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Resolutions Fail Without a Specific Action Plan

In her Washington Post column, “The financial resolutions that will doom you to failure in 2019,” Michelle Singletary gave advice related to what Fidelity Investments said were the most popular financial resolutions for the new year:

“[People] want to, in this order: Save more money. Pay down debt. Spend less.

Here’s the problem. You can’t achieve your financial goals with vague promises. You need to be specific, and you have to have an actionable plan with a timeline.”

It is not the act of making resolutions that means failure but the fact that people don’t have specific plans for achieving these goals.

Singletary recommends that people use the acronym SMART when setting financial goals and resolutions. (You may have had to set SMART (specific, measurable, attainable, relevant and time-bound) goals at a job or somewhere else; if you found it challenging, you may find it better when you are setting these goals for yourself and not for the approval of someone else.)

The examples Singletary provides show readers how to go from general goals to actionable ones that can get results. If you wait until you feel inspired to save more money, you might never save. You need to consider a certain amount to put away and set a date or an amount to indicate that you’ve met your goal.

She also recommends using the “debt dash” method to pay down debt: instead of just saying you want to pay down debt, you will be taking steps to eliminate your debt. You will have to find a consistent amount of money to dedicate towards debt by either earning more or cutting expenses. Then, you use that amount to pay off either the lowest debt or the debt with the highest interest. After you pay off the first debt, you move on to the next one. 

In “Consider Interest Rates When Tacking Credit Card Debt,” we mentioned that research finds that it makes more mathematical sense to pay off the debt with the highest interest first. Singletary concedes that this method does make sense numbers-wise but cites other research which finds that people gain more momentum from paying off their smallest debt first.