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. Doug December 19th, 2012

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

  2. 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!

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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!

  10. 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!!!

  11. Natalia Cristurean February 8th, 2016

    Hi Kerry!
    I love this post so much I want to feature it on my blog! I’m a new money blogger and currently have 1000 views a month. I’m learning so much about the world of blogging, but I’ll definitely direct all the traffic to your site.

  12. Sherrie August 14th, 2016

    I’m glad you threw in not making enough money. It is definitely a question of balance – there’s no point in earning more if you are just going to spend it on more crapola, but if you aren’t earning enough to meet your obligations, then whatever you have to do to make up the difference is fair game, as long as it’s legal.

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