Wednesday, September 22, 2010

Setting a financial goal

I graduated from University in 2005 and from graduate school in 2009.  I paid off my undergraduate debt when I finished graduate school.  Pretty amazing!  How did I do it?  I get this question a lot when people find out that I have no student loan remaining.

Well I set a financial goal....mainly to graduate college with a manageable debt load.  When I decided to go to graduation school I set my sights on the full scholarship programs rather than finding programs that would set me further in debt.  The ideal degree wouldn't have been paid for....I would have gone like 100,000 in debt, so I modified things.  Now in a way this was not ideal.  I do not have the certification that I really wish I had to be able to be a licensed therapist.  However I am pretty well trained in research with a well respected degree from an ivy league equivalent institution and I have no debt.  I am able to get better jobs with my degree.  I am more respected when I go and do the presentations that I do.  It was a great move for me.

My steps

1.) Create a goal

This is self-explanatory just write it down.  My old goal was to get through school with as little debt as possible.

2.)Sacrifice to get there

If your goal is to go to Europe debt free well then cut an expense and work a little over time or get a second job to save for it.  If you cut one expensive and gain a little extra income, and if you put all that into an account for your goal, you'll get to your goal in no time flat.

My goal to go school with little debt required that I make good grades, not party, apply for every scholarship I could find, I worked 1-2 jobs the whole time I was in university, I wore crappy clothes, I did not vacation with friends.  I led by many people's standards, a boring college existence.  Yet I had a fabulous time.  I found the free campus activities so fun I ended up working for them....getting paid for my leisure time is not too shabby.  I have no regrets about those years at all.  I had to look where I was willing to cut, and basically in university I cut everything.  I made my goal.

3.) Always spent less than you earn...always.

This is with the exception of emergencies and major life events....which hopefully you have saved enough for that you still don't have to go into debt.  I am spending a little more now than I earned but I budgeted for this period in my life, when I am raising a toddler and not ready to work full time yet.  I live off my part-time (and unemployed income) a little bit of savings.  I minimize my withdraws though.

4.) When you reach your goal make a new one.

I have now graduated school, payed off all my debts, started investing in stocks, had a baby, bought my first home, and paid cash for the holiday of my dreams.  It's been an amazing decade.  I have new goals now.  I would like to maximize my tax free saving account every year.  I would also love to pay off my mortgage.

What are your financial goals and how are you going to reach them?

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