This is Why You’re Still Broke

This is a post from Pauline of

Have you ever wondered why some people seem to be enjoying life way more than you do, yet never go broke? Yet you are struggling every month to make ends meet, and there is never enough, let alone to plan for the future! Let’s try to see if we can reverse that trend.

You are broke because YOLO

Yes, we are all on this planet to enjoy life and all it has to offer. But we also need to be adults and think about the future. Especially when it is time to go live on our own, have kids, buy a house,… you know, the whole adulting thing. YOLO is fun today, I can assure you you will regret it tomorrow.

Living paycheck to paycheck creates unnecessary stress, that is not worth whatever extra fun you had last weekend. Financial stress is the root of tensions in relationships and many divorces. Let’s try to avoid that.

You can still have fun today without a hefty bill tomorrow. Look up free activities in your neighborhood, have your friends over for game night and a potluck dinner, visit a local park,… these memories won’t cost much and will last a long time.

You are broke because you pay too much for things

The main mantra of personal finance is SPEND LESS THAN YOU EARN. We’ll tackle the earning part later, but if you are still broke, that means you are paying too much for things. Which can be a combination of these three things:

  • You are buying things you don’t need
  • You are paying more than you should for the things you do need
  • You don’t know the difference between what you need and what you don’t.

Time to have a look at your old bank and credit card statements. Do you remember all the itemized lines of spending? Did you enjoy yourself? Are you still using that gadget/wearing that pair of pants/going to the gym three times a week like you said you would? Was it worth your hard earned money?

If the pants are still in your closet with a price tag on, next time you go shopping for clothes, ask yourself once more, “do I really need that”?

Then if the answer is yes, find a way to pay less. Try to get a coupon, to pay with a travel credit card so you get miles, or even to barter! A friend gets free yoga for greeting the students as they come in, and tidying up the place after the class is over.

Also, if you are broke and spending more than you earn, you are probably paying interest on your credit card. Making minimum payments every month will never make the principal go away. Look up the best balance transfer cards to lock in a 0% rate and send every extra bit of cash to pay off your debt every month. You can also negotiate your mortgage rates, your personal loans, everything! Banks are just another business, they are trying to make as much money off you as possible.

You are broke because you don’t make enough

Now it is time to tackle the make more part of the “spend less, earn more” personal finance equation. You may think you don’t have enough time to make more money, but it is not as complicated as it seems. Remember that story of a San Francisco mass transit janitor who made six figures? He just picked up any extra shift people didn’t want, and stayed a bit longer almost every day.

Staying an hour longer at work, if you are paid hourly, is an easy way to boost your income by 12% or so. No extra commute, no changing into some other work clothes,… it’s right there. You can do it in the morning and still be home at the same time in the evening.

You can also put a local ad and try to work in something you enjoy a few hours per week. Be a music teacher, a tennis instructor, fix people’s computers,… whatever it is, with rates a little under market, it shouldn’t be too hard. The extra money should be used first to pay off your high interest debt, then to save for the future, and have fun.

Being broke is a lack of planning

It often seems like people keep being broke because they don’t plan for things. Like Christmas, or annual car insurance premiums. These things come around every year, like clockwork. You just need to save a little bit of money every month, so the next holidays or health bill don’t take you by surprise.

We are all going to get old and want to retire some day. So funding your 401k and other retirement accounts is super important too. If you make that your priority, then learn how to spend only on things that matter to you, whatever they are, and reduce costs in other areas, you should break the cycle of being broke sooner than you think.

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