Pimp Your Finances

I put a lot of thought into resolutions, but in the past few years, I’ve struggled to find the right scope for my goals.

I’ve tried focusing on the big picture, and choosing resolutions like “improve finances” or “be healthier.”  One thing I like about these type of goals is that it’s hard to be daunted by them.  Most people fall behind on their resolutions, get discouraged, and give up.  That’s harder to do with broad goals, but their vagueness is also their weakness.  Without benchmarks, you can’t track your progress.

So I went the other direction, and chose goals that are very specific.  You’ve probably heard of them – they’re known as SMART goals.  The idea is that goals should be specific, measurable, attainable, relevant, and time-bound.

I wrote resolutions that were incredibly detailed – down to how much money I needed from each paycheck to accomplish them.  This didn’t work for me either.

My goals were so specific that I missed deadlines and got discouraged, even though I was making solid progress.  Or I would focus on the details so much that I’d forget about the big picture.

This year, I’m trying something new.  I’m making resolutions that bridge the gap between small details and the big picture

My new approach has three W’s: What, Why, and When.  W W W.  Easy to remember, right?

The “what” and “when” give me an idea of what I want to accomplish, and enable me to make a plan.  The “why” explains its importance, and gives it context in the big picture.

So without further ado, are my resolutions for 2009.

1. Get out of debt
   • What: pay off all of my credit cards
   • When: by the end of the year
   • Why: having debt stresses me out, and I have better uses for my money than paying credit card bills and interest
2. Start a Roth IRA
   • What: open a Roth IRA account and start making automatic contributions from my paycheck
   • When: by the end of the year (after I pay off my credit card debt)
   • Why: I want to take advantage of the low market, and ensure that I have a very comfortable retirement
3. Start an emergency savings fund
   • What: start making regular, automatic deposits to an emergency savings account
   • When: by the end of the year (after I pay off my credit card debt)
   • Why: I’ll feel much more comfortable with some padding, and it’s vital to my long term security
4. Start a vacation fund
   • What: start making regular, automatic deposits to an emergency savings account
   • When: by the end of the year (after I pay off my credit card debt)
   • Why: I’m improving my finances so I can enjoy life more.  There’s nothing I like more than travelling, and I want to be able to pay cash for any trips I take
5. Improve my health
   • What: improve my health by exercising regularly, eating more nutritiously, and drinking less
   • When: immediately
   • Why: I don’t ever want my motivation to be restricted by my physical state.  I never want to be too tired, hungover, etc… to accomplish what I want

Notice a common theme?  Money has been on my mind a lot recently, as it has been for the rest of the country.  But improving my finances is just the means to an end.  My ultimate goal is to enjoy life more.  To me, that means not worrying about money, and being able to do more of the things that make me happy.

What are your resolutions for 2009?  Do you have any tricks that you use to stay motivated?