There’s a difference between goals and dreams. Dreams tell us about the things that we’d like to do. Goals tell us how to get them done.

If you dream of getting out of debt, but have struggled to achieve that reality, you’ve probably experienced this principle firsthand. Without specific plans of action and the discipline to get them done, your debt-free dreams don’t get you very far.

Though we’re still in the run-up to Christmas right now, the New Year will be here before you know it. This fresh start affords a great opportunity to convert your dreams of freedom into an actual plan for getting out  of  debt.

In order to do that effectively, you need to set some goals.

People who get stuff done know all about goals, and they’ve learned to set goals to help spur them on to success. And most people who have successfully escaped debt will tell you that setting goals was an important part of their victory.

If you want to make 2014 the year that you finally get out of debt, now is the time to start setting your goals and crafting your plans. Here are five tips to help you set goals and get out of debt in the coming year.

1) Be ambitious

One of the most common mistakes that people make in getting out of debt is that they don’t apply enough intensity to the process. They don’t have the ambition to pay off their debts quickly, so they set a five- or ten-year plan for debt payoff. With such a long road in front of them, they eventually lose motivation and give up on the process altogether.

If you want to succeed in getting out of debt, you need to be ambitious. Figure out the maximum amount of extra money you can come up with to pay down your debt, and set that as your goal each month. Base your plan around the very best that you can do, and you’ll end up achieving the very most you’re capable of.

2) Be realistic

On the flip side, some people get into trouble by being too ambitious with their goals. They set their aim at lofty heights that they don’t have any realistic way of reaching. When they fall short, they get discouraged, and that discouragement causes them to eventually abandon their pursuits altogether.

When you set your goals for next year, you need to balance your ambition with a healthy dose of realism. Yes, you should stretch yourself to pay off your debt, but don’t stretch so thin that essential things start to fall through the cracks. You still need to feed and clothe your family and keep your home and vehicles in working order.

A reality check might also help you figure out whether your debt is payable in 2014, or whether it may take you another year to do it. There’s no shame in taking more time if you’re working as hard as you can.

3) Be specific

Goals only work when we have specific plans for how we will meet them. It doesn’t do any good to say “I’m going to be debt free in 2014” if you don’t establish a plan toward debt freedom. In order to meet your goals, you need to be specific about the steps that you’ll take to get there.

If you don’t have one already, a good budget will be the first tool you need in establishing a specific debt pay-off plan. A budget will help you see exactly what your monthly expenses are, and where you can cut costs in order to have more money for debt payment.

Beyond a budget, you can make other specific plans for your debt payoff. If you need to get a part-time job or work overtime to make more money, write that down as part of your goal. Make deals with your spouse about what expenses you can defer or live without while you go through these processes, and then put them all on paper. The more specific you make your plan, the better it will be.

4) Be organized

If you’ve ever been a part of a disorganized company, group or event, you know how important organization is in making something turn out right. The same is true of your goals: The more organized you are with them ahead of time, the better your likelihood of success.

One of the best ways to be organized in paying off your debts is to use the “debt snowball” approach, which has been around for many years. Instead of throwing money at different bills randomly, you should focus on one bill at a time. Start with your smallest loan balance. Pay the minimum payments on every other bill but the smallest one, and use all of the rest of your available cash to dispatch that loan quickly.

Once the small loan is paid off, you move on to the next smallest one, and then the next, and so on. As you do this, the amount of cash you have to pay toward the target loan gets bigger, like a snowball rolling down a hill, until finely you have a big chunk of money to pay toward your biggest loan every month.

5) Be diligent

Here’s where the rubber meets the road: You can have finely crafted goals and an excellent plan for how to accomplish them, but without diligence to actually do the hard work, you’re ultimately going to fail.

There’s nothing easy about paying off debt. It requires focus, sacrifice and persistence. Once you get into the actual scrimping, saving and paying that is required, you’re probably going to feel the burn. This unpleasant sensation might tempt you to slow down a bit and lighten up to make the pain go away. But you can’t give in.

If you lighten up on your plan once it gets hard, you’re going to fall short of your goals. The only way to accomplish the big things that you have envisioned is to do all of the small things that are required faithfully, every day, week and month. If you succeed in the small things, you’ll find yourself winning in the big things too.

If you follow these steps, set goals and develop a great plan, 2014 could be the last year that you ever have to deal with debt.

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Photo by Simon Claassen. Used under Creative Commons License.