With more and more credit card offers coming on the market, consumers have found themselves caught up in spiral of unsecured debt. As the New Year began you may have made several resolutions, one of which is to reduce your debt. This is a good resolution but to give you the best chances of success, make sure your financial resolution is done the S.M.A.R.T way.

The acronym SMART is the criteria by which all goals should be set and it stands for Specific, Measurable, Achievable, Realistic and Time bound.

Specific
When setting your financial goals, write down exactly what you want to achieve. Do you want to repay $5000 on your credit card or loan by the end of the year? Which credit card or loan does your goal apply to? Etc. It is not sufficient to say I will reduce my debt this year as this does not give you specific actions to work with.

Measurable
You should be able to measure if your debt is decreasing. This may involve transferring funds to a 0% balance transfer credit card where you have no interest to pay so you reduce the capital faster. Most of all you should not use the card for any purchases during the year as this would defeat the purpose of the debt reduction.

Achievable
Is the goal to reduce your debt by $5000, for example, actually possible? If you have other major expenses like car payments, university fees etc, can you find an extra $5000 for the year to put towards debt reduction? Whatever the amount you wish to reduce your debt by, you need to ensure you can actually do it.

Realistic
You must do a personal audit and determine if you have the resources to achieve your goal. If your salary after taxes, expenses and all bills payments is $200 can you afford to clear $10,000 in one year? Maybe you have items you have bought in the past that could be sold which could enable you to achieve $5000. In such a case your goal would not seem that unrealistic. You need to check out what you have that can raise cash in order to achieve your goal.

Time bound
Setting a specific goal and ensuring you have the resources to accomplish it is good, but you also need to set a time limit. When you use a time frame say one year, you can then budget to determine how much you would be able to pay towards your debt over the 12 month period.

It also gives you a deadline to work with. If at some time during the year you realise you are falling behind, you can then re-evaluate the monthly payment needed to reach your goal and possibly employ other methods to raise the funds.

Budgeting to repay debts is not always easy. You need to be determined and focused. It also calls for sacrifices to be made. Once you choose to reduce your debt the SMART way, stick to your plan and the chance of success would definitely be stacked in your favor.