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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

Does Your Credit Score Actually Matter If You’re Broke?

Cheap Foods to Eat When Broke

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

Why It’s Okay to Make Financial Mistakes

February 24, 2020 By MelissaB 1 Comment

What’s the worst financial mistake you’ve made?  Ask any adult, and you’ll likely hear about thousand dollar or even hundreds of thousands of dollar mistakes.  Ouch.  We’d all love to go through life with a great handle on our money, only making smart decisions and watching our money grow in investment accounts.  But life isn’t that way.  Sometimes we’re just stupid with money, and other times, we think we’re making a smart decision only to find out later that we were wrong.  But that’s okay.  In fact, there are many reasons why it’s okay to make financial mistakes.

Why It's Okay to Make Financial Mistakes

Why It’s Okay to Make Financial Mistakes

Chances are you’re more financially savvy because of the mistakes you’ve made!

You Learn

The most important reason why it’s okay to make financial mistakes is that you learn from those mistakes.

When I was in my early 20s and just out of college, I was working at a job and was told that I would be getting a raise in the next few weeks.  I increased my meager standard of living because I knew the raise was in the works.  But week after week went by, and I didn’t get the raise.  In fact, a few months later, the company went out of business.  Not only was I out of a job, but I had accrued some debt by raising my lifestyle prematurely.

A few years ago, my husband was guaranteed a raise.  It was supposed to come in August, but it didn’t actually come until December.  Thanks to the lesson I learned in my 20s, we were very careful to avoid lifestyle creep.

You Can Help Others

When you’ve learned from your financial mistakes, you can help others avoid the same mistakes that you made.

Why It's Okay to Make Financial Mistakes
Photo by Irina Murza on Unsplash

When I went to graduate school, I did my best to avoid student loans.  I chose a college that paid my tuition and gave me a small stipend for teaching two classes a semester.  But after I graduated, I wanted to teach at a community college.  Those full-time jobs are inaccessible if you don’t have experience.  The only way to get experience is to teach as a part-timer, and part-time community college jobs pay next to nothing (about $1,000 for a 16 week class).

I went into credit card debt trying to maintain my college lifestyle (which was already frugal) while earning poverty level income.  The next year, I did get a full-time community college job, but I entered that job with over ten thousand dollars in credit card debt thanks to trying to subsist on such a low income.

When it comes to encouraging my kids to save and plan for college, I urge them to try to get scholarships that will also help them pay their living expenses.  We’re sending my son to SAT prep classes so he can score high enough to be in the running for a lucrative scholarship from our local college.

Final Thoughts

Making money mistakes is part of your history.  Hopefully, you’ve grown and made smarter decisions because of your financial mistakes, which is an excellent reason why it’s okay to make financial mistakes.

However, if you find yourself making the same mistakes over and over again, i.e. running up your credit cards, paying them down, and then running them up again, you may need to explore more deeply why you keep following the same negative behavior patterns.

Filed Under: credit cards, Financial Mistakes, General Finance Tagged With: credit cards, money mistakes, Student Loans

Things to Avoid When You’re Broke

November 25, 2019 By MelissaB Leave a Comment

Things to Avoid When You're Broke

 

Most of us have been there. You have three dollars in your checking account, and it’s five more days until payday. You may feel overwhelmed and not sure what to do. Unfortunately, many people in this circumstance feel that there is nothing to be done and, out of desperation, ignore their situation – continuing to live life as if their finances aren’t dire. However, all this does is make the situation worse. Instead, consider things to avoid when you’re broke so even if you’re not improving your situation, you’re not making it worse.

Things to Avoid When You’re Broke

Using Credit Cards

Things to Avoid When You're Broke
Photo by Blake Wisz on Unsplash

When you’re broke, credit cards can feel like a lifeline. For a while, at least until you reach your credit limit, you can continue to maintain your current lifestyle. But, this is a mistake! You’re broke! If you admit that and are frugal with your money, once your current financial hardship ends, you’ll be in a position to improve your finances. However, if you have to pay back thousands of dollars of debt, you’ll still be broke. Please don’t make this mistake.

Paying for Entertainment

Entertainment is expensive. Movie tickets cost $10 or more; a meal out costs $10 to $40, depending on where you dine. Netflix costs $13 a month. All of these expenses add up over 30 days. If you’re broke, don’t pay for your entertainment!

Go to the library and check out a movie for free. Attend a local free concert at the university. Invite friends over for board games.

Nobody says you can’t have fun when you’re broke, but find ways to be entertained that don’t cost any money.

Not Having a Budget

Burying your head in the sand is easy when you have no money. If you ignore the situation, it won’t exist, right? Wrong. Ideally, you should be budgeting every month, but this is even more important when you’re broke.

You have limited money, and you have to decide where that money should go. When you have a plan that you can follow, you’re much more likely to not overspend. Having a budget and following it is absolutely necessary when you’re broke so you don’t make your financial situation worse.

Hiding Your Situation

Don't Do These Things When You're Broke
Photo by Ali Tareq on Unsplash

Being broke is embarrassing, but being honest with your family and friends is the best way to handle the situation. If you’re not honest and you pretend that everything is fine, your friends may be offended when you repeatedly turn down invitations. If they know your situation, they may be more willing to find things you can do together without putting a financial strain on you.

Things to Remember When You’re Broke

Even though at the moment you may feel hopeless, remember that you’re likely not going to be broke forever. You will get a better job or have fewer expenses in the future (probably the former rather than the latter). Your financial situation will improve, but that improvement can come faster if you make sure to consider these things to avoid when you’re broke. Don’t make your future more difficult by making bad money decisions when money is tight!

 

 

Filed Under: General Finance Tagged With: money mistakes

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