WRITING DOWN YOUR FINANCIAL GOALS

On the expense side, we suggest breaking these down into “Family Expenses” and “Individual Expenses.” This configuration will enable you to shape your budget to your joint goal decisions while permitting each of you the degree of independence you’ve decided you need. For example, if you’re a “three checking-account family,” with one account dedicated to household expenses, having categories for “Family Expenses” and “Individual Expenses” will dovetail nicely with the payment responsibilities that have been assigned.

Make sure to allow yourself a realistic amount of time. You probably didn't get into debt overnight, and you certanly won't get out of debt overnight. Generally speaking, you'll probably need at least as much time for getting out of the hole as it took for you to get into it.So if you went to college for four years by using student loans, then got out and bought a car, and then got a job and started spending money, you probably have put fve or six years into accumulating debt. Figure fve or six years to become debt free. Different factors can contribute to getting out of debtin more time or less, including your level of income and your level of commitment to the process.

Think back to when you started to build up your current debt profile. How long ago was it? Look at a calendar and determine a date that is about that far in the future. That date is your long-term goal for being debt-free. You can set shortterm and mid-term goals as well, both to help you chart your progress and to help keep you motivated.
Remember, though, that achieving freedom from debt involves sacrifces. You must remain committed to paying back what you owe.

There are plenty of good reasons for writing down anything that's important:

■ You tend to remember information better if you take the time to write it down.
■ You're more likely to believe something that you see written out. Seeing it on paper makes it real and tangible.
■ You have something to look at, which makes it harder to forget or ignore that you've made a decision.
■ You have proof that you've already accomplished an important task. Goal setting is a major step in the process of getting out of debt, and once you've set the goal, you can start getting excited about the destination.
Write out your positive, long-term goal statement at the top of a sheet of paper. Beneath it, write out the dates you've set for attaining your short-term, mid-term, and long-term goals.

If you haven't already started a file or three-ring binder for the project of getting out of debt, now is a good time to do so. Place your sheet of written goals in the front of the binder or file. This way, you have everything you need in one place:
goals, worksheets, and any other information you collect.In addition to the sheet of paper listing your goals that you put in your fle or binder, you can write out your positive,long-term goal statement on a 3 x 5 card and post it whereyou'll see it regularly, such as on a bathroom mirror.

For your reminder note, you can rephrase the statement in a less formal way. For example, instead of "In fve years, I wantto have my debt to 25 percent of my take-home pay," you might write it as "If I stick with this, I can be fee in fIve years!" Write whatever gets you the most excited about thisprocess. You can then rewrite the note every time you reach the creation of a personal finance budget as an intermediate goal ("Just four more years!"). Updating your note helps keep you out of the "Are we there yet?" syndrome that accompanies many long-term projects.

Make your budget as detail-oriented as you would like. We believe that the more detail, the better, in terms of gaining an understanding of your spending habits. However, if details aren’t your thing and will impede your budgeting process, try to consolidate categories into “Fixed Expenses,” “Variable Expenses,” “Necessities,” and “Discretionary.”
Other consolidated categories can work as well. For example, you and your partner may prefer to use cash for household items such as spot grocery purchases, fuel, and dry cleaning. Instead of having a separate category for each item, you can consolidate these into a “Cash for Household Items” category. Some couples simply find fewer categories less intimidating and easier to adhere to.

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