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Thursday, January 31, 2008

You Need to Develop a Success Map

How many of you have paid off all of your debt before, only to say "Never Again" and then few years later do the same thing? I have. Not to the level I am working towards now, but multiple times I have worked for a bit until I paid it off and then went back to how I charged before!

What's worse is that each time its a bit deeper, isn't it. Well the Credit Card Companies raise your credit line since you paid it off! This becomes a vicious cycle. If this has happened to you before, or it you don't want it to, I suggest you put together a Success Map.

If I look back to all of those times I paid it off just to recharge again, there is one thing that happened each time. I thought I had reached my goal...heck I did, but I didn't reach my end-goal just a stage-goal. This is why I say often that Budgeting is a lifestyle, not a prison sentence to be hopefully paroled from!

This is were I really like Dave Ramsey's Baby Steps, or other guides that help you plan out what comes next. First, you really have to have your goals together. Is it buying a house? Saving for your kid's college? Retire early? Buying your own business? It doesn't matter, but you need to plan for it now, before you have paid off your debts, because you need to apply that same drive and moxie that killed those debts to the next project.

For us here it is:

  1. Emergency Fund - Done
  2. Pay off all consumer debt - In process
  3. Save 6 months expenses -Next
  4. Fully fund Retirement accounts - up to 15% of gross
  5. Pay off house
  6. Invest all available funds
  7. At $1 Net Worth -Buy own business

You can go to step 10 or beyond, my brother is a planner like that, but the point is to have a plan for what to do next. If you don't, you could be restarting the process at step #1 all over again, and each time it is a deeper hole to get out of, with less time to do it.

So set your plan up soon if you don't have one and make sure that you review your goals frequently enough that they still match where you want to go in life, before you get there!


Fiscal Musings said...

It's always easier to work to a plan so you don't have to constantly spend your time thinking about what you're going to do next.

RacerX said...

Yep, it is those "gap" times where we can fall off the budget horse pretty easy!

SavingDiva said...

Great post! I plan on creating a plan now....

RacerX said...

That's great savingDiva!

It is cheesy but true: A failure to plan is a plan to fail!

Lauren said...

I'm such a list person and planning junkie...I love this post. It's so true too! Your goals are great.

I've actually never been in debt...I just married debt, but I've done the exact same thing with savings where I'd build it up and then go spend it all and then the cycle would start again.

RacerX said...

Well hpefully it isn't too deep.But if you brought no debt into a marriage, you probablyu have a good handle on finances. Having you plan before you have everything paid off will ensure that you can achieve everything you want to. I'd bet on you! You have a great blog as well!

Thanks for commenting!

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