If you always have more month than cash and never seem to get ahead or even to even, it’s time to look at some reasons you may be broke.
- You spend your money on the wrong stuff. Instead of investing your money in education or your 401K, your money goes to clothes, gadgets, big screen TV’s or alcohol. If you don’t have enough money, it’s time to quit spending on stuff that doesn’t last.
- You don’t keep track of your money flow. You don’t know what you have coming in or out. You haven’t balanced the checkbook in years. All you know is at the end of the month there is never enough money. Keep track this month of everything you spend. Then at the end of the month evaluate to see if you are spending money how you want to be spending it.
- You are spending more cash than you are bringing in. If you make $50,000 a year after taxes and spend $60,000 a year, your finances are going backward. Look at how much you spend each month. Now see how much money you are bringing in. If you are bringing in less than you spend, you need to fix that fast.
- You aren’t taking responsibility. You know you need to start paying attention to your money. You know you shouldn’t be using credit cards all the time nor should you be making balance transfers and not paying them off. You know getting a second mortgage is a bad idea. Now is the time to take responsibility for past mistakes. Don’t blame your spouse, the economy, your parents or your job. Look at your part of the situation and move forward.
- You won’t make any sacrifices. Sure you know you are in debt over your head. But there is no way you are going to give up cable, the cell phone, eating out or your gym membership. So you continue to get further in debt as you continue to spend. What is the one thing you are refusing to give up that would help you pay off your debt?
- You shop to feel better. You shop to release stress, to be someone else, to escape. But, you can’t escape your life and the bills will follow you. Stay away from the stores unless you need something. Send your spouse to do the grocery shopping. When you do need something, shop with a friend that won’t let you go overboard. If you think you need it, attend shopoholics anonymous.
- You have bad money habits. You have pizza every Friday night. You have a latte on the way to work every day. You go weekend e-baying, garage-saling or to the flea markets. What are some good habits you can do? Perhaps a walk with a friend instead of lunch. Or making your own coffee. How about a trip to the park instead of weekend shopping?
- You have no budget. You spend until the money runs out and then you put your purchases on your credit card. Try a simple budget. Write out what you have to spend on your home, utilities and other necessary items. What you have leftover is how much you can spend. Put some money aside for savings and food. How do you want to distribute the rest so you are spending money how you want to?
- You got divorced, had medical bills, or were unemployed. Life stinks sometimes. In one month every single appliance in our house broke from the stove to the washer to the toaster. So even though things happen, now we need to clean up the mess. Not pretend our finances are fine. Look at your financial picture and see what you need to do next.
- You are competitive. You don’t want to keep up with the Joneses, you want to leave them in your dust. Be very clear of your motives before buying something.
As you can see there are many reasons why we may not have the money we need. The key is to rectify these issues and manage our finances in a way that gives us what we need with what we have.
So, have you been broke in the past? If so, why? And, how did you get out of it?
Guest Post Author Bio: This is a guest post from Andrew Wang, who blogs about how to make money.
Been worse than broke. Took filing Bankruptcy to slap us in the face & own up to our bad spending habits.
Took us a long time to get back on track. Sure, we still occasionally make financial mistakes- but now we notice we’re doing it much faster & also know what steps to take to fix it.
I think many people have been down that same road. The important thing is that we learn what not to do next time which sounds like you have for the most part.
I’ve definitely been broke before. Me and my boyfriend were reminiscing on when we were younger and talked about how broke we were. How horrible that was.
I remember being broke too. In fact I made a lot of bad financial decisions when I was younger. I am so glad I have now cleaned up my act. Glad things are better for you too.
I was broke and in debt in college, and I definitely had no sort of budget or tracking for what I spend on. I also relied on credit cards, and regularly spent more than I earned.
To me, the biggest one on this list is #5. So many people deem things “necessities” when those expenses really aren’t. It’s hard for me to understand why people that spend on fancy cars, gadgets and housing do that and continue to be broke.
I have been there too Jeff. Very similar situation.
I think people feel pressured to live a certain way or they don’t want to feel inferior when they compare themselves. To me not comparing yourself to others is key in managing finances.
I’ve always been fascinated by the spending habits of both the super rich and the super poor. I realize spending habits alone don’t dictate your financial future, but they definitely contribute to it as you point out in this article. You should write a follow-up post with the solution to these ten reasons. 🙂
Great idea. Might just have to do that.
You are right about spending habits. It is interesting to see the differences. I agree with you. They definitely make a difference to your future.
We must pay attention to our attitude towards money. Like anything else in life, money requires planning and budgeting to live a worry free life. You have ariculated every aspect of money that matters well.
So true. Life requires a plan and so does every aspect within it. Without one, we become aimless and irresponsible.
I have been there too. What I did in my early 20’s seriously set me back. I should have been better with my money. At least now we both make better decisions right?!
Until my debts are paid off, I feel broke every day. I don’t have full control over my income because of debt,and I actually plan to frame the first dollar bill I get once I’m debt free (minus house) in about 6 months.
I think that is an awesome idea. It is a great way to pay tribute to all of your hard work. You are well on your way John. 6 months will come before you know it.
Often, we’re broke because we fail to face up to reality. It is sad but true. We are in denial about many of the points you have highlighted here!
So true. I have been there myself. It’s like we don’t want to admit what is really going on because deep down we know it isn’t good.
We were all of these a few years ago (except #4 and #9). Never got into debt but we were just one disaster away from debt. Even now we feel broke, but that is more because we feel we are not bringing in enough to fund all our dreams via targeted savings.
#9, we were lucky enough to not experience. #4 got us out of the mess. We took responsibility and everything fell into place.
I think many of us have been there. I was myself. One of my biggest things was a lack of record keeping. Once I started tracking things, stuff improved.
Don’t worry, eventually you will have enough money for your dreams. Good things always take time.
Plenty of reasons people go broke, comprehensive list here. I think that the one on shopping to feel better is actually more prevelant than meets the eye. A lot of people shop to feel better about things, and to bring happiness. The reality is that what makes us happiest – many of us, anyway – money can’t buy.
Well said. I can admit I too once spent money emotionally. It wasn’t good but I fell into that same trap. I have since learned more about myself and what makes me happy, and it isn’t stuff. The sooner we discover ourselves, the better off we are, financially and in life.
I used to be all of this except 9… I am glad I am not in denial anymore and started taking actions.
Acknowledging an issue is so important. Until we are aware something is going on, we just keep repeating the same bad behaviour.
It is hard to start seeing what you’re doing though. It takes serious effort on your part to notice. Glad you have been able to make positive changes. That’s great.
I think that not knowing and not taking responsibility are really big ones. Good check list!
Yes, so true. There are so many people these days that seem to like to pass off responsibility to others when in reality they are responsible. Owning up to what you need to do is huge for long term success.
I think you pretty much summed it up!
I love it! It’s all about taking responsibility for our lives. I got scared into budgeting by looking 25 years into my future.
We should all do that. Fear is a good thing sometimes.
I realize that everyone can add reasons to this list. I think another good reason why people are broke is that they buy more house/condo than they can afford. I guess that falls under not having a budget. Buying more house/condo than you can afford is hard to fix. It’s not like cutting back on general spending habits.
Good point. I know a lot of people that are house poor. It is not a good situation.
I have a friend (really was a friend:)) whose husband left her and declared bankruptcy. She was advised to declare bankruptcy at the same time so that she would not take on his debt. Yuck!
Nice guest post. Although some of these may be obvious, I think they often go overlooked. As a whole, you could really make some strides of improvement by following these examples.
I know a few that it took filing for bankruptcy before they would finally look at themselves and realize they had to change their spending habits. Sad that they have to hit the bottom before coming back but some need to!
Well these are mostly developed country problems, I live in a place where corruption is strife, where Unemployment is upto the 50% mark and where I and many individuals like me who fail to adopt corrupt means, just are slowly being killed economically I have not bought clothes in years, I don’t drink, have no property as a matter of fact have never had a Credit card, have tried out even running a take away in the economic depression, I have a Masters degree hold Foreign certifications and all, All to no avail, I am 41 now and have never had a vacation in my life all my earnings have been spent on my children education and their upbringing and pretty soon I believe I wont be able to afford that, Life is good for some and a major bummer for some, the point is life goes on those who move on move on, there are the have’s and have not’s, the have not’s are forgotten while the have’s move on to glory. There comes a point for the have not’s in life when dreams don’t matter anymore we survive for the day and the world moves on, there is no justice in society or saviors as depicted in hollywood movies, It gets worse when you have principles such as not begging, keeping to yourself, being honest, professional and courteous all the times it works for many the flip side is it does not work for many too.
One day we die, just like so many others, and that’s the end of it. Hope you had a third world country perspective as well. Whats said here wont work for us, we are pretty thankful everyday if we are not shot,killed, robbed, beaten up from our way back to work each day. All these blogs are more or less for developed countries
where you are not killed or harassed for being bankrupt, whereas here we cant imagine of taking a loan, Id rather die hungry than face the prospect of being killed or harassed by Bank loan sharks or other loan sharks. Have a nice one all. Live Long and prosper as Mr Spock would have said.
Thank you for such an insightful response. I would like to share your comment in a post if I may to address the very thing you just said- create a larger perspective on the problems people face and that it is not just about the developed world. If you can reply with your permission that would be great.
I recently visited Africa and can say that I have seen the very situations that you are referring too. When you are striving to protect your life every day you don’t worry too much about things like getting a credit card or spending too much. It is so far on the priority poll. I think this is a great reminder for those in more fortunate situations to put things into perspective and realize what really should be important in life.
I wish safety and health for your family and may you find some happiness in your life.
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