might be to
use self-help websites and software to help resolve this
situation, in conjunction with education and perhaps a visit to a
financial advisor if necessary.

What resources do you need to reduce personal debt?  Well first
of all, you must be able to measure and control what you are
spending.  Yes, I am talking about the dreaded budget.  With
internet banking and plastic cards, it is relatively easy to
download transactions from all of your banks and put them into a
spreadsheet.  I believe that the most important tool, however, is
the banking system itself.  With high interest-earning no-fee
accounts available it is possible to use the banking system and
the utilities to do a lot of the budget accounting for you.
  
The Plan-A is what you will do if you are on track to achieve
your goal.  Is there some kind of reward for achieving your goal?
 Clearly to reduce personal debt, you must have a system to
control what you spend, so at a minimum a separate card account
and bills account but more likely around 9 high interest no fee
accounts and one card account per partner, preferably a debit
card (or secured credit card).

The Plan-B is to identify the biggest risk and what to do if it
happens.  If, for example, you think that your car might need
$1,000 of repairs but you can't set aside that much money over
the next 6 months, what will you do?  Will you change the
deadline, or cut costs in other areas?  Can you do without a
car?

Finally, tracking a financial goal and measuring the level of
success is straight-forward when you have the right tools in
place, such as internet banking.

Glen Smith aka Glen The Goals Guy has been running both
goal-setting and budgeting workshops.
Visit <a
href="http://QuickStartGoals.com">http://QuickStartGoals.com</a>
or <a href="http://BillBanisher.com">http://BillBanisher.com</a>

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