Note: This is a post from Joan Otto, Man Vs. Debt community manager. Read more about Joan.
Last month, I was proud to share a look at what I accomplished financially in 2013 as part of my series of regular financial updates.
This month, I want to share some highlights of the current month, and then focus on a look ahead at my financial goals for 2014, along with some suggestions on how you can set your own financial next steps!
Our Very Next Steps
We hit a major one of our “V.N.S.” or very next step goals this month, plus one overall goal that’s worth noting.
Hated BoA Mastercard: Our goal had been to get this under $15,000, and this month, its balance dropped to $14,952.09. Next, we’ll aim for under $14,000! When we started tackling our debt in early 2011, this card had a balance of more than $36,000!
Total debt paid off: We crossed the 40 percent debt-free mark! Now we’re at 40.41 percent paid off, with $36,238.49 paid and $53,448.74 to go.
Don’t forget that we keep track of all of these debts in summary (complete with V.N.S.) on my “Joan’s Finances” page – so you can see how we’re doing at a glance. Here, I just hit the updates each month.
Financial goals for 2014: Debt reduction
Total debt down at least $15,000 from now, and total payoff over $50,000 total, AND total debt-paid-off percentage over 50%. That would put us at $38,448.74 to go, and $51,238.49 paid off. YES. I can’t even imagine how good that will feel!! (If you’re wondering, that would also be 57.13 percent debt-free!)
Hated Bank of America Credit Card down at least $5,000. Last year, we came within a couple hundred dollars of that, and doing so would put us under $10,000 total owed on this card. So that’s the highest-focus goal!
Reduce total number of debts by one. I’m not sure yet in which direction I’ll go to accomplish this, but we’ve consistently reduced our total NUMBER of debts each year, and that always motivates me like crazy to hit the remaining ones even harder. This is mostly a mental game for me, and one that I’m glad to play.
Other financial goals for 2014
Continue to make estimated quarterly tax payments for federal, state and local taxes. (This is kind of a no-brainer, as it gets set aside when I make the money, but at the same time, I want to note it!)
Get health insurance. This is a whole post on its own, but suffice it to say a LOT of what I’m working on right now is tied up in this!
Pay cash for a second vehicle if needed. This remains an uncertainty depending on some job situations that look to shake out in the next month, but IF we need to add a car, the idea is to do it such that we have no car payments!
End year with at least two months’ mortgage in savings. This is in addition to the savings we routinely build up for everything from taxes to medical expenses.
Continue tracking our financial progress each month. I’ve been doing that in my own spreadsheets since April 2011, and it feels amazing to see the progress over time.
Shaping your financial goals for 2014
My goals might seem a little haphazard. Some savings, some debt payoff, some to deal with big purchases… doesn’t most financial advice suggest to focus on just one of these things?
Well, yes and no.
To me, goal-setting is about finding out what motivates you. Just like when I talked about fear being the best determiner of the amount in your emergency fund, looking at what scares you – and excites you – is often the clearest road map to your goals.
So for some people, consistency and progress in one particular area will be the most motivational. That’s often the case for me. But this year, with a lot of challenges and changes in front of me in a variety of areas, a mix of things stood out.
If you’d like to set financial goals that work for YOU in 2014, here are some things you might ask yourself:
What scares me most about the year ahead? For me, it’s my car situation. That’s why I’m including the resolution of it that I want as one of my key goals.
What would make me grin like crazy if I could say it at the end of this year? That’s the reason having one fewer debt in total is on my list. If I can say that I’m down to five debts total to pay off by this time next year, I’ll feel great.
What goals are within reach? I’m not a fan of aiming TOO high about yearly goals. I’m actually concerned that my $15,000 is a super-stretch goal, and while I sometimes like those, I like setting goals I know I’m going to hit, too. (This is why the Very Next Step concept is good for me.)
What are my nonfinancial priorities? While I didn’t list my own nonfinancial goals for the year here, there are some that would conflict with financial goals I could set. For example, if one of your key values is to travel more this year, you don’t want to cut your travel budget to a point that doesn’t support it, right?
So what are your financial goals for 2014? What strategies did you use to choose the goals that work for you?
I’d love to hear your stories in the comments!