Resolution Reset—Learning to Take Small Bites

It’s February 1. Do you know where your New Year’s resolutions went? If your 2018 resolutions are ancient history, don’t worry—you’re not alone. Many people don’t follow through on their resolutions because they try to achieve lofty goals all at once.

Wanting to shoot for the stars is natural, but why not take smaller, more manageable resolution bites instead? A series of small steps when approaching everything from fitness to
finance can help you eventually achieve your goals. Let’s look at some common goals and how a small-bites approach might help you.

Pay Down your Mortgage

Anyone who owns a home knows that making one extra mortgage payment per year can reduce the number of years it takes to pay it off. Yet, finding the money to make that extra payment each year is burden-some for many people, so they give up. There’s a better way.

Here’s how: Pay down extra principal each month instead of in one big annual payment. Let’s say your mortgage payment is $1,200 per month. Seems like a lot if you want to make an extra payment per year, right? Not if you pay a small bite out of your mortgage every month.

Consider putting an extra $100 per month toward your principal. After one year, you’ll have made an extra $1,200 in mortgage payments. And, if you break it down further, the extra payments cost you a little more than $3 per day.

Put More into your 401(k)

Taking a short-term approach to a long-term goal can also help you contribute more to a 401(k) plan. Let’s say you earn $52,000 annually and you want to put away an extra 1%. That 1% would add an extra $520 to your plan each year. If you have a dollar-for-dollar employer match up to a certain amount and you haven’t reached that limit yet, then your extra $520 grows to $1,040
annually.

If this sounds like too much, consider your extra contribution would only come to $10 per week. That’s barely more than the price of a designer cup of coffee. Or you can save this amount by brown-bagging your lunch once a week instead of going out.

And if you really can’t find an extra 1% to save for retirement, try starting with half of 1%.

Pay Off Your Credit Cards

Small bites can also help you pay down credit card debt. There are two ways to do this. The first is to pick the card with the highest interest rate and the second is to choose the one with the lowest balance. If the card with the highest interest is also your lowest balance, you’re credit card-smart. But if your high interest card also has a high balance—say $5,000—the amount may scare you away.

Break it down. Make a goal of adding $100 per month to your minimum payment. This comes out to a little over $3 per day, but adds up to $1,200 over the year. Continue this without adding further debt and you’ll take years off the time it takes to pay the debt off.