SMART Goals

I’ve written a lot about SMART goals and I thought I would use this post to explain what I mean by that, for those of you who might not be familiar with the acronym. I first learned of SMART goals in a PE class I had to take while pursing my recent degree. At the time, I didn’t pay as close attention as I should have. I’ve always been a goal setter. I routinely set 1, 5 10 and 25 year goals and review them every year right after New Years. I know this is a somewhat cheesy time, with all the New Years resolutions being made and soon dropped, but I don’t have an active lifestyle in January and so it’s a good time for me to review how things are going.

I was taught to make goals by a high school teacher. He said it was good to have a roadmap of where you wanted to go, so you could use it to help make difficult life decisions. That sounded good to me. I knew at the time where I wanted to end up… Academy Award winning actress with a long list of movie credits to my name. If you’ve been reading the rest of my blog, you’ll know right away that somewhere along the line I detoured far away from that path. It was on my goals list, but I never even came close to achieving it and there’s a good reason why.

In the past, I made goals much the same way most people do. I thought about where I wanted to be in 1-25 years and wrote it all down as “goals”. Maybe I wanted to be a millionaire in 10 years? I would simple write down, “have a net worth of $1,000,000” on the 10-year page and move on. The goals were general, had no supporting interim achievements, and the time limits were rather fuzzy. That “have a net worth of $1,000,000” goal has been on my 10-year page since high school. Since I wasn’t near achieving it, I never moved it to the 5-year or 1-year page. It was more like a wish than a goal, and that was the problem with the vast majority of my goals. Sure, I achieved a few of my goals here and there… most often the shorter term goals that I was already working on and had a plan to finish.

When I completed the PE class, I quickly forgot about SMART goals. After all, they were only for fitness and who had time for any of that in architecture school! I was busy, busy, busy and my singular goal was to graduate, first with my bachelors and then with my masters degree. I knew exactly what I needed to do to achieve my goal. I showed up for the classes I was signed up for, I did the work to the best of my ability, I increased my abilities, and then I was permitted to take the next semester of classes and repeat the process until I finished. School is an easy goal. Sure the work is hard and the hours can be brutal, but most schools have the path laid out for you… all you have to do is walk along the path until you reach the finish line. Many others have walked the same path and achieved the same result. When you are setting your own goals, the path isn’t always so clear.

In my 5th year professional practice class, our professor asked us to write goals and whipped out that long forgotten SMART acronym. This time, I paid closer attention. Turns out, it wasn’t just for fitness, but for all goal setting exercises. The key to a SMART goal is that it is Specific, Measurable, Attainable, Relevant, and Timely…. SMART! This is what my goal setting needed all along and is why getting through college is such a good example of how to set a goal. Lets break this down.

  • Graduating college is specific. It requires you complete a set number of credit hours in specific subjects, maintain a specific grade point average while doing this, and show up to class a minimum number of days. It is incredibly straightforward in its specificity.
  • It is measurable. At any point along the way, you can measure your progress, You can determine how many credit hours you’ve completed and what your GPA is. You also know exactly how many credit hours you have yet to achieve.
  • It is attainable. As I said before, many people before you have made it through the process and many will make it through after you as well.
  • Is it relevant? Not every career requires a college degree, but for me, architecture does. If I want to be an architect, I have to have that degree to even begin the testing. Therefore, in my case, it’s relevant. It’s aligned with my other goals and essential to their achievement.
  • It is timely. There is a time limit. A bachelors degree is supposed to take 4 years, and in my case, the master of architecture degree was scheduled to take another one year. You could argue that some people take breaks, or do fewer classes at a time and stretch out their degree, but an architecture degree doesn’t make that option very practical. In architecture school, you take a studio class each semester. Each studio follows the one before it and is only offered one time a year. This means that you put yourself an entire year behind if you don’t stay on schedule. This timely schedule forced me to hustle down the path instead of talking my time. Regardless, when you take on college, you usually have a target graduation date and a plan to achieve it.

You don’t start college by just opening up the course book and playing a game of eenie-meenie – minie – moe or picking classes on a whim. If you just said, “I want a degree” and started taking whatever classes you wanted to, you might one day take enough of the right classes to earn a degree. However, this is not the best strategy… it’s not SMART.

The same is true for my $1,000,000 goal. If I keep putting it on the 10-year list, I may one day achieve it in spite of myself, but I’m not as likely to. The better option is to look at those who have done it before me and figure out a clearly defined SMART path that I can take to achieve my financial goal. I’m currently still partially in the research phase of this goal, but I’ve also taken positive action in several areas. I’ve set up my accounts to generate long-term passive income, instead of just paying my bills today. I’ve invested money in BitConnect and have watched it achieve a 30% ROI in only 45 days. I’ve taken specific, measurable, attainable, relevant and timely steps towards ensuring my achievement of this goal and the goal itself has changed. My goal is now to achieve this first million in 3-1/2 years and I have the skeleton of a plan to get me there. I will flesh out this plan as I learn more from my research.

This is the better path to actually creating a set of goals and not just a simple wish list. My next step is to take all of the other items on my lists and transform them into SMART goals. I hope you’ve enjoyed this discussion and you will consider transforming some of your own goals into SMART goals. Please tell me about them as you go along.

By the way, I ate the frog again this morning! Day 2 of accomplishing my treadmill and clutter reduction goals… Woot!!! Now THAT is SMART!

SMART-Goals

 

Finances… Otherwise Known as Torture.

Finances are one of those topics most people dread talking about, reading about and, more than anything, doing anything about. Dealing with finances usually means lots of numbers and even more deprivation. Do you enjoy your morning cappuccino? If so, that’s too bad, because most financial advice columns are going to tell you that’s the first thing you need to give up to become financially fit. It’s a numbers game, and if you feel like you’re winning at it, just read a few tidbits of advice and you’ll feel like a loser pretty darn quick. This is especially true for me right now. I’ve been a full-time college student for 5 years now; there’s no going to architecture school part time. This means I’ve incurred a mortgage-worth of student loan debt and, since I was rarely able to work more than 12 hours per week, my finances are a mess in other areas as well. The financial segment of the Level 10 Life didn’t look so good during my assessment.

I have a small IRA that would make a 21-year-old pretty envious… which would be great, if I wasn’t 45 already. By now, I’m supposed to have 3-times my annual salary saved and I’m only at 1/100th of that. I had a small 401k once upon a time, which saved us from homelessness during the recession, but unfortunately disappeared in the process. I wrote down my expectations for Level 10, cried a while, ate way too many cookies, and then resolved to figure out (somehow) how to get there. One thing I realized is that I will never live enough hours to get there on wages alone; it’s going to take some other strategies to do it. So, I spent the last half of August reading about finances. I’m not talking about the articles that tell you give up that morning coffee because, let’s face it, at this point that is not going to cut it. I’m talking about how money works and especially, how it works most effectively.

I decided to start living on only 70% of my already meager income. Since I’m not working at the moment, this amounts to back child support my ex owes me from 15 years ago, when he decided not paying child support for over a year sounded fabulous. We came to an agreement at the end of that time that he would continue to pay support when the children were grown until that back support was paid off. It’s a small amount, but it’s something. I also contacted all of my utilities and negotiated lower rates on my monthly bills, redid my car insurance and am emptying out and selling items I’ve had in a storage unit. I’ve cut my monthly bills by about $400/month and am making a little money on the storage unit stuff. I’m also helping a friends who just had surgery by cleaning her home once a week for a few weeks. But just having money coming in isn’t as important as how to spend it, so I created a financial plan and have stuck to it for the first month so far. Here’s how it goes.

All the money I receive for the month goes into a “holding” account. This is a savings account that earns interest. This is not the money I will spend this month; it is for next month. This way, I know for certain ahead of time what amount I am working with and what I can and can’t afford that coming month. Plus, the money earns a small amount of interest while it waits to be divided. At the beginning of the month, I divide up the money in my holding account as follows:

  • 35% – Needs – these are things I need to live, like food, shelter, transportation for work, electric and natural gas. The food included here is the basics. Anything fancy falls under the wants.
  • 21% – Wants – this is anything I want, such as wifi, cellphones, restaurants, movie night, or that morning cup of coffee. It doesn’t matter what these items are, but I cannot exceed this pre-determined amount in the month. If the budgeted funds are gone, I have to do without it until the next month. If I want to upgrade to the iPhone X, I might have to give up coffee for a few months. Simple and effective.
  • 14% – Debt Reduction  – I have a small amount left on my car loan and will soon have to start paying on student loans. The required monthly payment is in the needs category above, but whatever amount is here is what I add to the payment of my highest interest debt so that I get the loans paid off faster.
  • 10% – Passive Venture – this is set it and forget it investing. I have a small investment account with a low-fee index fund and a couple shares of stock, all of which have reinvested yearly dividends. It is usually making money at a slightly better rate than inflation. I’m working on diversifying my portfolio now to include bonds, gold, and commodities to protect against market fluctuations. There may be other opportunities for this segment of money at a later time, but right now this is where it’s going.
  • 10% – Active Venture – this is the money that supports the side-hustle. This is the money that could be used to start an online dropship business or purchase real estate.
  • 5% – Retirement – There’s a lot of advice on retirement funds. I have a Roth IRA and try to make sure I fund it to the max whenever possible. Even when I can’t, I always try to put in a small part of my income into it so I feel like I’m making some kind of progress.
  • 2.5% – Emergency Fund – I’m determined to be ready if another recession hits. I’m working on having a 1-year emergency fund to keep me going. It’s being funded slowly but surely and is always kept in an interest-earning (1.2% APY) savings account. I’ll be moving it to a higher-interest Beam account (2-4% APY) as soon as they get to me in their gradual roll-out process… I’m on the list!
  • 2.5% – Personal Goal – I think it’s important to have something you’re working for that is set aside from the rest of your finances and special. In my case, I’m going to Italy… maybe not this year, or next… but eventually. It keeps me excited about my financial plan because if I stick to it long enough, I will have an amazing trip to look forward to.
  • Charity – You may have noticed that the above categories add up to 100 already and may think I’m being awfully selfish. In reality, I am donating another valuable resource at the moment… time. Non-profit organizations definitely need money to keep them going, but they also need people willing to donate their time. While I’m working towards putting myself in a good place financially (so I can ultimately give more money) I am donating my time on a regular basis. It’s important to me to always give back somehow, so that will always be part of my financial plan.

I know my plan may take a bit of tweaking as I go along, but it’s a good mix of taking care of my current needs and my future needs simultaneously. It’s hard to get used to living on 70%, but as I see my investments going up, my loans going down and my net worth being positively effected, it makes me feel better about that awful budgeting and even allows me to fully enjoy an occasional cappuccino, guilt free!

Nikon D50