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Guaranteed Ways to Go Broke

February 1, 2021 By MelissaB 1 Comment

How to Go Broke

If you look, you can find plenty of material about how to create a budget, save for retirement, and live within your means.  What you don’t find are many examples of people doing just that and living a financially solvent life.  On the other hand, you don’t find much material about guaranteed ways to go broke, but you can likely find people from all walks of life who flaunt the steps to going broke.  Ironically, those are often the people of whom we are most envious.

How to Go Broke

There are many, many ways to go broke.  To most effectively go broke, utilize as many of these steps as possible.

Buy a House You Can’t Afford

One of the best ways to go broke is to buy a house you can’t afford.

When you qualify for a mortgage, you’re given a price range that you can buy in.  If possible, buy a house at the very top of your price range.  This will ensure that you will likely struggle with house payments, and that your monthly payment will be more than the recommended 28 to 36% of your take home income.  (Remember those percentages include not only the house payment but also taxes, insurance, and HOA fees.)

Also ideal is to pick a home with the highest HOA fees.  Then, even after you pay off the house, you’ll be paying hundreds a month in HOA fees.

Buy a New Car and Trade in Frequently

How to Go Broke
Photo by Jakob Owens on Unsplash

After buying a house you can’t afford, the next best way to go broke is to buy new cars frequently.

Buy a brand-new car and only drive it for two to three years.  Sure, you save yourself the headache of costly repairs as the car gets older.  However, you also ensure that you’re absorbing the depreciation that happens in the first year or two of brand-new car ownership.

Ideally, when you sell your car, try to be upside down on your loan so that you owe more than the vehicle is worth.  Go ahead and roll that difference into your next new car loan, and you’re well on your way to going broke.

Give Your Kids Everything They Want

If you have children, make sure to give them everything they want.  After all, kids are only kids once.

Make sure to pay for all the lessons that they want.  Buy them all the clothes that they want.  At Christmas, buy them as many presents as possible.  When they come to you for money, give it to them freely without making them work for it.

Stay Active on Social Media

Stay active on social media and follow as many people as possible.

This is the best way to see what the Jones’ are doing.  Try to do the things that they’re doing.  Book more travel than you can afford.  Get your hair and nails done.  Go out to eat as much as possible at the trendiest, most expensive restaurants.  Buy as much as possible.

After all, the point isn’t a happy, contented life, but one in which you look as impressive as possible.  Who cares that you’re actually broke?  No one can see that.

Don’t Save for Recurring Expenses

Of course, you have your regular bills that come due every month, which you try to pay regularly.  But then you have your irregular expenses like your car insurance and home owner’s insurance, which are due twice a year.  Property taxes also fall into those categories.  But don’t bother saving a little each month so when the bills come due you have money to pay them.  No, that’s no fun.

Instead, pretend like those bills don’t exist, and when they come due, panic.  For several weeks, worry how you will pay these large bills.  Try to cut your spending for a few weeks so you can gather enough money to pay them.  If you can’t manage gathering enough money, ask friends or relatives for a loan.  Six months later, when the same bills are due, repeat the process.

Don’t Have an Emergency Fund

Who needs an emergency fund?  How could you possibly set aside thousands of dollars for an emergency?  That’s too boring for you.  You could never stand seeing that money sitting there and not spend it.  No, enjoy the money that you have, and when an emergency comes, which hopefully it won’t, you will deal with it.

Have as Many Credit Cards as Possible

How to Go Broke
Photo by Avery Evans on Unsplash

Fill your wallet with as many credit cards as possible.  After all, how can you finance your lifestyle without credit cards?

Make sure to charge all of your expenses each month.  Ideally, only pay the minimum payment due.  When one card reaches its credit limit, just move on to spending on the next card.

Don’t worry about the 12 to 20% you’re paying in interest monthly.  Don’t worry that by paying the minimum due you,re only putting a few dollars on principal, so you’ll never get out of the financial hole you’re digging yourself.

Remind yourself that all Americans have credit card debt.  It’s just the way our economy functions.  Plus, you’re actually helping the economy by spending, right?

Don’t Invest

Investing is so boring.  Don’t bother saving for retirement.  After all, you only live once, and who knows how long you’ll live, anyway?  What if you save all that money, and then you don’t even live until retirement?  What a waste!  Take any money you have and spend it now.  Live in the moment!

Final Thoughts

Clearly this is a tongue-in-cheek post about how to go broke.  However, many Americans do try to live this way.  The path to going broke is clear; we’ve seen many Americans do it—from everyday people to professional athletes, singers, and actors.

What doesn’t get highlighted as much is how to be smart with your money and build a sound future.  Don’t worry about what other people are doing; focus on your own life and your own financial future.  You’ll be much happier that way.

Read More

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The Five Most Common Retirement Planning Mistakes

Filed Under: Financial Mistakes, General Finance, Home, Insurance, Personal Finance Education, Retirement, Saving Tagged With: broke, financial awareness, money mistakes

How to Get More Financial Peace of Mind

January 18, 2021 By MelissaB Leave a Comment

 

 

Financial Peace of Mind

Money troubles kill relationships. They also cause major stresses, catalyze health problems, ruin plans, mess up sleep schedules, and so much more. We hate to admit it, but money is easy to worry about, and many of us do it a lot. What’s more, there is good reason to worry about money. Without enough of it, we can’t live where we want, eat what we want, get educated, have a fun time out of the house. Like it or not, your sense of well-being has much to do with how much money you have and how you use it. So here are a few ways to get more financial peace of mind.

Life Insurance

Perhaps the best way to get peace of mind in your financial life is to buy life insurance. If you’ve never thought about buying life insurance before, you probably don’t realize how inexpensive it can be. Many people find that life insurance quotes are much lower than they anticipated, especially for people who are young and healthy. Life insurance creates peace of mind not just for you, but for the people who depend on your for income and security.

Know Where Your Money Goes

If you’ve ever made a budget after a long period of not paying attention to your money, you know how much it hurts. You  may feel like your spending record is judging you, so some people avoid budgeting at all costs. But the only way to spend money more wisely is to take a close look at how you need to spend, and how you actually spend in practice. Often there is too much difference between these two , and you should find a way to spend your money according to better measures and goals.

Get an Emergency Fund

Financial Peace of Mind
Photo by Nathan Dumlao on Unsplash

Building an emergency fund and contributing to it regularly is one of the most important financial habits you’ll ever create. An emergency fund will help protect you in the event of an accident, a breakdown, and any number of unexpected expenses. It takes awhile to build an emergency fund large enough to cover you and your family for six months (the oft-recommended amount).  However, once you’ve managed to build it, you’ll find it’s worth it. An emergency fund provides great peace of mind because you know you have a safety net.  Plus, to create one you have to be financially responsbile and disciplined.

Final Thoughts

There are many ways to live beneath your means and acquire better financial peace of mind. We lose our cool financially when our money is out of control. Learn the basic ropes of personal finance, spend time caring for your own financial garden, and you may be surprised at the extent to which it improves your life. People don’t feel secure when their means of sustenance and shelter are constantly in upheaval. When you have financial security, you are very likely to have physical security, which can only have a positive impact on your state of mind.

Read More

When Do You No Longer Need Life Insurance?

Finding Low-Cost Term Life Insurance

Realized Benefits of Emergency Funds

Filed Under: General Finance, Personal Finance Education Tagged With: budget, emergency fund, financial peace of mind, life insurance, Personal Finance

Making the Most of Your Money

August 8, 2018 By Sharon Kalipali Leave a Comment

Rock star / Sport star / Movie star/ Prominent Businessman announces “I’m broke!” 

The following post is brought to you by Ria Money Transfer

Media headlines like these leave the rest of us wondering how this could possibly happen. But the truth is that making money is not the same as keeping it.

GETTING RICH

Rich is a relative term, and most people will never be really rich. However, the majority of people would like to accumulate enough money to cover their immediate needs, to afford to do some of the things that they really enjoy, send money to friends, families or charities, and to create some sense of financial security for the future.

Avoiding the rags-to-riches-to-rags story

Who doesn’t dream of receiving a large sum of money in a lottery, in a casino, or through an inheritance? Imaginations run wild when people think of all the different ways in which they could spend new-found wealth. In the unlikely event of this actually happening, what should they buy first?  The answer is: nothing!

When people are not used to large sums of money, it is easy to believe that the dollars won’t run out.  It is so tempting to make dramatic changes to the way they live, by buying fancy cars, moving house, wearing designer gear, throwing extravagant parties, going on expensive holidays, eating in the most expensive restaurants, and so on. Pretty soon, they are on a roller-coaster ride to financial disaster, and they probably end up being worse off than they were before.

Much better ways to use a sudden injection of cash are

  • to pay off debt;
  • to take sound financial advice and invest the money in long-term investments such as mutual funds and stocks and shares;
  • to invest in children’s education;
  • to boost retirement savings.

It is worth remembering that Warren Buffet, one of the world’s richest men, still lives in the house he bought more than fifty years ago. Granted, it is a big house, but still!

Building financial security

Most people build a reserve of money by being careful with what they spend. They learn to say “No!”  to the temptation of spending money on desires rather than needs. How do they do this?

  • They live according to a budget that encourages them to save, rather than to spend.
  • They choose their investments carefully, by finding out as much as possible about an opportunity before they commit their money.
  • They reinvest the profit on their investments. Even small amounts of money steadily accumulate, but once money is spent, it is gone. It can’t work for them.
  • They focus on their long-term investment goals.

This may sound rather unexciting, but if people look after their money carefully, the day will come when it will look after them.

Keeping your money

Let’s assume that you have managed to accumulate a reasonable amount of money. How do you keep it working for you? The problem with having money is that the world is full of schemes that encourage you to spend it.  Advertisements continually tell you that if you buy this or that, you will be smarter, fitter, better looking or happier, and the envy of your friends and neighbors, when the truth is that you will simply be poorer.

Look around you at the people you know who seem to manage their money successfully, and take some tips from the way in which they live.

  • They are not stingy, and they may live well, but they still take advantage of freebies, special offers, rewards schemes and other ways of stretching their dollars.
  • They don’t feel the need to display their money in order to gain status or recognition.
  • They understand the difference between comfort and extravagance.
  • They are often generous, but not foolish, with their money.

People who appear to be wealthy are sometimes deeply in debt, so be careful whom you listen to when money matters come up. Avoid get-rich-quick schemes and only take advice from reputable financial advisors who have been recommended to you by people you really trust.

Warren Buffet sums up the issue of getting and keeping money in these words: Do not save what is left after spending; instead, spend what is left after saving.

Filed Under: General Finance, Investing, Personal Finance Education

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