Only eight percent of those who set New Year’s resolutions actually achieve them.
Why do so many people fail, and how can you improve your chances for success?
If your goals have to do with debt repayment, they’re not just nice to achieve — they’re crucial to your long-term financial prosperity. Here are seven proven ways to reach your money goals this year.
1. Know where you currently stand.
Before you can set a specific goal (see step 2), you need to know where you currently stand. In the case of debt, you may be feeling overwhelmed both by the amount you need to pay each month and/or by the sheer number of due dates, if you have multiple debts.
While that feeling may inspire a goal or resolution, it’s actually just the first step in how to achieve goals.
If you’d like to reduce your debt, step one has got to be to know exactly what you owe. Make a spreadsheet with all the relevant information, including type of debt (student loan? car payment? credit card?), total balance, interest rate, minimum monthly payment, and the due date of that payment. This will prepare you to actually set your goal.
2. Make your goals explicit and specific.
Now that you’ve got a grip on your situation, you’re ready to set your goal.
Which debt will you set your sights on and why? You might go for the debt avalanche method and focus your efforts on the debt with the highest interest rate. Alternatively, perhaps your car payment takes the biggest chunk out of your budget each month, and paying it off would give you the greatest flexibility as you continue your journey to reach your financial goals.
Assuming you’ve got student loan debt in your crosshairs, your goal might be to pursue a Direct Loan Consolidation for your federal loans, or maybe refinance with a private lender at a lower interest rate.
Goals like these can help you better track payments or ensure that more of your money goes to principal rather than interest (gotta beat amortization back!). Being specific about what you want to achieve makes you 10 times more likely to achieve your goal than someone who has only a vague sense of what they’d like to do.
3. Strike a balance between ambition and achievability.
When you’re deciding on what specific financial goals you want to reach, it’s important to strike a balance between a goal that is lofty enough to require some willpower and sacrifice (after all, if it were easy you would have done it already), but is not so pie-in-the-sky that there’s no chance you will achieve it.
Ideally, you want to be motivated by the challenge, not terrified and overwhelmed by it.
Perhaps that’s why only 46 percent of those who set goals last beyond month six — if it’s clear that you’re not going to succeed, why even try?
One way to walk the line between ambition and achievability is to look at what you were getting accomplished and trying to improve on that by, say, 10 percent. For example, if you were putting $500 per month toward debt last year, can you swing $550 this year? When it comes to how to achieve goals, that’s as simple as canceling cable or dining out two or three fewer times per month.
4. Write down your goals.
According to a study by Gail Matthews, a professor of psychology at Dominican University in California, individuals were significantly more likely to achieve their goals if they wrote them down as opposed to simply thinking about them. So making a list of financial goals may actually lead to checking it twice — and succeeding.
Post your list if goals where you can see it every day. Try printing it out and posting it by your bathroom mirror, using your list of goals as your cell phone or computer wallpaper, or incorporating a goal into a password you use often can keep it at the forefront of your mind.
5. Hold yourself accountable by sharing your goals with others.
Matthews’ study also found that sharing goals with others further increased the likelihood of success. And with social media as ubiquitous as it is, sharing is easier now than ever before.
Tweet your goals or post them on Facebook. However, while sharing your financial goals far and wide can feel satisfying, Matthews’ research actually had a group of participants sharing their goals with friends on an individual level.
Further, sharing goals a single time wasn’t as effective as sharing goals with a friend or family member up front and then committing to making regular updates on progress. So buddy up with someone — not only to share your debt-reduction goals, but to email or post on each other’s social media accounts every so often to let them know how you are doing.
6. Break your goal up into manageable chunks.
Of the five groups in Matthews’ research, the one that experienced the highest rate of success was the one that not only wrote down goals and shared them with others, but also formulated action commitments.
If you really want to succeed this year, break down your financial goals into smaller components you can check off your list as you achieve them.
For example, if you have a debt-related goal, maybe in January you construct the spreadsheet mentioned above and identify loans you want to refinance. Then in February, you pull your credit reports and identify any steps you need to take to improve your credit so that you can qualify for the best interest rates.
In March, you can actually apply and update your spreadsheet in April with your new payment amounts and interest rates to decide where you want to focus your efforts in May, and so on.
Your goal may be different, but if you can break it up like that, each month feels more doable and less nebulous.
7. Build in incentives and rewards.
Obviously, paying off a debt has inherent rewards — flexibility in your monthly budget, improved credit score, etc. However, you may find that you’re more willing to make sacrifices if you establish a meaningful reward. What that reward is may be different for different people, so think about what makes you happiest.
Also, remember that rewarding yourself for reaching your money goals doesn’t have to involve spending!
Let’s say you freelance to make extra student loan payments. Maybe once you pay off a particular account, you take a month off to binge-watch your favorite shows in your spare time instead of working so much. Or perhaps a splurge is in order — just make sure it’s a one-time item or experience that doesn’t break the bank.
Everyone’s situation is different, so everyone’s financial goals and the steps necessary to reach them will be different, too.
However, the strategies for success when it comes to how to accomplish goals have been researched and quantified. So if it’s time for you to get serious about your debt, try one or more proven methods for sticking to your goals.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|