Setting SMART Goals to Get Out of Debt

Setting SMART Goals To Get Out of Debt

Success begins with setting your financial targets the right way and applying them towards paying off your debt.

Do you remember studying for an exam when you were in high school or college, and using an acronym to help you remember? Acronyms can be helpful like that, but not just during finals week. Here’s one to keep in mind when you’re setting financial — or, for that matter, any — goals.

SMART Goal Setting 101

SMART is an acronym that stands for:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Timely

It refers to a process that helps you not just establish your goals but succeed in reaching them.

Here are the five components of the SMART goal setting.


For a goal to be specific, it must

  1. Clearly state the goal
  2. Describe the outcome
  3. Outline actions that must be taken

When a goal seems too complex, it should be broken into sub-goals that can be clearly expressed. This can help you go into more detail about what it is you want to achieve, says London-based career coach Nicola Simpson.

So, for example, if your goal is to become more financially healthy overall, SMART would ask what the first step is to getting there. That question may inspire you to realize that you should start by reducing your credit card debt, thereby going from a very general to a more specific goal that’ll prove easier to achieve with the following steps.


Now that you have your objectives, you have to ensure they are measurable and evaluate your progress toward reaching them. A good goal always has a desired outcome and milestones that can be unambiguously measured.

As an example, you may want to reduce your credit card debt, but how exactly are you going to do that? You could start by identifying how much you want to reduce it. Maybe you want the new number to be 50% smaller, or maybe you’d like to eliminate it.

  • Quantifiable Measures
    • How much is the dollar amount you’d like to reduce your debt.
    • 50% smaller is a quantifiable percentage of your debt reduction.
    • Eliminate debt is also a number or dollar amount that is quantifiable.

Alternatively, instead of an end-number, you could decide to reduce the debt by increasing your monthly payments by a set amount. For example, if you were paying $100 before, maybe you’ll pledge to double that figure and contribute $200. Whatever you decide, this step forces you to put numbers around your goal and your progress, making it easier for you to stay on track.


This step asks you to fact-check the numbers you’ve come up with to ensure that you’re being realistic about them.

In other words, can you afford to increase your credit card payments by $100 each month? This forces you to ask yourself “What could go wrong?” and decide if you could deal with those possible circumstances. “[This step] is great because it’s about being realistic,” Simpson says. Good goals have an attainable outcome that will inspire a sense of commitment. There are two ways to set attainable goals.

  • Two Ways to Set  Attainable Goals
    • The first is to set a goal that can be easily reached, and once it’s reached, you can move it towards more challenging targets that do not sap your motivation.
    • The other approach is to start with a moderate goal that requires you to push yourself beyond your comfort zone – but only slightly. Once the initial milestones are achieved, your confidence will rise, and your chances of successfully tackling more challenging goals will improve.


What could stand in your way when it comes to achieving any goal? Deciding it’s not so important for one thing. This step encourages you to ensure your goal is meaningful in your life, and significant when you consider your broader life goals.

For example, how might your goal aid you in reaching a larger goal, such as buying a house? How might it impact your health? For example, if another of your goals is to lose weight, then packing your lunch every day to save money can also help decrease your waistline. By the same token, eating out less might negatively impact your social life, so the SMART methodology asks you to acknowledge all the possible changes that might occur when you make a change, so they don’t deter you from sticking to your plan.


Good goals are time-bound, which means they have a specific target completion date that is neither too long nor too short.

Set a realistic timeframe to reach your goals that will inspire confidence, but still give you a sense of accomplishment when reached. “It’s important that your goal isn’t open-ended, as this may inspire a sense of drift,” says Simpson. A deadline forces you to check in with yourself frequently to evaluate your progress.

Jean Chatzky

Powered by: SavvyMoney