Guarantee Your Success
Posted by John Draper | Filed under Life Lessons
Often when we set goals for ourselves, they’re big goals. We want to be debt free. We want to have enough saved for retirement. We want a big, fat emergency fund, just in case. While we’re gung-ho when we set the goals, because they are big they are also long-term. And long-term financial goals can seem like impossible achievements when that gung-ho turns to ho-hum.
No matter how big a goal, it takes small steps to get there. And taking the time to set milestones so you know you’ve achieve those small steps is the best way to stay motivated, and keep on truckin’ toward your goal.
Milestones work because they let you celebrate your incremental successes along the way. And that helps to keep you motivated to make wise financial decisions day to day.
Let’s say you want to be debt-free. Broken down, that means you may want to be free of all your consumer debt within 3 years, your student loans within 5 and your mortgage by the time you retire.
If you’re snowballing your consumer debt repayment, then you already have a list of individual debts. All you have to do now, is write in the date by which you want to banish each individual debt. When you do, you’re going to reward yourself by… whatever turns your crank that doesn’t cost tons but makes you feel great.
A longer-term goal such as having your mortgage paid off at retirement may not seem to have many milestones. And if all you do is keep paying your mortgage on the schedule you’ve chosen, then this goal is a no-brainer. But if having paid off your consumer debt you decide you want to pay off your mortgage earlier, in addition to a long-term goal, you’ll need to set annual milestones. So you might decide that you’re going to put a principal prepayment of $6,000 against your mortgage every year, which means you’ll have to set aside $500 a month in your budget. Have that money auto-debited to your Mortgage Prepayment Savings Account and you’re on your way. Make the annual prepayment and you owe yourself a treat!
When it comes to saving, there can be several pools you’re trying to build: the Essential Emergency Expenses pool, the Retirement pool, the Educational Savings pool.
To save your Essential Emergency Expenses, you first have to decide how much you’re going to save. Will it be three months of your net income? Will it be six-month’s worth of your Essential Expenses? You might then decide it’ll take you half a year to save your first month’s worth of Essential Emergency Expenses. Once you bag that, grab a reward and start on the second months’ worth. Get the picture?
When it comes to setting milestones for your long-term savings, you can do it either based on an actual dollar amount as in this year I’ll save $100 a month; next year I’ll save $200. Or you can base your savings on a percentage of your income. This year I’ll save 10%, next year 12%, and so on. Your ultimate goal should be to contribute the maximum amount to your retirement plan that you are allowed by law. It may take several years to work up to the top limit, so setting milestones along the way will help keep you motivated toward your goal.
Create any number of milestones to help keep you focused and feeling great about your accomplishments. The smaller the step to achievement, the more successful you’ll feel. Pretty soon you’ll be so focused on the final outcome because you’re so used to being successful that the small rewards will pale in comparison to achieving The Big Goal.
November 13, 2008 at 10:49 am
can’t wait for the planner!:)
November 13, 2008 at 11:08 am
Woo Hoo!!
November 13, 2008 at 11:31 am
The planner is such a fantastic idea! I’m way to excited about it. I’m already plotting who to give to for Christmas!!
November 13, 2008 at 11:56 am
It will be top of my Christmas Wish List as something I want and as a gift for my kids (adults)!
November 13, 2008 at 12:04 pm
What jar do we use to pay for it? : )
November 13, 2008 at 12:06 pm
loved this post Gail
when I was younger I went to an unconventional private school (think little house on the prarrie) where we were taught to set small goals each day to get to the larger goal of finishing enough credits for a grade… this really helped solidify the concept of achieving small milestones toward the bigger goal and it has worked perfectly for me in having my own business… but somehow, I had never translated the skill I learned about goals to finances… Since I started watching your show I had that “aha” moment and realized it was the exact same thing!! Now, I have about 6months left before hitting that big goal of paying off my power line… I did the same thing for my credit card and paid that off last year… now all that’s left is to tackle my mortgage! I’m so excited about this coming year 
Thanks Gail!
November 13, 2008 at 12:20 pm
Where will we be able to purchase the binders? Can’t wait.
November 13, 2008 at 1:10 pm
Awesome – this will for sure be on my Christmas list!
November 13, 2008 at 1:40 pm
Hey everyone – There is a great articly on the Toronto Star website about consumer debt. http://www.thestar.com/Business/article/536028
The comments after the story are interesting too.
64 MILLION Visa and Mastercards in Canada. Oh Vey!
November 13, 2008 at 1:41 pm
I can’t wait for the Life Planner either. WIll you please let us know when it goes on sale, Gail? Thanks!
November 13, 2008 at 1:50 pm
Hi Gail,
I’m currently taking a family finance course at uni, and we watch your show in class sometimes. Do you remember Gillian and Ed, who had fashion and gambling issues, and owed $50K when they were on your show?
Well, my prof showed us another debt show, “Maxed Out”, and Gillian and Ed were on it. Not only were they in further debt, $75K, they were planning on moving to a bigger, newer condo.
Old habits die hard(ly)!
November 13, 2008 at 3:20 pm
Great post, Gail. Sometimes its overwhelming to see the whole picture (debts) looking at it in bits n pieces makes it easier to digest and tackle. Thanks and looking forward to the Budget Binder.
November 13, 2008 at 3:42 pm
Not to sound like a stick in the mud..but shouldn’t we be frugal and not buy your life planner and use your budget worksheets and the information contained on these pages to create our own…it’ll save the cost of the planner and will make us more financially literate….
November 13, 2008 at 4:03 pm
Elvin: it’s probably just a matter of what works for various people. Gail’s made various spreadsheets etc available on the site, and if they work for some people great. If not, a minimal investment to try something that may work better is always another option.
Personally, I like the flexibility of making my own system via Excel (free option: Google Docs Spreadsheets or Open Office!), but what works for some may not for others.
November 13, 2008 at 6:19 pm
So excited for the Planner! Let us know how, when & where to the find the Planner.
November 13, 2008 at 7:53 pm
It’s not very attractive, but Craig and I have a big dry erase board on one of the walls in our bedroom.
It’s actually on a wall, where it kind of smacks us in the face, before we exit the room.
I put it there on purpose – because it is where we list our short term, midterm, and long term goals.
And we leave plenty of room to write new ones as they come up.
But we don’t erase them as soon as they are achieved, because it’s kind of cool to see what we have accomplished.
(Like you said … hitting those milestones)!
It’s really hard to slack off, when our goals are staring us in the face each day.
And I’m really looking forward to the day I can cross off … taking the whole family to Italy!!!
November 13, 2008 at 9:54 pm
I think the planner sounds great! I can’t wait! I definately need a tool to get me organized a little better! I am paying off debt now but with a little more organization I could reach my goals a little easier!
November 13, 2008 at 10:49 pm
Gail, is there a way I can preorder one of the planners? Also, do you have an idea of the price yet? Thanks!
November 13, 2008 at 11:25 pm
Gail, I can hardly wait for the planner! We have paid off our consumer debt and are now fast tracking the mortgage, all due to your sound advice. You have made paying the bills FUN!
November 13, 2008 at 11:59 pm
I love your show and can hardly wait for the binder/planner. As many have already commented, can we pre-order or can you start a waiting list and email when they are available?
November 14, 2008 at 7:11 am
As soon as the planner is available, I’ll post the location where you can buy it.
November 14, 2008 at 10:00 am
Gail/Admin- If you are still in the development stage of the planner package, consider including a sheet of stickers – plain or pre-printed ! Extra cost would be minimal and everyone will feel like they got to be on the show with Gail when they have their binder/ sticker and jars on hand!
November 14, 2008 at 2:37 pm
Love the show Gail and definitely will be on the look out for the binder/planner.
November 14, 2008 at 5:15 pm
I’ll definitely watch for the binder! I did the budget sheets online but must’ve forgotten some things because it says we have money. LOL. Uh, we do? LOL.
Yes, I’ll be doing them again.
Thanks for making this easier!
November 14, 2008 at 9:40 pm
Hi Gail
I have been following your show and website and blog for quite some time now – and I know others have too – my question is this; (I also have the same question in my line of work) – (This is NOT a criticism but…) – most/pretty much all of your work is geared toward the people who are in major debt, and now becoming acutely aware they need to make changes – your job? to show them the light – - my problem is this – I have done a LOT of what you suggest – I am not in debt at all – but I’m not getting ahead – I would love it if your work could sort of delve into intermediate level budgeters – those of us who are not in debt anymore – but want more sophisticated, refined and pointed ways of using, saving, investing and scrutinizing how our money is used. I find that I have reached a plateau and I find it hard to find information at my level – it seems either for the beginner or the most advanced (eg., investing in stock markets) – I’d like more info., on how to make my mutual funds grow – (mine arent’ and never have) – insurance – how much do you need – what must you have – what can you prune away? – how to get the best deals with cable/cell phones etc. – and any other intermediate type advice that would help those of us who are already using cash – not in debt, already paying monthly or weekly mortgage payments etc. etc., Is that a possibility?
November 15, 2008 at 7:38 am
Sure Mllmac. You want the next level of info. Let’s see what we can do.
November 15, 2008 at 11:41 am
Yipee!
I’m looking forward to the workbook!
I’m also looking forward for the advice like Mllmac — especially with regards to maximizing long term savings and more advanced info. Even if its just to slight push towards where best to find this information. I do think that, as individuals, we also have to roll up our sleeves and do lots of research ourselves (to sift through all of the information). I’m not sure if Gail would agree, but I suspect that getting all of our facts straight and staying on top of tax legislations etc takes dedication — but one that is well worth it.
A++
November 21, 2008 at 7:53 pm
I found the planner! It’s available now.
http://www.shopfranticfilms.com
Ordering it myself now…
November 21, 2008 at 7:55 pm
Oh. And watch the Gail-isms. Very witty and sooo Gail.