{"id":12760,"date":"2023-07-26T10:00:22","date_gmt":"2023-07-26T16:00:22","guid":{"rendered":"https:\/\/www.iccu.com\/?p=12760"},"modified":"2024-08-14T11:33:49","modified_gmt":"2024-08-14T17:33:49","slug":"4-steps-to-lower-your-debt-by-january","status":"publish","type":"post","link":"https:\/\/www.iccu.com\/blog\/financial-education\/4-steps-to-lower-your-debt-by-january\/","title":{"rendered":"4 Steps to Lower Your Debt by January"},"content":{"rendered":"\n

If we all lived in a vacuum-sealed world where our minds and emotions didn\u2019t affect our finances, saving money and lowering debt<\/a> would be a whole lot easier. No bad days to trigger junk food binges, no impulsive vacations, and no mid-life-crisis shopping sprees. <\/p>\n\n\n\n

But our minds and emotions do <\/em>impact finances, even for the most money-savvy. The trick, then, isn\u2019t just identifying your own bad money habits \u2014 it\u2019s finding small ways to tweak those habits in the long run. That way, you\u2019re not just lowering your debt; you’re empowering yourself to take control of your finances for good. <\/strong>Here’s how to do it.<\/p>\n\n\n\n

At a Glance: How to Lower Your Debt <\/h2>\n\n\n\n
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  1. Set positive, values-based money goals.<\/strong><\/a><\/li>\n\n\n\n
  2. Plan your finances at least six months out.<\/strong><\/a><\/li>\n\n\n\n
  3. Anticipate your financial pain points.<\/strong><\/a><\/li>\n\n\n\n
  4. Don’t settle for a standard savings account.<\/strong><\/a><\/li>\n<\/ol>\n<\/blockquote>\n\n\n\n

    1. Set positive, values-based money goals.<\/h2>\n\n\n\n

    It\u2019s true that the traditional SMART goal strategy is insanely effective for hammering out specifics. It\u2019s also true that SMART goals skip over the arguably most important part of goal-setting: choosing the right goal. The most meaningful goals are both connected to your core values and structured with a positive mindset.<\/p>\n\n\n\n

    George Doran et al. coined the term in a 1981 article to describe the traits of meaningful goals. The SMART acronym stands for specific, measurable, attainable, realistic, and timely. Read the original article here.<\/a><\/mark><\/p>\n\n\n\n

    Values-based goals vs. desire-based goals<\/h3>\n\n\n\n

    Say you want to save money<\/a>. That\u2019s a desire-based goal because it focuses on what<\/em> you want, not why<\/em> you want it. It\u2019s still a great objective, but it has even more potential. Instead of stopping there, tie your goal of saving money back to your core values.<\/p>\n\n\n\n

    Not sure what your core values are?<\/mark><\/strong> Answer this: What attributes do I most want to embody in my life? The trick is to think in the abstract. Family and friends may be innately valuable, but they\u2019re not typically considered core values. Sincerity, on the other hand, could be a good option for someone who appreciates authentic relationships and honest communication. <\/p>\n\n\n\n

    Here are a few examples of values to get you started. Just keep in mind that you\u2019re not limited to this list! Your values are yours to decide and yours alone.<\/p>\n\n\n\n

    \"An<\/figure>\n\n\n\n

    Reframe your goal into something positive.<\/h3>\n\n\n\n

    Once you have a tentative goal in mind, ask yourself this question: Am I working toward something exciting, or am I focused on moving away from something negative?<\/strong><\/p>\n\n\n\n

    A 2020 study<\/a> found that people with approach-based (positive) goals were significantly more likely to accomplish their objectives than those with avoidance-based (negative) goals. If your money goal is more avoidant in nature, don\u2019t toss it just yet. Instead, reframe it.<\/p>\n\n\n\n

    A good goal (desire-based, avoidant): <\/strong>I want to save money so I don\u2019t fall behind on rent.<\/p>\n\n\n\n

    A better goal (desire-based, positive): <\/strong>I want to save money so I can fund both necessary and fun expenses.<\/p>\n\n\n\n

    The best goal (values-based, positive): <\/strong>I want to save money so I can confidently pursue fun opportunities that encourage me to be more lighthearted and curious.<\/p>\n\n\n\n

    With each iteration, the base desire (\u201cI want to save money\u201d) stayed the same, but the purpose behind it grew deeper. Once you\u2019ve found a goal that is positively centered around your values, you can use the SMART goal acronym to structure how you\u2019ll achieve it.<\/p>\n\n\n\n

    2. Plan your finances at least six months out.<\/h2>\n\n\n\n

    Budgeting is like driving a car \u2014 looking far ahead is a much safer strategy than staring at the nose of your vehicle. Of course, that\u2019s easier said than done. For many of us, our short-term financial needs are so pressing that we struggle to dedicate energy to our future selves.<\/p>\n\n\n\n

    If that sounds like you, don\u2019t worry about jumping straight into a 6-month budgeting spreadsheet. Start small with something as simple as your shopping list.<\/p>\n\n\n\n

    At the bottom of your list, jot down a few higher-priced items you\u2019re sure you\u2019ll need in the upcoming months, whether that\u2019s clothes, tools, or anything in between. Then, when you go shopping, keep an eye out for deals on those items.<\/p>\n\n\n\n

    This works for a few reasons. First, you\u2019re more likely to avoid impulsive purchases than if you\u2019d done your shopping at the last minute.  Second, you\u2019re slowly training your brain to think about future needs<\/a> without putting too much extra stress on your current situation.<\/p>\n\n\n\n

    Since some of the best sales happen during the summer, now can be a great time to stock up on things you\u2019ll need come winter:<\/p>\n\n\n\n