Don't Sweat the Big Stuff

Question of the week:This year, I'm going to pay off all my debt, get started on my retirement fund, and begin saving a down payment on a new house. What should my strategy be for accomplishing all this? --A Proud Texan

Dear Proud Texan,

Whoa! Slow down there, Tex! Great things are hardly ever achieved all at once. You'll vastly improve your chances for succeeding in achieving your big goals if you break them down into smaller, attainable steps.

Here are a few examples of very achievable financial goals that members of the Armchair Millionaire community recently shared with us:

"To reduce frivolous spending and increase my variable annuity contributions." --Rebecca

"To use a check card instead of credit cards for purchases so that I don't have to pay interest." -- Steve G.

"To continue to put at least 20 percent of my gross income into long term savings." --Tim A.

"To increase my 401(k) contribution by half of whatever raise I receive each year." --Paula

"To set aside money each month for a Christmas Club account." --Mary

"To pay off my remaining credit card debt with my tax refund. " --Wade

See how these are all simple, doable actions? To arrive at these, I suggest that you first identify which goal is most important to you, and then focus on small, specific steps that will help you achieve it. My guide will show you just how easy it is to whittle big financial chores down to size.

The Armchair Millionaire Guide to Getting a Grip on Your Goals

• Save a pile of dough. Creating and following a budget in order to squeeze out a few dollars of savings is hard. Paying yourself first is easy-just have a set amount automatically transferred from your checking account into another bank account that you don't touch until you need it. What it takes: A call to your financial institution to request an automatic withdrawal form and a few minutes to fill it out and return it. (And if you think you don't make enough to save anything, then save your next raise-you'll never miss it.)

• Downsize your debt. Paying off a pile of credit cards is difficult, but committing to paying off the one with the highest interest rate is easy. What it takes: Review your credit card statements and locate the one with the highest interest rate. Pay the most you can towards that one. After you eliminate that debt, tear up that card and repeat with the next highest interest rate card.

• Secure your retirement. The thought of savings hundreds of thousands of dollars for retirement is daunting. Funding your 401(k) or IRA each month is easy. What it takes: A quick visit to your employer's HR department to get started. If your employer doesn't offer a retirement plan, just call your favorite mutual fund or brokerage company for an IRA application.

• Protect your stuff. Achieving peace of mind is a challenge. Getting an insurance checkup to make sure you have enough coverage is a piece of cake. While you're at it, find out what you can save by increasing your deductibles. What it takes: A single phone call to your insurance agent.

• Know where you stand. Knowing where every dollar is going and what every investment is doing is hard. Starting to track this information piece by piece until you have the complete picture is easy. What it takes: Pick up a personal finance program (such as Quicken or Money) and dive in.

THE BOTTOM LINE: Don't set yourself up for failure by trying to achieve major goals all at once. By breaking your journey to financial security down into manageable steps, you'll find it easy to start on your way.