I like to think that I’ve always been good at handling my money. I’ve been tracking my spending and using a budget since undergrad. I opened a Roth IRA while still in law school, and I’ve been trying to save whatever possible for an emergency fund. Despite doing all these things though, I never really made progress on any of my financial goals: I was spending more than I earned, my credit card debt increased, and I had approx. $25.44 in my emergency fund.
This year, I set my goals for my financial life like I usually do, but then, I decided to do something a little different. I decided to actually make a difference. In January, I started my spending fast, retooled my budget, and changed my automatic transfers to build that emergency fund and pay down my debt more quickly. I also stopped using my credit card – I even took it out of my wallet so I can’t use it. Still, it was hard to stay motivated.
In the four months that have followed, I’ve made tons of progress on my goals: my emergency fund is almost at its half-way mark and will be fully-funded by December, my credit card is on track to be paid off by my birthday next year (July 2017), and…I actually stuck to my budget for a whole month.
This might seem like small potatoes to some, but for me, this is huge. I stayed within my food budget, my miscellaneous budget, AND made all of my savings/debt repayment transfers (my credit card payment isn’t listed because it’s one of my Goals in Mint) for the month. I don’t think I’ve ever done this before, and I can’t tell you how excited I am to do it again. Seeing this small amount of progress towards becoming a truly financially savvy person means the world to me. As a recovering perfectionist, this is exactly the kind of progress I needed to stay patient while waiting for the rest of my financial goals to fall in line. Not kidding, having a “green” budget meant more to me motivation-wise than knowing my credit card debt will be gone in 15 months.
Fighting Impatience by Striving for Progress
I’ve seen a lot of posts lately about how hard it is to sit back and wait to be debt-free. Sure, it sounds passive…but that’s exactly what we’re doing. If you’ve made it to the point where your savings/debt repayment is automated and you’ve figured out how to not overspend, then all that is left is to watch the months roll by until your debt is paid off. Sure, you shouldn’t accumulate more debt, but that’s easy to do if you’re watching your slow-but-steady progression into debt freedom. What’s not so easy is staying positive and motivated during this process.
For me, this means celebrating the little things during the next three years. I have a lot of debt to pay off: a credit card (July 2017), a private student loan (December 2018). Plus, there’s the retirement account that really needs some catching-up, and I’d love to have a more robust emergency fund. Even towards the beginning of last month, I was already feeling down about how slowly I was making progress. I looked into more income sources, and I ended up pouring myself into this blog…that actually worked surprisingly well. That being said, the thing that really got me feeling great again (so great, in fact, that I went to the gym because I felt so good) was seeing that Mint budget perfectly green for April.
Rewarding “Small” Financial Goals
Now I’m working on a list of smaller financial goals to meet while I work towards those larger, multi-year goals. For each one, I get a small reward, probably an extra trip to the food cart during the week (it’s my favorite & only costs $4.25!). So far, this is what I’ve got:
- 3-month streak of “green” budgets
- Save money each month for car insurange & rental insurance (instead of paying it all at once like I did last month – see above)
- 6-month streak of “green” budgets
- Complete the 52-month savings challenge for my non-emergency savings account (I’ll do this in 2017) – This account currently has just the $5 minimum in it & is supposed to be for a wedding, house, or doggie!
- 12-month streak of “green” budgets
- Double retirement savings from $100/month to $200/month in my Roth IRA
- Cut that interest payment in half! (This one is more of a waiting game, but I’m excited to see it’s already gone down a little with my more aggressive repayment plan)
- Become forward-funded (where my paychecks from last month are paying for my current month) – this is my ultimate financial independence goal but it’s hard to do!
- Work more on the blog! Dames in Debt has already motivated me so much more than I ever though possible – my “small” goal is to get more of a routine in when I write & work on things.
- Maybe making a countdown clock or something for the debt? Might help me visualize my repayment progress more.
Some of these are easier than the others (or are simply more automation, like the savings goal), but they are my little goals to keep seeing progress, while still allowing for some mistakes, accidental splurges (I’m really bad at buying too many gifts), and keeping stress low.
So tell me: What are some of your “little” financial goals while you work towards your bigger ones?