The real reason you’re broke

I’d like to take a moment to be mean. I not going to be a bully-type of mean. Bullies are a special breed of mean — a stupid, slobbery mean. The kind of mean that has little substance and a lot of supremacy. I hate bullies. Several have crossed my path over the years and I’ve done my best to steer clear of their shallow, selfish behavior — even when they pulled out my hair as a kid or tried to get me fired as an adult. So I’m not about to become a tormenting mean bully. I just don’t have that in me.

But I do want to get a little mean with you. A friendly sort of mean. The type of mean where a good friend would take you out for a drink (or coffee) and chat you up in a concerned, caring way. We’re not squawking about an intervention here, but rather, some serious tough love.

Ready? Here goes … and remember I’m buying you that drink (or coffee) by taking the time to tell you the honest to goodness truth. I’ll stop stalling now … gulp!

If you’re broke, please don’t email me to whine about it. I know money sucks when you’re stretched to the limit. I know buying a house is expensive. I know credit cards can be devices of torture masquerading as shiny pieces of plastic pleasure. I know buying quality foods can cost more than buying processed crap. I know that digging oneself out of a pit of dark debt seems insurmountable. I know that school is expensive and paying back that massive student loan is difficult, especially when your degree pays peanuts. I know life is hard. I know being single is expensive. I know being married is expensive. And there’s no doubt that getting divorced can be a drain too. I don’t have kids, but I hear they ain’t cheap either. Yes, working two (maybe even three) jobs is exhausting. I haven’t been all of these things. Maybe you have. But on the surface all these reasons for being broke are just the result of a much bigger problem. So if you’re ready to stop complaining about life’s circumstance, then here’s the remedy — the real reason why you’re broke.

1. You spend good money on crap.

Are you craptastic? Cool, I’m sure the marketers love you since you’re spending your hard-earned money on crap. And you know the crap I’m squawking about. Crap is the stuff that’s cluttering your home and bursting out of your front door. It’s the disposable, upgradeable, and superfluous stuff you buy in a heart-beat because you’re worth it! But crap costs. Crap consumes your space, can initially make you feel good but can lead to feelings of guilt, and can make you broke. Please, learn to identify crap and end the spending spree – you’re worth it. Smile. See Just say NO to crap! for the craptastic details.

2. You don’t have a budget.

I’m dropping the B-word ’cause I know you don’t have a budget, have little clue about your living costs, and don’t track your spending. Yes, starting a budget can be scary and learning about your true financial situation can be a bummer. Get over it. Please. Do the mathy math for once and for all and find your net worth, add up all your debt, track your spending, and build a budget that reflects your real reality — not the la-la land dream-world you prefer to live in. Only when you face the facts by spending the time to manage your money will you stop being broke.

3. You don’t earn enough.

This is a hard one to swallow, so I’m ordering you a second drink. If you can’t balance your budget after cutting the crap from your spending, then you’re probably not earning enough money. Sorry to be the bearer of bad news. Take a sip.

There was a time in my life when I had three jobs — THREE JOBS — to make ends meet. I worked my tail off to earn enough cash to cover the rent, buy better quality food, and pay off my student debt. You want to know How I Paid Off My Student Debt in Six Months? I worked my arse off with a full-time job plus two oddball gigs evenings and weekends! I didn’t own a car, I didn’t wear fancy clothing, and I didn’t wine and dine on the weekends. I was broke, after all. And I worked most minutes of every day to bring home enough dough to dig myself out. The answer here isn’t easy — you’ll have to find a way to make more money. Check out How To Find a Job for some pavement pounding ideas. Love is tough, I know. Smile.

4. You don’t pay off your debt.

If you don’t have a plan to conquer your debt, then you’re going to be broke forever. Do yourself a solid by downloading the Debt Reduction Spreadsheet to dig yourself out, starting today. While you’re at it, set your financial goals and make your Needs and Wants List — only then can you really tackle that mess you put yourself in.

Once you’re in the know, it’s time to look at ways to increase your minimum payments. Paying just the minimum balance is a sure-fire way to keep the debt hanging around your neck like a noose forever, so dig into that debt by paying it off sooner. Don’t believe me? My handy dandy Credit Card Calculator shows you how many years it will take and how much interest you’ll pay by just paying the minimum. Yes, the results will probably make you cry. So deal with it, already.

5. You don’t save.

If you’re up to your eyeballs in debt there’s no doubt that it’s very very hard to save 10 percent of your take-home pay. I hear ya. But saving even a smidgen of your salary for a rainy day or in an emergency fund is a wise way to get started. I’m a big fan of savings and have tapped my own emergency fund when times got tough in Reasons to Build and Love an Emergency Fund. You may not need surgery like I did, but you never know when tough times happen.

Start a savings plan by taking a good hard look at your spending patterns, your subscriptions and services, and find ways to cut back. For example, downgrading your television package — or canceling it completely — adds up to money that could be put into a high interest savings account. The idea is to be consistent and set up automatic deposits into a specific account set aside for emergencies. Get some ideas in 50 Ways to Save $1,000 a Year. It’s not hard to save — you just have to want to do it.

6. You’re clueless about your investments.

Do you know what you’re invested in, or did you let your financial advisor pick a bunch of posh-sounding investments without asking a single question? It’s your money and you have every right to know your Return on Investment (a calculator), How Much Your Mutual Funds Really Cost (a calculator), and How Long Until Your Investments Recover (another calculator). Not asking these questions or knowing the answers is a smart way to lose your shirt in the market. Not fun.

Getting clued-in to investing is not hard, just follow these steps:

STEP ONE: Learn the basics.

STEP TWO: Learn about financial advice.

STEP THREE: Become a ‘Couch Potato’ investor?

For Americans:

For Canadians:

There, I said it. So no more whining, hating on my blog, or complaining to me about being broke. If something is broken, then go fix it. I’ll raise a glass to that…

Squawkback: I know I missed a bunch — what are some other reasons why people are broke?

Your two cents:

  1. Harriet September 9th, 2010

    I LOVE your common sense approach to life.

    I can tell that as a new parent, the amount of stuff marketed to mothers for BABIES (who, sorry, do not need toys) is appalling. Even worse, most of it will amuse your child or make thing easier for you for about two months tops. We went without most of it but took anything bequeathed to us.

    As for baby food. Hello! boil a yam and mash – done!

    Now he’s running, his FAVORITE activity is running down the sidewalk with a stick in his hand – sigh – I sound like my grandmother!

  2. Lance September 9th, 2010

    Hey Kerry,
    Your “mean streak” is too sweet!!!

    Now it’s time for me to go get rid of some of that crap (yes…I’m sure I have some of that around…)

  3. Canadian Couch Potato September 9th, 2010

    Many thanks for the mention, and very nicely said.

    I can’t believe people pulled your hair as a kid. I would have stood up for you.

  4. Old School/New School Mom September 9th, 2010

    Okay…this made me want to cry, because it’s all true! Thanks for the reality check. I do ALL OF THOSE THINGS!

  5. Money Smarts Blog September 9th, 2010

    You’ve reduced me to tears. I hope you’re happy. :|

    Mike

  6. Diana September 9th, 2010

    Illness is a big money sucker. Most people don’t have enough emergency funds or insurance to cover the unexpected costs of a major long term illness in the family, even us Canadians.

  7. sarah September 9th, 2010

    Thank you. I needed this.

  8. Jackie September 9th, 2010

    Not taking responsibility by admitting that yes, it is our own darn fault is another biggie. Once you take responsibility, things start looking up, because you can change.

  9. Rob September 9th, 2010
  10. WealthWebGuru September 10th, 2010

    You sound a little like Larry Winget. Well said!

  11. Betty September 10th, 2010

    This was my favorite article so far! Keep them coming!!

  12. Lori September 10th, 2010

    Amen sistah!

    I hate hearing my friends complain to me about how they dont have two nickels to rub together. Meanwhile they have cell phones and cable. We do not. Yes I would like both. I am a stay at home Mom and these are the sacrifices, among others, that I am willing to make.

  13. SavingMentor September 10th, 2010

    This is a really great article that I think can help a lot of people! Although, I do have to disagree with you about the use of credit cards. They are definitely wrong for some people, but they help a lot of people earn extra cash or reward themselves in ways they otherwise couldn’t.

    I am planning a vacation to Paris very soon for my wife and I with the flights and 4* hotel nights paid for all thanks to credit cards. I couldn’t justify doing this otherwise. We also don’t make a huge income between us either, especially now when she just finished a year of school (adult student) and we just had a baby. I, myself, am on parental leave so we only a very small income and we can still afford to go on an expensive vacation even with such limited finances.

  14. Marcia September 10th, 2010

    Very nice post! And so true.

    I have been loving this Canadian TV show called Til Debt to us Part. The woman on there does some tough love with couples who do all those bad things.

  15. Joy September 10th, 2010

    Best article ever! I worked hard to get myself out of a huge amount of debt about 8 years ago and that includes most everything you discussed. But it’s still too easy to make dumb decisions even if you ARE paying cash for them. The goal now is not to get out of debt or even to stay out of debt. That’s a given for me. BUT to make better use of the money I work so hard for. Thanks for the “kick in the pants”. I needed that.

  16. Shana September 10th, 2010

    Very well stated. Enjoyed the bullying. Hopefully we can do something about it!

  17. Kerry September 10th, 2010

    Emailed to me from Nancy:

    “Add to the list a husband who spends money and doesn’t give a crap about how much he spends, nor what he spends it on. Won’t write out a budget, and won’t keep track of how much he spends because he doesn’t care. I HATE being in debt, and we’re headed for bankruptcy and he just doesn’t care!!!!!!! It is so frustrating and makes me extremely angry!!! Husbands who don’t give a crap SUCK!”

  18. Shane September 10th, 2010

    Thanks for sharing all this information. I don’t have credit cards (I know they are not a good match with me and my spending habits), and since first finding you I have been paying more attention to my money wasters (the crap that really doesn’t need to be bought), and am up to my armpits (figuratively speaking) in tracking where my money goes and what I can do without (cancelled the cell phone….what a huge bill that was!).

    Thanks again, your direct honesty and commitment to helping others is refreshing!

  19. ldk September 10th, 2010

    Outstanding post and right on the money(so to speak!)

    I wish I had the nerve to forward it to the people in my life who need to hear it.

    Cheers~

  20. JC September 10th, 2010

    This is a great article! I’ve only been following your blogs for a few months and your website offers practical solutions to day-to-day personal financial problems.
    Most people lack the discipline to stop spending. I used to be one of them – especially when I’m feeling blue. I learned since then and became very organized with my budget. I work full-time, I’m taking courses for my professional designation (which I’m paying by the way) and provide for my family. I have good amount of savings as well. Thanks for your blogs – I’m pretty sure they made a big difference to people looking for answers.

  21. Thicken My Wallet September 10th, 2010

    7. You are lazy. Personal finance is like everything else in life. You get out what you put in.

  22. Yuvraj September 11th, 2010

    Dear Friend ….

    Just Hats Off To You !!!!!!!!!!!

    You Are Great ……..

    I Love Your Creative Mind .

  23. queen of string September 11th, 2010

    8. You think it’s important to have the things your friends and neighbours have whether you need them or not.

    9. You shop for recreation. Get a life. Shop only for what you need.

    10. You think old school skills like getting the most for your dollar, cooking from scratch, mending stuff, repurposing etc, are boring and sad.

    11. You are not parenting your children, you are being their friend because that’s easier. Step up, parent, say no sometimes, suprisingly, no one will die if you do.

    Thanks for the blog, enjoyable as always.

  24. Sara September 12th, 2010

    It is a fabulous article. I think I am going to have to link to it so some of my friends who think they are broke can see it. They have so much wealth if they open their eyes and change the way they look at things!

  25. Abigail September 14th, 2010

    Hmmm…

    On the one hand, I am definitely sick of hearing people with two incomes complain.

    On the other, uh… there are a lot of us out there who don’t have the options you list. When my husband and I met, I was on disability. My check covered rent and my meds. Barely. He had student loans outstanding because his own medical problems kept him from working regularly. We also had to get him $8,000 in oral surgery. That’s after insurance kicked in, fyi.

    After a mere four years, I lucked into something — purely through happenstance — that lets me work full-time from home. My husband is currently unable to work and we don’t know if he ever will.

    That said, we paid everything off. With hard work, admittedly not enough denial of things (he has ADD so it can be hard to get him to delay gratification), and a lot of luck, we only owe $6,000 on his student loans yet.

    But I just want to remind you that there are plenty of people who don’t have options you list. The area they bought a house in went bad and there are no jobs nearby — they’re lucky to have just the one — or they have medical issues which means they’re unable to work or unable to be as frugal as they like when they do work.

  26. Rob September 14th, 2010

    Abigail:

    Hopefully Kerry won’t jump on me for putting words in her mouth, but.. While it’s true that everyone has their own special circumstances with which they have to deal that sometimes make it impossible to get ahead, or get ahead easily, it’s also true that the vast majority of people (in my opinion) who are broke are broke for many or all of the reasons Kerry mentions, and many of her “cures” would work for them. But people are very short-sighted. They want their “stuff” *now*, whatever that stuff is, and don’t worry about tomorrow. Or they spend all their money on crap and then complain they have no money. The overriding theme of this post and many of the comments is self-discipline. We live in a world where letting things get out of control is much easier than keeping a grip on things – for that we can thank the industries (banking, credit card, mortgage, housing) that support and encourage personal disaster. The credit card company doesn’t care if you slowly go broke paying their fees and punishments, as long as they get more of your money. Nor the bank, or the builder of the 4500 square foot McMansion. And also, life doesn’t necessarily have to fall in place the way you want. The person who bought a house in an area where the jobs vanished *does* have the option of finding a job elsewhere. They might not *want* to, but that is a different problem.

    Self discipline is *hard* – but it is also a key to success. I can’t help but imagine how today’s populace would survive (and how many would not) in a good long 1930s style depression. I imagine there would be a lot of hard lessons learned and the whole “buy now, pay later” theme of our society would change dramatically. And we might have a healthier society for it.

  27. Rachel September 16th, 2010

    I loved this – thanks!

    12. You gamble.
    Obviously if you actually have a full-blown gambling habit, then that would be a likely reason for being broke.
    But we often gamble on other things – we take our chances and spend our money on a want, gambling that we can save on something else to make up for it, and that there won’t be a financial emergency this month. We gamble every time we aren’t prepared for every possible eventuality, and this can cost a lot of money (think emergency fund, think adequate insurance, think servicing your car before winter).
    And of course, we gamble in our financial investments, not to say that noone should take any risk, but it is called risk because any time you gamble, you could lose.

  28. Doctor Stock September 18th, 2010

    Mean… no, just reality. This is a great post for every adult who has never learned to treat their financial picture with maturity and are stuck in financial adolescence.

  29. Isabel September 19th, 2010

    I love, love, love your writing style! This is a great article…I will be following you from now on.

  30. Peter September 21st, 2010

    Great post with enjoyable humor. Adding on to number 4, it won’t hurt to call the credit card company and ask them for a lower interest rate. It can work.

  31. Stephanie Christensen September 22nd, 2010

    Well put! I especially like the part about the income…it’s a bunch of bs when people claim they don’t make enough to save. When I was making $31K a year, I got myself out of $16K in debt in under two years. How? Because I walked dogs on my lunch break and after work, to make some extra cash (aside from not spending, budgeting, and the usual suspects).

  32. Nicola Timmerman September 24th, 2010

    You didn’t study advanced math or science in high school and decided to study liberal arts in university (if you got there). If you want to make money, work in the money fields.

  33. Sonia September 24th, 2010

    Love it!
    How about adding: You’re trying to keep up with the Joneses (a.k.a. your friends) because you’re affraid to admit you can’t afford it. Newsflash: Maybe they can’t afford it either.

  34. david toyne September 24th, 2010

    Thanks to Rob Carrick for pointing us to this post.

    I tell all my friends that, at the tender age of 50, I have entered my “period of minimization” having left my period of acquisition behind me. The realization that retirement is now looming some 20 years out (thats not a long time!!) means that thinking about and preparing for those post work years is mission critical. Your compelling words will be shared with my teenage children this weekend!!

    David.

  35. Andrew Sikomas September 24th, 2010

    Great post! found your site via Rob Carrick’s Personal Finance Reader, and will be back regularly!

  36. Loukia September 24th, 2010

    Was this article supposed to bring me to tears?

  37. Steve September 24th, 2010

    I really liked your perspective. Here’s something to add. I’ve reached a point where I have too much stuff therefore my new rule is I can’t buy any new stuff until I sell, donate or otherwise responsibly rid myself of an article of old stuff. Funny thing is once I’ve had to go through the effort of selling somthing on CL, I’m all of a sudden less enthusiastic about buying new stuff. An interesting consequence is I’ve accumulated some cash AND making better choices

  38. Nick September 24th, 2010

    The truth hurts sometimes, good post to call some people out! to comment on #6, we recently sat down with some prospective clients and asked them what they were contributing to current investments. they responded, “we pay $600 a month but we’re not sure where it’s going.” I was blown away! Even though it may not be a huge amount, you should still have a handle on where it’s going each month. We were able to redirect that $600 into their own private banking system where they’ll have control, liquidity, and safe, tax free growth for the rest of their lives. not to mention the ability to literally use it as their bank for major purchases.

  39. Rob September 24th, 2010

    @Nick: I wonder what you mean by “their own private banking system”?

    @Steve: Try selling 2 items for every one you buy. Not only will your house slowly empty out, you’ll end up with more cash!

  40. Nick September 24th, 2010

    @Rob, it’s a concept that few people know about, but is amazing for wealth creation and money saving. safe, risk free, inside a vehicle that has been around and consistenly growing for over 150 years!

    You can watch a quick video here –> http://www.becomingyourownbank.com/video

    Let me know what you think!

  41. Rob September 24th, 2010

    @Nick: I bet few people know about it because the website is dead :)

  42. Nick September 24th, 2010

    @Rob, yeah something crazy just happened, should work now, hopefully!

  43. Roy September 24th, 2010

    I liked you article. It is always good to go back to basics and review ones finances. Ultimatley it comes down to ones ATTITUDE towards money, creating it and spending it. And there is the other factors too…DENIAL and BLAME. It takes courage and responsibility to be accountable for ones debt or being broke and then to work hard in rebuilding it so not to be broke anymore. I have been there. Thanks also for the many tools you make available. I know they are very valuable and hope many will use them and follow your advise.

  44. S. Wolf September 25th, 2010

    I love people I’ve seen elsewhere who complain about how hard it is to make ends meet … by posting in places such as this using high speed Internet. Ummm … first thing to go? There $50 – 70 a month freed up. Cellphone(s) or Crackberries? Toss ‘em. I use a real plugged-in phone and still manage to have a happy, productive life. Oh, and save a pile of cash. I do have a car. But it’s an 18-year-old Mazda. Works fine. So why waste money getting a new one? And I’m willing to drive a little out of my way to find a station charging less for gasoline. I also don’t have a credit card, so I can’t spend more than I have on me. My life hasn’t suffered for it and my bank account is healthy.

  45. Annie September 26th, 2010

    Great Article ! I need to anonymously forward this to some family members.
    I think a big one missng (jackie mentioned it). Is the blame game, blaming everyone else for why you don’t have money.

  46. youngandthrifty September 29th, 2010

    You go girlfriend!

    Great post…I think everyone needs to read this because most people right now in our society is saving zilch and nada of their paycheques…they think about now now now and me me me and nothing about the future.

  47. Mika September 30th, 2010

    Wow.. tell it like it is sister! I love this! I heard you at bloggin Okanagan last weekend, and though unfortunately I had to sneak out before the end (yes, I am the rude girl in the back who just got up and left) I thoroughly enjoyed your point of view! Now I’m looking forward to reading through your post history! Thanks so much for telling it like it is.. my family is trying to live more frugally, and to build a sustainable house frugally, so the timing is great.. I wish I had had the chance to meet you in person – maybe our paths will cross again one day!

  48. All our financial failures are always a combination of all these. I am still learning to survive. Good article

  49. The SOFT Blogger October 3rd, 2010

    I think the budget point is the best note in your post. Far too many individuals don’t have a monthly budget or even an idea of how much they might go over their income on a monthly or bi-yearly basis.

    Really like the website!

  50. ChristineWithRegence October 3rd, 2010

    When it comes to health care costs, we need to take responsibility. We all have a role to play in helping to control health care costs. Check out the site for ideas.

  51. Rob October 3rd, 2010

    The cost of health insurance, broadly referred to as health care costs, is one of those things that differs dramatically between the US and Canada. I haven’t lived in Canada for 20 years but I recall just wandering into the doc and handing over my OHIP card. I realize that I paid for that in taxes, but down here on the southern side of the border health care is a for-profit industry that raises rates significantly every year. My monthly health insurance premiums (and I’m not even sick!) cost me more than all my other monthly costs combined. And, despite what I and all my CDN friends thought when I lived in Canada, the total tax burden down here (excepting sales/GST taxes) is about the same as in Canada. When employed I see about 2/3 of my gross salary – exactly as I did in Canada.

  52. Kevin @ Thousandaire.com October 4th, 2010

    That perfectly explains a lot of the people I know. I think it can all be summed up with a general ignorance of their financial situation. Financial ignorance is bliss for them.

  53. Saver Queen October 5th, 2010

    Loved this! It’s all very true. I think what most of this comes down to is the inclination to avoid taking responsibility for one’s life. It’s actually entirely possible to live within one’s means, even if you’re making a low income, and still have a great life (I speak from experience.) But if you’re not wanting to face reality, make sacrifices, and determine what you really need/want, nothing in life is going to change for the better.
    Sorry to hear you get so many whiny emails!

  54. Andrew @ Money Crashers October 9th, 2010

    You’re so harsh! Haha, no it’s actually a really good post. I’m most guilty of spending money on crap and that’s the perfect way of putting it. I’ve slowly been growing out of it and trying to be patient before making big purchases, but there are so many temptations out there.

  55. MoneyEnergy October 13th, 2010

    Nicely said! Great gentle kick to go over these things again, since you can’t become very financially abundant while missing any single one of them. It’s important to do all at once, however you can make that work.

  56. Tara Laing October 13th, 2010

    Hi Kerry,
    I just discovered your great blog today through a friend and I’m going to post a link to this post on ‘The Real Reason You’re Broke’ on mine. I stopped buying anything new for 12 months on January 1st as both a cost-cutting measure and in response to the obscene amount of pressure to consume. The experiment is going very well over 9 months in, and I’ve learned to appreciate used clothing stores & clothing swaps, as well as save $11,000 in RRSPs, $about $4000 in ‘rainy day fund’ as well as pay off $17,000 in consumer and student loan debt. My wife and I have also recently taken the exciting and much negotiated step of cancelling our Roger’s cable and landline. We don’t have a car either. We are well on our way to living more within our means!
    cheers and thanks for such good council,
    Tara
    http://www.nonewfortara@blogspot.com

  57. Krista October 30th, 2010

    For some of us, it’s NOT possible to work 3 jobs. Some of us are living with chronic illnesses or disabilities, but aren’t too disabled to work. It’s insulting to hear that if “only you had the drive you could do it.” Some of us have learnt the hard way that there are limits to what we can endure, and going over those limits just leads to a relapse of the illness. It is better to be working part time and broke than be in a hospital.

  58. PK November 11th, 2010

    About the not buying crap rule……. A year ago my husband & I developed our own guidelines towards crap. We each get an allotted amount of cash each month for our own personal crap purchases. Magazines, music, earrings, candleholders, knick knacks, etc all count as crap. Everything gets tracked and if you spend less, you can carry that amount forward to the next month. Now we really think carefully before any purchases, our house is less full than it would have been otherwise and our wallets a bit fatter.

  59. Debt Donkey March 9th, 2011

    One of the best posts I’ve read in a long time! You know how to dish out the tough love, but everything you say is right on. Thanks for a good read.

  60. Don Edmunds-Oshawa Realtor March 24th, 2011

    I see it all the time. Financial responsibility needs to be taught in class. I am always surprised to hear the bitchin’ about money as they are planning another trip down south or buying another big screen TV.

  61. Linda September 28th, 2011

    Very well said. Some of just need to hear the truth from someone else to get our butts in gear. You have some excellent ideas. I hate to plug another site but I have found that a combination of info can be a good thing. Check out Gail Van Oxlade as well. She says it like it is – tough love- so to speak. I will definitely bookmark your site and refer to it often!

  62. Lynera October 31st, 2011

    Every time I need a kick in the pants I come back and re-read this post. Which has been several times in the last couple of months. Thanks for helping me get straightened out.

  63. Kerry November 1st, 2011

    @Lynera I think you need a hug. :)

  64. Broke to bankruptcy January 18th, 2012

    To bad we can’t get everyone to read this kind of stuff. I work with a lot of Credit Counsellors, and it’s amazing how many people they see who are headed toward bankruptcy but have already been bankrupt one or even two times. If these people only learned how to budget and stay out of debt, most of them could spare themselves the ordeal and have a great life.

  65. Jax March 29th, 2012

    In #6, you don’t “loose” your shirt, you “lose” your shirt. Too many people use the wrong spelling.

  66. Kerry March 29th, 2012

    Jax — Thanks for the typo report.

  67. Jackie March 30th, 2012

    Thank you! As someone with a petite income and habitually thrifty habits, I’m always hearing “I’m always broke” from friends who make more than I do. I hear ya on buying way too much crap. Buying 8 winter coats when 1 will do, buying lunch and dinner every day no wonder they’re broke.

  68. andy April 10th, 2012

    The link to the free guide above is no longer valid

    “Ram from Canadian Capitalist links to a Free Download of The Elements of Investing by Burton Malkiel and Charles Ellis. This freebie is fabulous for Americans and Canadians, so go and download it now. ”

    It says due to the popularity of the offer they need you to call a 1-800 number…….

  69. Kandyce April 12th, 2012

    I haven’t read them all, but I want to add:

    Denial.
    My dad thinks he taught us kids how to spend money like there is none. He is flabergasted when one of us make bad money decisions. But truth is he spends money like it grows on a tree has yet to pay off a credit card. He hasn’t let more than 2 years pass between “needindg” to dip into retirement funds and now blames the economy for not having a job in the last 2 years going on 3. He does everything on your list. Unfortunatley for Mom, Dad refuses to even acknowledge his problems let alone see them. If people are to chankge they have to see the problem firse

  70. Elaine April 18th, 2012

    Kerry,

    You are so bang on it is crazy! I love your sense of humour, I was laughing so hard. I’ve been down the bad financial roads and realized I am the one n only one who can make the changes and have no one to blame for my poor financial choices. It was not easy to look at my debt load, my poor spending habits, but once I realized I could turn it around,I did. I have an Emergency Fund, which I keep adding to and putting 10% in, I got rid of RBC and the ridiculous monthly fee of $13.95 I was paying and moved ALL of my money to ING Direct. I still have cable with Robbers and moved my Internet and landline to Teksaavy and am saving big time. I realized I was an emotional shopper, I’m in the midst of looking for a fulltime job. I was feeling low and was going to buy a purse and then said WHOA and it hit me that I am shopping emotionally. I like to log on to my bank account and look at the savings, I’m proud of myself and the positive decisions I’ve made. My teenaged son also has a savings account and paid off his credit card. Thanks for being so to the point!

  71. Vincent Turner (@vinaeco) May 17th, 2012

    We are observing that one of the reasons people remain broke is because of inaction. When a course of action is theoretical it is hard to commit to an action. We think the reason for this is that people can’t see the impact clearly of the action so the result is inertia. In my personal experience I found this in a decision I needed to make to sell my car (back in Australia) to give me financial security while I worked on my startup in the US (planwise). It was a tough emotional decision (I loved that car!), but when I could see the difference it would make in black & white.. the decision became easy. I listed the car to be sold that day.

  72. John June 11th, 2012

    You missed one very important fact….TAXES

    Net AFTER TAX INCOME

    Gross income less deductions means a dollar in income is worth about 1+1/3 to 1+1/5 of a dollar of savings.

    There are two kinds of money INCOME and EXPENSES.

    The most valuable thing I learned in University was how to love comfortably by minimizing expenses.

    We live in a land of excessive taxation….gas and alchol are actually cheap IF you seperate out the cost of taxes added (included) to the final price. Remember you are buying them with valuable TAX Paid dollars.

    Take income and subtract income tax, value added tax (GST), sales tax AND HIDDEN TAXES included in almost everything and you will realize the real purchasing value of a tax paid dollar.

    For example: the interest on a mortgage is paid with tax paid dollars…how much is that in pretax dollars over the life of a mortgage??? Figure it out …the amount is hudge.

  73. John June 11th, 2012

    You missed another very important fact…..Inflation.

    40 years ago a new car cost $3000 and a new house $18,000

    By comparison a dollar in 1972 is worth about a nickel in todays economy.

    INFLATION has resulted in a dollar being worth in real terms about 1/20 of its value about 40 years ago.

    Looking forward I predict inflation (decline in the real purchasing value) of our currency to increase rapidly in the comming decades.

    The net result is to relize that currency is actually a short term medium of exchange and not a long term store of value.

  74. ImpulseSave June 11th, 2012

    You should print this out and post it EVERYWHERE! People don’t get told these things and they really, really need to!

  75. Old and tired June 12th, 2012

    We all know people who should read this article, and most of us could benefit too, so I won’t say you are being judgemental, however, here are a few more reasons someone might be “broke”: illness without or with only inadequate disability coverage (this could apply to anyone that is not a civil servant), recent immigrant refugee, forced out of a job through no fault of your own without compensation, significant medical costs not covered by public or private health plans, minimal or negative stock market returns over an extended period of time, uninsurable bad luck, ill child or parent or spouse. Life can be hard and it is not all within our full control. There is no excuse for whining when you are broke because of iirresponsible behavior or laziness, however some situations do require compassion.

  76. Fortune Flips June 12th, 2012

    I love this article, and agree with most of it. My husband and I in our late 30s were well on our way to financial freedom. I even managed to SAVE money while on maternity leave and when my husband had barely any income (self employed). We live in one of the most expensive cities in North America. Everything was great – we were frugal, tracked savings, everything was pointing to early retirement.
    But.
    Our child was diagnosed at 20 months old with autism. The treatment therapy is covered by the government but only after a lengthy waiting period (3 years). Early intervention is key. Therapy is recommended at 20 hrs a week and is about $40 an hour. My husband quit his business to be able to manage all of the various therapies and I went back to work in a very high stress industry that I was looking to leave after maternity leave just so I could make enough the money to pay for it all. My child may never live independently, making costs of child rearing more than beyond the standard 18 years. We break even every month due to extreme belt tightening in our household and the fact that my husband found a work from home gig which basically pays for our groceries every month.
    We are not irresponsible with money and in fact before I had my child was working on a blog about financial freedom and early retirement. You sometimes don’t know what life throws your way and so not everyone is in a bad financial situation due to their own fault.

  77. Victor June 12th, 2012

    @John Yes, but taxes and inflation are things that everyone must deal with. People who are broke are not broke because of taxes and inflation. Otherwise, we’d all be there. Yet clearly, some people are financially healthy, while others aren’t. The difference lies in what individuals do and the choices they make, which is the point of the article.

  78. David June 12th, 2012

    With 24% unemployment in Spain right now (and probably rising) I’m sure only the pretty people there have jobs right now.

    Also, you seem young (or were when you were digging out). One day you will reach an age where three jobs = dead

    That said, many of your points apply to most of us

    One of the key lessons of frugality that helps me to control my spending is to calculate the actual hours I will have to work in order to pay for junk. It quickly puts the value of that junk into perspective.

    You can also calculate the net hours. In other words the amount of money you will have after everything else is paid for. If you only net out $700 per month after all your expenses, do you really want to work every day for the next month for FREE in order to pay for that new smart phone? Or every day for the next year for free for that used car? Is your old one or the cheaper one really that bad?

  79. Frank June 13th, 2012

    The lack of financial literacy is the main reason for most of those problems.

    Most people take a loan @ 6% to pay for a used car while they keep a savings account getting barely 1% on GIC.

    The vast majority still pay their mortgages on monthly installments, some of them even pay off their mortgages faster during low interest rate periods.

    Dollar after dollar their wealth evaporates without a clue…

  80. Kent June 14th, 2012

    I’m proud to say at 25 years old I am debt free. I learned early on that I work too hard for the money I earn and don’t want to lose it to interest. Other than a student loan(which I paid off in a year) I’ve never been in debt. Paid cash for all my vehicles and a few toys. I do regret some of the “toys” but overall looking back I’m pleased at the financial choices I’ve made. Number 3 is what hurts me. I’ve always had jobs in the construction industry and since the housing bubble burst our area has suffered significantly. I’m currently working as a maintenance man for a non-for-profit ministry, which I love being a part of, however, as frugal as I live, saving 20% of my paycheck isn’t getting me as far as I’d like. I have dreams of owning a farm/ranch someday so I can return to the lifestyle I knew when I was growing up. Just seams so hard for a young guy to get started with the cost of living increasing and the enormous overhead of any business aspirations I have! I’ll keep chugging along and hopefully when a different opportunity comes along I’ll take a leap of faith and try it!

  81. carmelina rizzo June 29th, 2012

    Wonderful,straightforward article-as they say here in Italy-Straight ,clear talk is for friends’I'm fed up with girlfriends who spend all week pampering themselves in beauty parlours,go to every party or function they’re invited to,buy anything they want,then whip up a crappy,yukky meal no-one enjoys last minute,,,,then ask’oh how do you manage?could you give me some advice,,,?’when they earn 5 times more than we do!!!I loved your article-God bless you!!I paid my College too working in restaurants,took a sabbatical to get together cash for the future-office job by day,waitressing by night and shop assistant on saturdays..I’m proud of myself!!!

  82. Karen July 1st, 2012

    I wouldn’t say you’re being mean. You’re telling them the truth and sometimes the truth hurts. People need to stop using all their energy for whining and use it for earning more $, saving, budgeting and investing. Some people definitely need a wake-up call. Well done on the article!

  83. Elaine July 2nd, 2012

    I decided to put this in a word document, will print it out and put on my fridge today. This is too rich to not do otherwise. Thanks so much for your honesty. I slipped a bit, but this kicked me in the pants and gave me the wake up call again!

  84. Dawn linnert July 9th, 2012

    How does one fire their investor? What fees/penalties will be incurred? I would like to do so, but, I don’t know where to start.

    Thank you.

  85. Nick July 9th, 2012

    Dawn, I can’t imagine there would be any fees for choosing another advisor. In fact you could probably save money by choosing an advisor that does not charge fees but works on a commission based structure. What bugs me most about many advisors is the fact that they make money whether or not you do.

    I could go on and on about the poor financial education in our country but I’ll stop for now.

  86. DD August 17th, 2012

    AND JUNK IT IS ! Or was that sugar & salt ? Drive up, drive thur, walk in walk out, the JUNK parade is 24/7 ! Check out the FREE ads, theyre trying to sell you the junk They Had to Have ! Or is that, your trying to sell me the junk you had to have ? I see it 24/7, $10 for 2 coffees, $15 for 2 pink slime burgers & frys. Eating healthy at home is By far safer, & at less cost……… The Junk parade appears to be Full force, check out those free ads, I dont want 99.9% of what is offered theyre, & neither does the person that thought, I GOTTA Have it !

  87. Caitlin September 25th, 2012

    Thanks for all the good tips!

    I love how you have idenitified the common problems that msot people have when trying to save money!
    Coming from a student who works part-time and is trying to obtain a rental property, this has helped me better understand the cost of living and how much saving extra money will help.

    I plan to start using your guide to help me realise where I am going wrong, so I can fix it and have a better finanical situation :)

  88. Caitlin September 25th, 2012

    Thanks for all the good tips!

    I love how you have idenitified the common problems that most people have when trying to save money!
    Coming from a student who works part-time and is trying to obtain a rental property, this has helped me better understand the cost of living and how much saving extra money will help.

    I plan to start using your guide to help me realise where I am going wrong, so I can fix it and have a better finanical situation :)

  89. Connie Solidad September 26th, 2012

    Wow! Very blunt but informative! Obviously many people need this kind of direct approach to their steps of getting out of debt. Here’s a simple tip, “If you don’t have the money, don’t buy it!”

  90. Georgie14866542 September 26th, 2012

    I love the fact that this is a no nonsense straight to the point step by step approach to saving money. I like the way you have clearly targeted your audience of young adults just starting out and getting serious about work and money. Your message is clear and well thought and the breakdown and layout is really helpfuland easy to follow. Your blog has great feel of honesty and you don’t mind telling it like it is. The fact that your giving people the tools they need to help themselves is a great objective for your blog.

  91. Georgie14866542 September 26th, 2012

    I love the fact that this is a no nonsense straight to the point step by step approach to saving money. I like the way you have clearly targeted your audience of young adults just starting out and getting serious about work and money. Your message is clear and well thought and the breakdown and layout is really helpful and easy to follow. Your blog has great feel of honesty and you don’t mind telling it like it is. The fact that your giving people the tools they need to help themselves is a great objective for your blog.

  92. Doug December 19th, 2012

    Loving your approach. There is no quick fix for financial stability, you have to examine every aspect of your life!!!

  93. Jentry Nielsen January 9th, 2013

    Ha love the tough love! This is seriously an amazing article though, really great helpful tips! I thought I was a saver, but these tips are even better than my great glorious approach I thought I had…ha Thanks for sharing these!

  94. bill January 20th, 2013

    One thing some people fail to consider is their monthly contributions to certain “Charities” Those whiny TV spots for both humans and animals cost big bucks to produce. And so few of those dollars actually end up where they “promise”. Clothing
    donation scam boxes. Get in your car and take them to agencies who don’t sell your donations by the pound. There are virtually no tax rewards for donations.
    I think of a certain TV program here in Ontario that suggests they spread the “Word”…It has already been spread, and continues so, no thanks to them. Did my parents contribute to them. Yes. And almost died penniless. Were they ever given a fact sheet as to there monetary disposition? No. They invested in a business that cannot possibly make a dividend.
    Fortunately my parents had already “Laid up their treasures in Heaven” where religious scammers and other moths do not corrupt.

  95. Merrin February 23rd, 2013

    One I just figured out the hard way: Not paying attention to your finances. I didn’t keep an eye on my balances and due to some unplanned fees there wasn’t enough in the account to cover a direct debit $20 dishonor fee later – I still have to run around and fix the mess, yes it is completely my own fault. a money plan is like a garden if you don’t tend it fails.

  96. Louise February 28th, 2013

    Very honest and fresh approach to the way many people live. I love the article and will be watching out for your new tips and ideas! I am now in control of my finances but dread to think what I have wasted on crap over the years. Onwards and upwards…thank you.

  97. Thomas March 11th, 2013

    The only word here ,in almost all comments is LIFE.If you are willing to contend with spending vs. frugality,debt vs savings….some can some cannot.Similar to dealing with that bully…LIVE!Its the only life youll have…there has been better before us and there will be better after us!Windfalls,inherentences,insurance policy payouts,pie in the sky lottery wins…all are focus changers that the majority in this go-round of life will never experience.If you have the parts and the willingness to live with it….thats your way of life!Just like that bully.

  98. Robespierre1758 April 11th, 2013

    Thank you for this great article! So insightful. This is definitely something I’ll be putting on my fridge and passing along to others who are “broke”.
    I have to admit I can be a bit impulsive sometimes, and I make mistakes buying things I really want and shortly afterwards I start to feel truly guilty & then I go back and return it because I realize that it is just crap that I don’t need. My weakness is books. I don’t own a T.V, or a cell phone, so I get bored, and I read. It’s my only vice. I don’t have credit card debt I know the damage they can do to someone who is prone to impulsivity, but I have student loans which I am kind of scared about.

  99. Stu (budget sheet) April 21st, 2013

    Under investing “How to read a Mutual Fund Prospectus” and “Get Rich Slowly” go together perfectly like peanutbutter and jelly. You’ll get rich slowly and the mutual fund company will get rich quickly.

  100. Catherine Nikkel November 18th, 2013

    Absolutely loved this article – spoke truth, not mean.

    I hear that same “whine” quite often and when I show people an opportunity to earn income (including savings and debt management) from home – and even that’s met with a closed mind! Can’t please them all :)

    I chose to take control of my finances with many of the tools you’ve mentioned “B” word (love that) … and it’s amazing how much more enjoyable life is without the word “broke”

    Liked and Shared!

  101. Condorbananapeel November 18th, 2013

    I love the language in this. It’s kinda cheeky, but oddly familiar… I can definitely relate to the 3-jobs-at-one-time period, and it was a great lesson, although I couldn’t maintain it long enough to cover all my financial goals. However, I could have dealt with things much better if I had these tips back in the day. But this is really a unique and super blog, and I hope it stays here for a while! Way to go Kerry!!!

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