There’s a funny little rhyme that goes “I’m broke as a joke” but the reality is that being broke is really not a joke. It is a problem however for millions of Americans and it’s also the subject of today’s blog. While being broke may just be the fault of your circumstance because you’re out of work, learning how to survive on minimum wage, underemployed or just went through bankruptcy, the fact is that most people are “broke” all the time because they make a lot of financial mistakes. Today’s blog is going to take a look at some of those mistakes and give a little bit of advice about how to avoid them. Enjoy.
- Spending all your money when you’re younger. Most gendered adults in their 20s and 30s spend all their money on food, clothing, fast cars and “partying”. While it’s great to have a good time (no matter what your age) there is a point at which it gets to be ridiculous. Budgeting your money so that you have some for “fun” and still put some away for retirement, a new home and so forth is a better bet.
- Forgoing savings for luxury items. Many people today have huge flatscreen TVs, expensive cars and the latest smartphones but then complain that they don’t have any money or savings. The simple fact is that you don’t need the nicest car or the newest electronics to be happy and if you don’t have an emergency fund (at least) set up to help you in an emergency, one wrong move and you could find yourself truly broke.
- Paying the minimum on credit card bills. Let’s say that you owe $5000 on your credit card and you’re paying an annual percentage rate of 19%. If you’re the type of person that only pays the minimum payment every month it will take you approximately 50 years and cost you nearly triple that amount in interest to pay off your debt. If that isn’t enough to make you pay down your debt quicker, nothing is.
- Paying bills late. Even paying one single mortgage, credit card or smart phone bill late can “ding” your credit and make it harder to get more credit when you need it in the future. If you have problems remembering to pay bills then you need to set up a system to remind you. Luckily there are plenty of smart phone apps these days that can do just that but, the matter what you do, set up a system so that you don’t miss any payments because the consequences are just too high.
- Driving your car like you’re in the Indy 500. The cost of gasoline as well as car maintenance and tires is ridiculously high these days. If you drive your car like Mario Andretti going to waste time of gas, put a lot of extra stress on your car and literally burn rubber, facts that could waste thousands of your dollars. Besides that, it’s pretty dangerous as well.
- Smoking, drinking or doing drugs to access. Hey, we’re not your mom but the fact is that if you smoke cigarettes, drink alcohol frequently or use a lot of drugs you’re not only going to be smelly, drunk and stoned all the time you’re also going to be broke. If you find that you’re drinking, smoking and drugging way too much, you may have only one choice; stop completely. It will certainly save you money and it may just save your life.
- Spoiling your children. Listen, most of us have children and we adore them. That being said, if you buy them every toy in sight and indulge their every whim, you’ll find that your wallet or purse is practically always empty. Learning to say “no” to your kids is not only a necessary lesson for them it’s vitally important to your savings and retirement funds.
- Trying to “keep up with the Joneses”. You may have heard this one before (possibly several times) but it’s quite true. Many people waste hundreds and even thousands of dollars trying to compete with their family, friends and neighbors. Not only is this a bit ridiculous it’s also extremely expensive. If you’re really worried about the way other people judge you based on your “stuff”, you may not need new stuff, you just may need a little bit of therapy.
While we realize that some of the comments above may be a little bit harsh, the fact is that some people need to hear the frank and honest truth in order to make changes to their lifestyle and get their financial act together. We certainly hope that we didn’t offend anybody and, possibly, have helped some of you to realize some financial mistakes and that you’re making. If you need help with your personal finances (and you don’t mind us being blunt with our advice) please let us know and we’ll get back to you ASAP with real answers, advice and solutions.