Slashing debt

Wipe out credit card debt with this goal-setting method

Management consultant George T. Doran came up with a debt reduction plan in the early 1980s he dubbed SMART, which calls for goals to be specific, measurable, assignable, realistic and time-related.

Doran envisioned it as a tool for businesses to set performance objectives. Over the years, it has been adapted for goal-setting situations beyond the workplace.

Here’s how to apply it to credit card debt:

1 What it means to be SMART

Specific. Define exactly what you want to accomplish and how you will do it. Shatoria Smith, who applied the SMART method to her credit card debt in 2014, set a different strategy for each of her three cards. For one of them, she wrote that she wanted to pay off $2,450 within a year, so she could free up money to pay student loans. Her budget included $300 every month toward that goal.

Measurable. Track your progress. You could do so with pen and paper, a spreadsheet, an app or whatever works for you. Smith used an app with a goal-tracking feature.

Assignable. Make clear where responsibility lies at each step. This is especially relevant if you’re paying down debt with a partner. (Some modern versions of SMART replace “assignable” with “achievable,” meaning the goal should be realistic.)

Realistic. Set goals that are achievable with the resources available. You can dream big, but the smaller steps that lead up to that dream should be within reach. At this stage, stop using credit cards while paying down debt to get results.

Time-related. Set a deadline. The timeline should be based on what you can do, not just your desires. Smith says she crunched the numbers to establish the deadline that she met toward the end of 2015.

2 Confront your budget

Getting an accurate picture of your finances, such as overall expenses and the money available to pay down debt, is the key to setting SMART goals, says Adam Hagerman, a Maryland-based certified financial planner and educator.

“What people think they spend is usually way different than what they actually do,” Hagerman says. “That’s why it’s important to take a step back and say, ‘How have I spent my money over the last 30 days?’”

Once you get that accurate picture, he says, you may need to revise your original goals.

You can also consider get-out-of-debt strategies if you can’t keep up with your debt payments. For instance, you might consider transferring a balance to a new credit card with a 0% introductory offer, consolidating debt to a personal loan or seeing if you qualify for a credit card hardship program.