To get out of debt, get specific

Have your good intentions for the new year already been blown to the side of the road like a grocery bag on the highway? It could be that you just didn’t set yourself up correctly. Before the year is too far gone, let’s look at how to approach goal setting in a way that could help you correct course and make 2013 a lucky year.

The concept of “SMART” goal setting dates back to the mid-1950s and Peter F. Drucker’s book “The Practice of Management.” Let’s apply this approach to the No. 1 financial goal I see people pursue, the very Cadillac of resolutions: “I want to get out of debt.”

Specific. The usual problem: The intent of “get out of debt” is good, but it’s certainly not specific. Are you really talking about your mortgage, car loans, student loans and credit cards, or just one part or another? The fix: be laser-focused. Identify a specific debt or dollar amount to attack.

Measurable. The usual problem: You can’t measure what you haven’t defined. But with the first step done, you have a clear measuring stick to work against. If the goal is to shed $5,000 in credit-card debt, you’ll be able to map out a plan with benchmarks to track your progress. It doesn’t have to be hard – write your goal down and post it on the fridge.

Attainable. The usual problem: Letting your enthusiasm overtake your realism. Is the general notion to get out of debt attainable? For most folks I know, it is, but not right away. Don’t put your goal in jeopardy by biting off more than you can chew. The fix: focus on the bite, not the meal. Remember the old saying: “How do you eat an elephant? One bite at a time.” Apply that logic to your debt-reduction goal.

Relevant. The usual problem: Incorrect focus. Why did you fall in debt? If it wasn’t a one-off medical situation or an isolated bad decision, but rather habitual overspending, “getting out of debt” might not be the right goal. The fix: switch your goal to one that focuses on monthly spending control and adherence to a budget. Then, you’re more likely to have lasting success.

Time-bound. The usual problem: No specific time frame. If you’re like me, you work better with a deadline – and so do your goals. The fix: set a date to get the task at hand knocked out as part of your new goal setting process.

So if the shoe fits (or, perhaps, fell off), why not start over? This time, try it with carefully thought-out and constructed goals that give you a better shot at success.

J.J. Montanaro is a certified financial planner for USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.

This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers. USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.