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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

Affluent Wants vs. Needs

November 8, 2010 By Shane Ede 4 Comments

We already know that a good portion of saving money (both saving in savings accounts and saving on spending) can be determining whether something that we think we need is really a need or not and whether we could really do without that need. The underlying problem there is that as we become more affluent, wants become needs. This isn’t a new problem.

What those wants are has changed, but the problem remains.  In the days of the Roman empire, things like Oranges were considered a luxury.  They didn’t have the ability to transport them as quickly as we can now.  Because they were unable to get them somewhere quickly, they would spoil in all but a few cases.  The elites of the time were affluent enough that they could afford to dedicate a whole team of chariots and riders to move the Oranges from the orchard to their homes as quickly as was possible in the times.  Today, oranges are a bit more commonplace.  And, as such, aren’t nearly the luxury that they were to ancient civilizations.  The same is true for many different commodities.

Without money

And so, we can be said to be equivalent of a Roman elitist.  But, even as we are equal in many ways when we compare our access to certain things, we are not equal in socio-economic standing.  We aren’t elitists.  We’re the modern day equivalent, in that way, of your average, everyday Roman.  Just as the elite Romans had their scarce commodities, the elites of our society have theirs.  Bentleys, Mansions, Lear Jets, and Caviar just to name a few.

One of the hazards of harnessing our personal finances is that we may begin to loosen our own self-made restrictions and some of our wants might become needs.  Sure, a private jet would be nice.  I want a private jet.  I certainly don’t need one, though.  But, what if my prowess with personal finance (stop laughing) causes me to become more wealthy than I could possibly imagine.  As it becomes easier and easier for me to get that jet without breaking the bank, it also becomes easier and easier for that want to morph into a need.

A jet is a bit of an extreme example.  But, apply the same concept to one of the things that you want now.  Here’s a perfect example from my own financial adventures.  About 7 years ago, shortly after my wife and I became engaged, we decided that we needed to move from the apartment we were in and into something that was a little bit more pet friendly.  If you’ve ever tried to have a 100+ pound dog in a one bedroom apartment, you know what I’m talking about.  Initially, we were talking about finding a house to rent that allowed pets.  However, the more we looked at it, the more we discussed buying a house.  We wanted to buy a house.  But, as we looked at houses to rent, we convinced ourselves that we needed a house.  And we bought one.  Now, 7-ish years later, we want to move into a bigger house to make room for our two children and a dog.  We certainly don’t need a bigger house.  But we want one.  As we get a better handle on our finances, it’s very possible that what we want now will become a need if we let it.

I won’t say whether that will be a bad thing or not.  Some would argue that if we don’t truly need the bigger house, we shouldn’t buy it.  Others will say that if we have saved up and can afford it, we should go for it.  That’s not the point of this article though.  What is the point?

Awareness.  One of the most important factors in your personal finance journey will be how aware you are of your situation.  Being aware enough to understand what you can and cannot afford as well as what is and isn’t a need will be a determining factor in where your finances end up when you are ready to retire.  Moreover, being oblivious to your situation isn’t an excuse.  Be responsible for your situation.  Learn how to fix your mistakes.  And become aware of your situation so that you can make educated choices for your financial welfare.

Image Credit: Without money by Toban Black, on Flickr

Filed Under: budget, Consumerism, Debt Reduction, Frugality, Personal Finance Education, Retirement, Saving, ShareMe Tagged With: affluent, elite, financial awareness, needs, oranges, roman, wants

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