This is the simple 4-step get out of debt plan that helped us achieve family financial freedom at last!
Y ou see, we had tried to get control of our finances for years. We faithfully kept a budget every month, but nothing ever changed. We never seemed to move forward in our finances.
There’d be the times where we would just give up and feel frustrated with living frugally but not seeing any results.
In those times, we’d end up setting ourselves back even more with overspending.
It was easy to justify telling defeated selves, “What difference will it make anyway?”
When we got bonuses, raises, or freelance work, we weren’t prepared with a plan, so that extra income quickly disappeared along with the opportunity to make a real impact on our finances.
We were floundering and getting nowhere fast.
I can tell you from experience, you can keep a budget YEAR after YEAR, and still never make one bit of progress toward improving your financial situation.
It wasn’t until we finally put our plan into place that we started seeing major progress faster than we ever imagined.
You can follow this same plan to make family financial goals that will help you to achieve family financial freedom, fast!
What Financial Hack is More Important than Budgeting?
Making a financial goal for your family can actually be even more important than saving money.
It’s more important than budgeting.
Because if you don’t even know where you’re going, chances are very good that you will never ever get there.
4 Steps to Create Your Get Out of Debt Plan
1. Have a clear, specific goal.
Very simply, find out exactly how much you need to save.
If you haven’t been actively working toward your goal, then you might not know. I certainly didn’t before we started our get-out-of-debt plan.
Sometimes it’s just easier to ignore the state of our finances, but unfortunately, that won’t make it go away. (Believe me, I tried!)
Just seeing it on paper (well on the computer screen) in cold black-and-white can’t-ignore-it-text did a lot to show us how crucial it was to change our financial situation fast.
What Goal Should I Set?
Everyone is in a little bit of a different situation, so of course, only you will know exactly what goal you need to set to bring you closer to family financial freedom.
A good rule of thumb is to follow Dave Ramsey’s 7 baby steps. Set your goal for the single step that you’re on right now. Don’t try to think about all 7 at once!
The baby steps include progressing in order through the following, as quickly as possible:
- Save $1,000 for Emergencies
- Get out of Debt with the Debt Snowball
- Build a 3 to 6 Month Emergency Fund
- Save 15% of Income for Retirement
- Save for a College Fund
- Pay Off Your Mortgage Early
- Invest and Give Big!
You can find much more info about why this path is a great idea in his book Total Money Makeover. (affiliate)
2. Set a Date
Set a realistic date for completing your goal.
This means if you’re trying to get out of debt, find out how much you owe, and how long it’s going to take if you keep making that minimum payment.
Then find out how much faster you can pay it off with the Debt Snowball Calculator. (It’s easy, and dare I say, fun?!)
If you’re saving for emergencies, calculate how much you need to save, and how much you’ll be able to add to your fund each month.
This is the time to think creatively about how to save money and how to earn extra money to help you reach your goals faster.
It’s good to be realistic, but it’s also just as good to think big. You’d be amazed at how much you can save when you really set your mind to it.
3. Remember Why
Also, write down why you want to accomplish this goal.
This might be the most important step.
Honestly, saving money, living frugally, and keeping a budget isn’t that fun, IF you don’t stay focused on your “why.”
Every time it’s feeling hard, you can remind yourself why it’s worth it, and that it’s only for a finite period of time.
4. Steps to Success
Break your goal down into bite-sized chunks, so you can see progress. It’s these quick little successes that will keep you marching right on toward your bigger goal.
Checking off that first mini-goal can be extremely motivating to keep going and to get it done even faster.
If you’re working on getting out of debt, then the steps would simply be listing out each of your loans in order from smallest to biggest.
If you’re saving for an emergency, then you might list out how much you plan to save for each month.
Put Your Get Out of Debt Plan into Practice
Making your plan to achieve family financial freedom is ultra simple.
It’s super quick.
The challenging part of the challenge is actually sitting down and just doing it!
Download this free Financial Goal Planning Worksheet.
To help you put this idea into practice right now, I created a free download worksheet with specific steps and questions to answer. Print it out or just grab a piece of paper, then…
Write down EACH STEP of your plan:
- A Clear and Specific Goal
- The Date You’ll Complete Your Goal
- Why You’re Working Toward This Goal
- Steps to Get it Done!
Post it somewhere everyone in the family can see it on a regular basis.
It could be as quick as 5 minutes, or more likely if you have a partner, you’ll need to sit down and chat and then come back and chat some more and then come to an agreement for your financial plan. (That could be a post all on its own!)
Effective goal setting has been SO powerful to completely transform our finances, I hope you will try it too!
This plan will finally take you from wanting to succeed with your finances to actually doing it! Today I challenge you to take that first step and get your complete financial goal down on paper.
What financial goal are you committed to achieving? Share your story in the comments!
