The year we say goodbye to debt
© The Bees Knees Photo
I’m a huge believer in choosing one big goal and laser-focusing on it to achieve major success. I use this method in my personal life and in my business. If you’ve been keeping up with my blog, you know that my personal goal for 2020 is to be alcohol-free for 365 days (I’m on track and loving it, by the way!). So what’s the business goal my team and I have set for 2020?
Paying off our last $250k in debt!
This is an aggressive goal for a small business like ours. Coming up with an additional $250k will be no small feat, but doing so will save us interest and have us paying off some of our business loans nearly 5 years early. We’ll be able to give larger raises and take care of our people better, and I can’t wait to be in a place where we don’t owe a bank anything. (Even though I really do love our bank.)
I know better than to tackle aggressive goals on my own. It’s so important to surround yourself with experts who can help you figure out how to best achieve what you are setting out to do. I’m blessed to have a wonderful CPA, Katie, who has taken the time to get to know my company inside and out (she’s more like a CFO for us). When I knew debt-free was our goal, I immediately asked Katie if she could help us create a plan.
I thought it’d be helpful to show you that plan and what Katie taught me about how to rally a team around a goal that makes you stretch. Even if paying off debt isn’t a priority of yours, I hope you can apply some of these same concepts when you set personal and professional goals.
Here we go!
Make the goal tangible for every person involved. Everyone needs to understand exactly what hitting the goal will look like and how it will directly impact them. This is critical for buy-in. For my team, we crunched numbers to show how much money would be freed up each month and what that cash could be used for instead: raises for our students and leaders, office upgrades, a larger emergency fund, and new business opportunities. Once everyone could see the tangible impact, buy-in was automatic.
Anticipate potential obstacles. Katie taught us that it’s not as simple as saying you want to pay off all your debt. You need to understand how the timing of your debt payoff will impact the rest of your budget, which could impact other strategic initiatives. You want to make sure you aren’t depleting all of your resources with a plan that’s too aggressive, and you want to make sure you have consensus on how you’ll prioritize the cash you do have. For my team, we agreed on going really lean this year. We’ve decided to put off projects that we’d really love to do, like redesigning Student Maid’s website, so that we can use all of our extra cash for debt.
Make a debt snowball schedule. Focus on accelerating payoff of one loan at a time. Once one is paid off, redirect those payments to pay off another loan, and so on. Katie suggested we start with the smallest loan for a quick win to build excitement, so that’s what we did. Some start with the highest-interest loans first. It’s really up to you!
Look at your expenses. Is there anything you can reduce to free up money and redirect it to debt? We made a couple phone calls to companies we’ve been loyal to for years and asked if they could do anything to lower our cost. We freed up a few hundred dollars a month right off the bat and started redirecting that to debt. The worst they can say is no, right?
Communicate, communicate, communicate. Every week, I send a debt update to Student Maid’s leaders. I tell them how much we’ve paid off and how much we have left to pay off in order to reach our monthly goal. I celebrate wins and the contributions that allowed for the payments to happen. I also highlight potential obstacles and let the team know where we’ll need to rally so that those obstacles don’t prevent further progress. At some point, we’re going to start including our students in the messaging as well. If you want to keep people engaged with achieving a hard goal, they’ll need regular updates and tangible ways in which they can contribute.
I can’t wait to keep you posted on our progress as we tackle this monster of a goal. By December 31, 2020 we WILL be debt-free. I’m already dreaming of what it will feel like to celebrate this huge, huge milestone with my team!
Thanks for reading, and thanks for your support.
Big hugs,
