13 Lies Making You Broke

Published on March 13, 2017 by Lauren

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  • If you’ve ever asked yourself, “Why am I broke all the time?” or “Why do I feel broke?” or “How come I never have money?” Sometimes it’s perception, and sometimes it’s reality. But in any case, we all know that our culture lies to us daily. We’ve gotten used to it. Just watch any advertisement.

    “Take this pill, you’ll lose weight.”

    “Save 15% on your car insurance.”

    “This cream will make your wrinkles disappear!”

    Those lies are so blatant. Most of see them coming from a mile away and have wised up not to fall for them… or to at least take the claims with a grain of salt. But then there are these other lies… the ones that seem to have become ingrained in our culture.

    “If everyone is thinking alike, then someone isn’t thinking.” – General George S. Patton

    Their claims are much more subtle. Marketers have been more clever with these. They’ve played the long game and let these lies take hold without actually coming out and explicitly telling them. And they’re happy to have us play along. Just like General George S. Patton said, if everyone thinks and accepts the same thing, then no one is really thinking it through.

    Many of these lies prey on our desires to be wealthy. But is wealth what we really want? More and more I am convinced that true wealth is not what we are looking for at all. Instead, we are lied to and told that if we FEEL wealthy, then that’s basically the same thing. But having wealth and feeling wealthy are 2 vastly different things. Feeling wealthy will have the opposite effect.

    And then there are also lies that come from our own insecurities. Many of these financial insecurities come from believing and acting on the aforementioned lies in the preceding paragraphs. And we need to learn how to overcome them.

    Because they’re making us broke. No matter what the numbers in your bank account are, if you’ve been asking, “Why am I broke?” Here are…

    Why am I broke

    13 Lies Making You Broke

    1. You need to make car payments

    If I had to pick one single monthly cost that is wreaking havoc on Americans’ finances and making you broke, it is the car payment. It is KILLING us. The average car payment on a new car is almost $500 a month. I’m convinced that car payments are the biggest thief of middle-class wealth in America.

    Almost everyone I know has at least one car payment. I was there too… I made car payments from 2006 through about 2011. Never again.

    Look… I get that you need a car. You gotta get to work. But if you’re making car payments, I can guarantee that the car you financed is too expensive for your budget. You may feel wealthy driving it around, but it’s making you broke.

    Make your current vehicle the LAST vehicle that you finance. Then save up cash and buy a used car. It will take time, but your future will thank you.

    Why am I broke

    2. You need a bigger house

    In 1973, the average size of a new home was 1,525 square feet. In 2015, it was 2,687. That’s a dramatic increase, folks. And if you look at these stats per family member, it’s even more dramatic given today’s smaller family size.

    The average living space per person in 1973 was 507 square feet… in 2015, 971. That’s right, almost double.

    You don’t need a bigger house and the accompanying bigger mortgage payment. You might just need less stuff. And please stop calling that house you’re in right now a “starter home“. It doesn’t have to be.

    Smaller house = more wealth.

    3. There’s no point in budgeting when you don’t make much money

    I believed this lie for way too long. Having barely enough money to pay bills and feed my family (sometimes not enough), what is the point in budgeting?

    If you don’t get a plan for your money, then you will never get out of that situation. Not budgeting – even when you in dire financial straits – is a recipe for perpetual poverty.

    Here’s one reason why – when your income does eventually increase, you will be so used to having no income leftover that your spending will simply increase accordingly, and you won’t even realize it. And you will remain broke.

    Here are 5 essential tips on how to budget when you don’t make enough money.

    Why am I broke

    4. You can’t invest

    Investing simply means taking some of what you have now, and instead of consuming it, putting it to use to make your future better. That’s it. It doesn’t mean that you have to hire a broker and watch the stock ticker on CNBC all day long.

    This could be investing in an IRA, investing in your kids through a 529 account, or investing in yourself through an online course. Even if you’re in the process of paying down debt, that is a form of investing since decreasing debt is increasing your net worth.

    And with regard to setting up investment accounts, it’s easier than ever today. Setting up an IRA with Betterment is SO easy. super low fees, and there’s no minimum. you can literally start with $5.

    Click here to get started with Betterment.

    5. Your kids will be emotionally harmed if you don’t take them to Disney every year.

    I might get hate emails on this one… but it needs to be said. There is a massive wealth transfer occurring in this country from broke, debt-shackled families to the massive empire that is Walt Disney World. Their marketing is amazing, and parents have bought into the hype hook, line, and sinker.

    Your kids do not need to experience Disney World. Sure it’s magical, they will have a blast, and you love seeing their faces light up upon seeing Mickey Mouse. But you’ve got to count the cost here. It might be the most expensive vacation that you can take.

    If you’re in debt up to your eyeballs, going to Disney is a great way to keep you there.

    Why am I broke

    6. Your kids will be emotionally harmed if you don’t get them iPhones

    Growing up, imagine if you had all of the world’s knowledge at your fingertips at all times. It would have sounded like science fiction, right? But with smartphones, that’s our world today.

    And if you have kids (especially kids over the age of 11 or 12), most of their friends probably have smartphones. Now look – I’m not going to get into a discussion of whether or not adolescents should have smartphones and access to social media, I’m just gonna carefully point out that they do not NEED them.

    Shelling out $500+ per kid every couple years just so that they can have an up-to-date gadget isn’t the best use of money. Either make them pay for it or give them an old-school flip phone.

    7. You need to buy all organic food and shop at whole foods or your family will be unhealthy

    These days, there is so much pressure on moms. On any given day, my Facebook, Instagram, and Pinterest feeds will show me dozens of pictures of 100% raw, organic, cage-free, GMO-free meals that other moms have prepared for their families.

    You know exactly what I’m talking about.

    Don’t let it get to you. You can feed your kids and family a very healthy diet without spending $5 per pound on chicken breast at Whole Foods. You have so many options.

    Firstly, many foods really have no benefit to having the label organic. Secondly, you have other options besides grocery stores. Look into buying local meat. Each year, we buy a half of a cow from a local farm, and the price works out to be less than $4 a pound after being butchered.

    Lastly – check out ALDI. They’ve got a huge and growing selection of organic foods. Being pressured to shop at the most expensive grocery stores to buy the best organic food might be keeping you poor.

    8. Once you get a raise, then everything will be fine.

    I remember this time in 2008… Mark and I were broke, and it was our own fault (you can read the detail of our story in my book, The Recovering Spender). We thought – if only Mark could get a raise, a new job, something – THEN we would be okay.

    In early 2008, he did get a new job. And his salary increased from $60,000 a year to $70,000 a year. Of course, an extra $10,000 a year would make the difference, right?


    We were so accustomed to spending every single dollar we took home, that it didn’t make the difference in our budget that we thought it would.

    Making more money is great. But if your spending habits don’t change too, then you will still be broke.

    Why am I broke

    9. You can start saving for retirement later

    Right now, time is on your side. And by that, I mean, you can use the power of compound interest to your advantage. Allow me to put a little bit of math on you…

    Let’s assume that at age 30, Dawn decides to invest $500 a month for 25 years. She then stops at age 55, and waits 10 years. At age 65, Dawn will have just over $800,000!

    But Stephanie waited. At age 40, she decided to make the same investment and contribute $500 a month for 25 years. At age 65 she only has $407,000.

    Do you see the power of compound interest? The same exact investment, but the one who started 10 years earlier ends up with almost DOUBLE the amount as the procrastinating investor. You cannot wait to start saving for retirement. It is making future you poor. Bump up your 401k contributions. Or open a Roth IRA.

    Again – don’t be intimidated. Companies like Betterment make it so easy to start.

    10. You can’t afford to give to charity.

    I get it. Money is tight. And you aren’t sure if there’s gonna be anything left over after you pay the bills.

    But guess what? No matter how bad you have it, someone else has it much worse. What you might consider a small amount of money is a very large sum of many in many parts of the world.

    Giving isn’t just good for the recipient. Giving is good for YOU. Giving makes you wealthy in ways that matter so much more than finances. And whether you believe in God or some kind of a higher power, I truly believe that those who are generous have more opportunity and wealth given to them.

    If you believe that you can’t afford to give, then that is keeping you poor.

    11. You are stuck in your current financial situation.

    There are two ways of looking at the world.

    Some believe (whether they admit it or not) that all available money in the economy is a pie, and each person is allotted a small slice. If you have a job, that’s your slice. Your paycheck is what you get, and you’ve got to make your budget and all of your living expenses fit within those confines.

    Others don’t see the world this way. Money and finances are more fluid… and if you want to make more money, you can go out and DO IT. You are not allotted just a small slice of the pie. Take as much as you want! And that doesn’t mean you are taking from someone else; the pie can simply get bigger.

    There are so many ways to make extra money. You can switch careers later in life, you can work side jobs, or you can start a business. Sometimes those side jobs and little businesses making money from home end up completely replacing your normal paycheck. I’m living proof of it, and I know so many others with the same story.

    Your current paycheck is NOT the only money available to you. You are NOT stuck. Limiting yourself and your potential is keeping you poor.

    12. Your job sucks.

    You feel underpaid, under-appreciated, and overworked. And then you are passed up for that promotion. Oh, and that guy who got the promotion that you felt you deserved? Do you want to know something about him? I bet you $100 that he doesn’t hate his job. I bet he might actually enjoy it.

    The number one self-sabotaging career mistake is to hate your job. Gossip, a bad attitude, and a sense of entitlement are the results. And trust me, even if you think you are doing a good job keeping it to yourself, it’s not a secret.

    But this is something that you can change. Only you have control over your attitude at work.

    But your job might not be a good fit or your superiors are awful (let’s face it… some jobs really do suck – this one might not be a lie all the time). But if that’s the case, then why are you still there? Develop an exit strategy and find a better fit. You’ll be happier, and probably make much more money in the long run.

    13. Your home is a good investment.

    This lie made me broke 8 years ago.

    Many believe that their home is their most valuable asset. I disagree. It’s more of a liability.

    Unless you buy and sell homes for a living, a home should not be treated as an investment; it should simply be treated as the place that you live. If you view it as an investment, it might just set you up for the poor house.

    Historically, the value of residential real estate has provided a return right at the rate of inflation. But it’s been much more volatile. Remember the early-mid 2000’s when everyone was going crazy buying expensive homes because it was a great investment in addition to a place to live? Didn’t end so well, did it?

    The stock market has fluctuations too… but it’s a different animal altogether when it’s your dwelling place. If your home suddenly loses 20% of it’s value and puts you underwater, you’re stuck. Physically stuck… as in, you can’t move. You can either ride it out and wait for the value to increase, or lock in the loss and sell your home (but you might have to come up with a bunch of cash).

    If your 401k portfolio loses 20% of it’s value, it sucks, but it doesn’t really affect your living situation.

    Purchasing a home as an investment instead of a dwelling usually results in bad choices. You will likely buy a more expensive house than you need, you won’t have much of a down payment, and you are putting yourself through unnecessary risk.

    As I said in #2, smaller house = more wealth.

    Any more I should add to the list? Or maybe there’s some you disagree with. Do any of these resonate with and speak to your “Why am I broke” question? Let’s discuss in the comments!


  • Coming from a very poor upbringing, I carried around the “poverty mentality.” I watched my mom, who was a single parent of 5 at that time, spend way too much at birthdays and Christmas to “make up” for the rest of the year. As a teenager we spent the tax return to go to Florida for 2 weeks, Disney for a week. It was much cheaper then, but we shouldn’t have been doing it. I carried these habits into my adulthood and passed them to my children. Fortunately, my son and his wife have taken a financial course and do much better. My daughter is getting better. We not only had horrible spending habits, but it was generational. Thank God it is ending in our children’s generation, and we are getting help!!

      • I feel you on that mentality. I was a food stamp kid and I am trying to break the cycle with my daughter. Friends keep telling us to get on assistance but even though we both work and are most likley around the poverty line we rufse to get on goverment assistance. It feels good to pay for our daughter’s stuff with cash even if we have to struggle right now.

    • Laura
      Thanks for sharing. I have been in a generational cycle too. I have had to dig myself out of debt more than once. Now I am thinking of finaces differently. I have one more credit card payment and I am able to save something from my paycheck.

    • charity does not require money & a house is the true wealth builder all else is spot on don’t get emotional about money unless you can grow it.and thank you.

    • Excellent article! I share a lot of your points in this article with family. Perhaps I should send you to talk to them!! 🙂

    • As a Home Economist I agree with your article. Here are other ways to increase your wealth. Use a consignment shop for your children’s clothing. Cook from scratch it’s healthier for you. You do not need organic. It is just a sales gimmick! Compare prices by the unit price, not the label price. Use alternative forms of protein such as peanut butter, and legumes. A dairy + a starch = a complete protein. Hence, grilled cheese, quesadillas, mac and cheese are complete proteins. Include one citrus every day. Plan weekly menus, that way you incorporate left overs into the meal plan saving time, energy, and money. In order to lose weight you must decrease calories and increase exercise. More money does not make you happier. We all need a budget. Learn interior design, and shop at State Sales to get bargains. Use color wisely in your home it can make or brake your home. De- clutter. Simplify your life. Have a family game night. Have a family movie night. Get kids involved in cooking. Have simply age appropriate activities for your children. Give them down time. Teach them empathy, thrift, and teach them about their intrinsic value as a human being. Teach them to give back and be a part of. Good luck

      • I love this article. I have been in this situation for some time and it’s time to put the breaks on. I am single grandmaw raising my 11 granddaughter. I raised my 3 kids by myself also. I really want to get better at spending and cooking habits and Spending my $ better. I would love to get on my feet so I can put some $ away for the future. Please if u have any help I need it Your advice would be appreciated thanks

      • Just a note about organic/non GMO. You may think of it as a gimmick but a lot of food is treated with pesticides and we still don’t know what GMO foods are doing to us. I was recently diagnosed with CLL. One of the nutritionists I work with broke a common food label for me and I was horrified at the chemicals I’ve been putting in my body. Healthy food does not have to be expensive but ORGANIC/NONGMO is not a gimmick. In my case it could be life saving.

    • I would like to share my testimony here deepwebservice01 AT gmail DOT com raised my credit score immensely and I could not have had 850 score without the help of their experts. I’m very grateful and would recommend them to anyone! They also clear credit card debts, remove bankruptcy, student loans. Tell them I referred you

  • Hi Mark, I received a raise that will go into effect 4/1. What is the best way to handle it so it won’t be consumed into the abyss. Should I contribute the % to my 401k or have the corresponding amount deducted and transferred to my account used to pay off bills? Thank you!

    • Hi Mary – congrats on the raise! If you have debt, put any extra towards that. If not, yes – put it towards saving! Either an emergency fund, or your 401k.

  • Awesome post! I especially relate to # 1, 2, 5, 7 and 13. I do have one question: what is your opinion on leasing a car? My husband and I currently save and buy used, but I’ve been wondering about leasing lately.

    P.S. I hope you don’t get nasty comments about the Disney comment. I’ve seen that happen to other bloggers, and it is truly ridiculous!

    • Hi Claire! Thanks for the compliment 🙂
      Regarding leasing a car, in my opinion, it is often worse. The payment is lower, but factoring everything in, it works out to a higher APR. Plus, at least at the end of a payment cycle if you financed, you own a car outright. When you lease, you have to give it back and then you’re in the same spot again.

      • You also have to pay for higher insurance limits which you’re required to have with a leased car.

  • Your article has helped me a lot to understand that you always have to live within your means in order to make create space for your future. I am apparently a low income earner and I always used to think that because I earn so little then there is no need to budget, although I haven’t yet started making use of budgets I do really believe that its worth it. Thanks so much

  • Hi. What is your opinion on saving for retirement before debt is fully paid off? Dave Ramsey says not to but then you miss out on company matches and the benefit of compound interest. Any thoughts?

    • Hi Lali – paying off debt should be priority number one. But if you have a company match in a retirement plan, I think it is a mistake to leave that money on the table. Contribute enough to get the match even if you’re paying off debt.

  • I grew up poor enough that I never really understood much about money beyond trying to be successful and make more so that I could have everything that I had always thought meant success as a kid (a big house, new car, etc). We started going down that cycle of upgrading and seeking more and more until I (fortunately) had some circumstances that made me see how ridiculous it all is. Using money to create a stable current and future life can provide so much happiness and freedom, instead of that Disney vacation (unless you can truly afford it and reach your other goals!) or brand new phone. Every one of these things you shared is so prevalent in society.

  • The advice is great. My car was dying and the gas mileage was 8/12 but I loved it. It had major issues, 3 doors didn’t work right, there wasn’t enough room for my kids to have a friend in the car, but the thing that made it time to replace was the noise in the engine. My mechanic said he wouldn’t fix it because he’d be wasting my money, he knows I’m a single mom without much money to spare. So with a little saved money and my tax refund I paid in cash for a 2005 Chrysler Town and Country, it has a few dents, and one of the sliding doors needs repair, but it was low miles and super clean. We had to replace the thermostat about a week later, $16 and my son and a family friend did that. So far it’s been a dream and there’s room for everyone plus a few. I only ever bought one new car, it was a nightmare, I’m all for buying used vehicles.

  • Amen! Someone who finally agrees on the Disney trap! I can’t wrap my brain around how some families spend $5000 EVERY YEAR to go to the money hole in Florida. I can easily think of a million better ways to use that big chunk of change.

  • This is a great article. In regards to Disney, my family of 4 (6 and 9 y/o girls) just got back last week from our first trip. We used credit card bonuses for hotel, airfare and tickets (paid in full each month). I bought $500.00 worth of gift cards spread out before hand-just added up what we charged for our 10 day trip…$2500.00!!! Disney was a blast but incredibly expensive. I would have done many things differently,

    • $2500 for four people to ten days is a bargain for a vacation. Or do you mean that’s just cash on top of credit card bonuses and such? Still a great price. Unless you go camping or stay local, it’s hard to beat that.

      We go yearly, and it’s worth it to us. We don’t charge a dime though.

  • I lost my job a few years back. I was working three jobs part time while my husband was recovering from a major surgery. I finally got my full time job back and my husband is working full time but we are in major debt. I am currently working with a debt consolidation company and still have two cards with over a 1000 owed each and of course student loans over 25,000. I started a few months back putting $200 in my 401k from work. Should I stop doing that and continue paying off credit cards? I tend to use my card and then when I get paid write a check to the credit card company. However I end up running out of money every two weeks. I know I don’t budget. I have taken money out twice from my 410k when I lost my job and had little money coming in. That is why I want to contribute again. However I see in my future this summer that I will need to borrow from it again because I won’t be getting paid in the summer because I am a teacher. Any advice?

    • Kristy,
      I’m also a teacher. I have my yearly salary divided into 24 equal payments so that I don’t have to worry about the summer thing. Is there any way you can afford to do that? Is it even an option for you?

  • I could relate to most of these in the past. Now that I’m retired I can see the whole picture. It is never to soon to start putting money away for retirement. if you do that right away when your young you won’t have to worry later when, on no I’m 45 and I have no retirement. We are working longer but just in case something happens. Like to me at 52 brain aneurysm, automatically retired and you guessed it no retirement. I had not worked the previous 10 years because my hubs at the time wanted me to stay home. Wrong, as I found out you can work your whole life but if you don’t work the last 10 years before you retire you get the minimum which isn’t much. Try living off of 740.00 a month. Thank goodness I had my home to keep a roof over my head. We had an old saying “Keeping up with the Johnson’s” just don’t do it. It only feels good as long as you can keep up. Besides think about spending more time with your family and quit spending your hard earned money on frivolous stuff you don’t really need. In the end no body wants it, you can’t sell it for much and your kids will take your precious belongings to the good will or the dump. So live smartly and save that money. Enjoy your family time. Those kids are not small for long.

  • Coming from a generational poverty family too, a relative finally took my kids and I to Disneyland in 2009. We were so excited!! We packed up and were completely underwhelmed by the lack of seating, $9 hot dogs(plain) and 2 hour lines for a ride. Many rides were down for repair and it was a long day. The next day, we rented a car and went to Knotts Berry Farm nearby. It was wonderful! Much smaller crowds, small lines, awesome rides and a lot of places to sit and relax. Far more family friendly for little ones and older family members. Free live music and for $7 we got a half a grilled chicken, roll, and drink for dinner. I’d go back to Knotts but Disneyland was a super big disappointment.

  • I disagree about a home being not an investment. It is. We invested in our house, and in return have received stability beyond anything we could have hoped for, the security of knowing a landlord can’t evict without cause or raise the rent drastically (those are happening in this area at an alarming rate…you might have heard of the problem the Portland area is having), and the freedom to really make our dwelling a home rather than something we’re paying to borrow. If worst comes to worst in our lives, we can get an equity loan or sell if we must. Our money isn’t going into a black hole. In another 29 years, our home will be ours free and clear, while our renting friends will not only still be paying, but paying at the rates 29 years from now.

    We also, though, didn’t buy a house more expensive than we can comfortably pay for. A lot of people do that hoping that raises will make them comfortable in a few years, and they end up screwed.

    A house can be a great investment if you’re realistic about what you’re likely to get out of it, and understand that, like all investments, you’ll need to maintain it, which means more money.

    • Aria – I totally get what you are saying. And this might be more semantics than anything – but yes, a home is something you invest in. But it is not a traditional investment. Since you will always need a place to live, a home is more of a liability and it costs you money rather than making you money. Unlike a traditional asset, you can’t cash it out without going into debt to the bank or finding a new place to live.

      And I disagree when you say “like all investments, you need to maintain it, which means more money”. I don’t think this is true. Like I said, assets make you money. Liabilities cost you money.

      It gives you benefits for sure, and I am definitely pro-home-ownership.

    • I agree with Aria on this one. Over the past 6 years, I have dumped at least Q60,000 (local currency; for reference, my husband earns about Q5,000/month) into renting, and that’s not counting the cost of stuff that has been lost due to leaky roofs and bad electrical systems that the landlords (and landladies) weren’t interested in fixing because it wasn’t their stuff getting destroyed. We haven’t fixed it ourselves because we’ve repeatedly heard stories of renters in our area fixing stuff up that their own expense and then having the owner raise the rent because of the “better condition of the house.”

      So, perhaps owning a house isn’t an investment in the strictest sense of the term, but it gives you somewhere to live that no one can kick you out of, that you can put money into as you choose, that you can pass along to your children so they are stuck renting with lousy landlords/landladies. I won’t knock renting completely as it’s great when you’re not sure what you want to do with your life or where you might work or if you want to change jobs, but when you know what you’re doing with life, a place that you can call your own is pretty important in my book. We’ve been looking for a place (or even land) to buy for about 2 years now, but either it’s too expensive (priced to sell to foreigners) or poorly thought out house designs/construction.

  • I’m a single mom of 3 teenage boys. We are minimalists. I hate lots of stuff. There is no point and they feel the same way as me. We are looking for a small 2 bedroom apt or condo as cheap as we can get and still live in a good neighborhood. Let someone else pay for whatever breaks. I have a good job and could buy a nice house for us, but I do not want a big fat mortgage and to be stuck if I can’t sell it when I want to leave. Also, we don’t own enough stuff for a big house. I would rather have experiences and have enough money to enjoy life and time with them while they are still home with me.

  • I am retiring and was living in Florida, my younger sister had breast cancer and I moved back to Ohio. I’ve been back for a year and haven’t found a job and my husband is working part time . We are staying at 2 separate houses and have lost most of our belongings. Should we file for Bankruptcy or try to find a debt consolidation and try to pay our debt. . I am going to get around $700.00 a month starting June

  • I think an additional lie you could add is that it is normal to be broke. People seem to think that is it just an inevitable part of life and it certainly is not! I am in my early 20’s and I have lots of friends who live pay check to pay check just because they always hear about how college students are supposed to be poor. When you think that way it’s easy to say I might as well spend this last $20 at the bar or on Starbucks. It’s like they are waiting for the day they grow up and suddenly become wealthy instead of taking initiative to work towards their goals now. It takes effort and changing your mindset to get motivated and believe you can make a difference in your finances right away.

  • Laura, Great stuff. I have been preaching similar stuff to my grown kids from since they were little. One item you mentioned, about the car thing, I have a slightly different slant. I found a dealer who will sell me a gently used vehicle with a 30 month finance deal at no interest even though I had the cash to buy it outright. I kept my money working for me and took advantage of the zero interest loan. I tried to get a better deal if I paid cash but no dice and it was priced below blue book so I went ahead with it. Not sorry yet! Your thoughts?

  • I love your article and it has helped me remember that I don’t need to spend so much on special events like birthdays and Christmas. The only thing that I disagree with is buying a house. Everybody has to live somewhere and it’s better to pay yourself rent then to pay and landlord. Don’t over Buy and don’t make yourself uncomfortable but for heaven’s sakes invest in your own home rather than investing in your landlord’s retirement fund

  • Thank you much for this article it is so helpful for someone like me who is trying to work towards a better future. I have decided to stop complaining about my financial situation but do something so that my life will improve for the better. I have a 10- year plan where I intend to work towards being completely debt free e.g I have decided to turn one of my houses into a B&B using my earnings, it is slow and takes time but it is better than getting a loan. Though I can afford a brand new car at the moment I chose to use the extra money to extend and renovate the house hopefully by end of year I will start operating the B&B. Then will move into another project ….

  • How can I get the packet other than email? I do not have a printer. My husband and I are on a tight fixed income (disability) and really do need some help with budgeting . It will not be easy but we are willing to do the work. Thank you Linda

  • Such great points! I wish someone would’ve explained all of this to me when I was younger. A few years ago, I was a single mom, with a good job, working so hard to give my three daughters the “things” in life – big house, fancy car, the newest phones…you get it – all that I didn’t have when I was growing up. I was so broke all the time, but you wouldn’t know it to look at us! A year ago, it was like a light went off, and I realized it IS a big trap. I was working my way under a mountain of debt so high that I would NEVER see the end. Now, we’re on the road to being debt free. It’s been a group effort, with all of us at the dining room table working on the budget with lessons about saving (Compound interest blew their mind, LOL) and working to have a fabulous life. My new motto is, “Live for the experiences and memories. In the end, that’s all that really matters!”

  • I have been through buying a house three times. The real estate market is saying you need to buy a house that you qualify for. Not so… I have bought 3 houses and learned that establishing a budget with a lhouse that you decide how much you can afford rather than buying the house that they tell you you can get. This house we live in now is a home. Our payments are lower than a two bedroom apartment. We bought this house much cheaper than what they said we qualified for. I don’t think about buying a bigger home.
    I feel for the younger couples getting into this trap. Your post is educating anyone who reads it. Thank you!

    • I agree Kelly. We moved in with my mom for two years and got completely debt free. We decided to buy a house with the same payment as rent in our area. 20 years later our payment is the same and rent in our area is four times higher than our house payment. Recommend Dave Ramsey classes. Really opened our eyes.

  • I agree with everything you said! I just recently got rid of my 1997 Ford Taurus, that I love, but after keeping it running all these years, it left me stranded a couple of times. The last time, I realized that at my age, 62, widowed, and alone, it wasn’t safe for me to be breaking down. This August I purchased my first new car ever! With warranties and newer equipment, I feel I am safe when I’m out. But this will be the only new car I’ll ever have!

  • Thanks for sharing. In reading it I have reviewed the choices we have made over our journey through life. Earlier choices were made based on the desire to experience everything possible at the time. Travel, life etc. We paid cash for everything but put nothing aside for the future. Then we started a family. Because we had spent our prior years experiencing everything we could afford we had no savings and started with nothing at the same time we were starting a family. With one income this meant paying for a car through a finance company. Yes we budgeted. It was the only way that we could survive. Regardless of our income we still budget. We allow ourselves some simple pleasures as damn we have worked hard and we damn well deserve it. We have saved for our retirement but we are late starters and the compounding interest will not be so high as it would have been if we had started earlier in our lives. I hope that we have done enough to have an enjoyable retirement.

  • Hi- I live in Canada.
    Good site. Thank you. I agree with you about the vehicle- Would never buy new, but I have to somewhat disagree with you about purchasing a house. We bought our home 23 years ago when our son was born- We did not have very much money, and sometimes things were very tight. Many of our friends/family still carry mortgages, as the more money they earned, they “bought up”. We bought the “saddest, good bones” house in the best neighbourhood that we could afford and spent several years making improvements as we could afford it- prioritised, enlisted capable friends and always checked/waited for good sales. Now it’s one of the nicest houses on the block and we still love it; our neighbours and community are solid. We learned how to save $ out of necessity. Added $30.00 to our mortgage payments and paid every two weeks. That allowed us to shorten our payment from 25 years to 15 years. Home is paid for, plus so is our place in AZ.
    Something that is not mentioned is, “Is this a need or a want?” I believe it’s fine to purchase an item If it is a ‘want’. Would never suggest that you give up things that bring you great pleasure- life is too short, but the second set of questions would be, “Can we really afford it and does it fit in to our financial plan?”, ” How will this improve/give value to my/our life/lives” and can we compromise?”. E.g. Our son used to go to Starbucks every morning on his way to university/work. When I pointed out that he was spending almost $2,000.00 a year on coffee and croissants and just reminded him that would be a travel trip (He loves to travel.) He changed his habits- He still grabs a Starbucks now and again, but most days makes coffee at home at six cents a cup. Adding the flavoured creamer adds about another five cents… Just saying. Realising that at any point in time we have a “finite” amount of money to use and how do we use it? So how do we do that? I’ve learned that money is a tool, not a master.
    One thing we did early in our financial journey was I would put our credit cards in water in a margarine container and freeze them. If there was a purchase that we wanted/needed to make, I would have to come home and thaw out the credit cards. (Please do not microwave to thaw!) More often than not the wants we did not buy…

    My best advice-
    Pay off your credit cards; at LEAST the minimum payment, on time and, before the due date. Two trains of thought- Higher interest or higher debt? Good intentions of paying more on your next paycheck means nothing to your credit score if it’s late.It’s just becomes a late payment.
    Build an “opportunity” fund. Some call it an “emergency” fund.
    Plan ahead. What’s coming up?
    Budget- know what you owe. Write it down- don’t forget the little stuff. It all adds up!
    Pay yourself first. Some suggest 10% of your net income- but if it’s less, don’t beat yourself up! Even if it’s only a few dollars a cheque. Really, It eventually adds up.
    Just think before you buy-whether it’s a need or a want.
    Don’t buy new if you don’t have to. Share, trade, barter, buy secondhand.
    What can you sell that you no longer have a use for? Or give it away to someone who can use it or needs it. All will be good in your world.
    Shop your cupboards and closets. ” Love you once, love you twice- love you much as beans and rice.”
    There may be a suit/dress/sandals that you haven’t worn for years, or ever? Can you say consignment store? Or start wearing or give away? Gifting is good for your mind/soul.
    If appropriate- find a way to make more money. I have a friend who walks dogs, another who mows lawns.There is no box you can think outside of. Again- If there is a need- find it?
    Just saying.

  • A note on cell phones: $500 is too much to spend on one, I agree. But there are deals out there. I have a perfectly adequate smartphone that I paid $75 for, and a great cell plan with unlimited data. Is it slow? Yep. Is the camera a gazillion megapixels? Nope. But I can make calls, send text messages and look stuff on the web, all for $35/month. There are deals out there and they will save you a LOT of $$$$.

  • You’re missing the lottery. Too many people, my boyfriend being one of them, think they will win the lottery. All they do is throw their money away. If they put it in savings, they would be a lot further ahead. At least that money will earn interest instead of wasting it away on the state. I be if my boyfriend did this over the years, he would have a lot of money. Instead, he’s broke and complaining.

  • I stopped eating meat, AKA dead animals, at the tender age of seven or eight, when I figured out what had to happen for meat to arrive on the plate. To me, being vegetarian better yet, vegan is a way to live with kindness and compassion, and comes with free health benefits. What’s not to like about that? Even if it didn’t save money, but as happens, it can save lots and lots of money.
    One of the things some of us do to save money is to shop at Garage Sales and Thrift Stores, but I have come to realize, that even that can become addictive. It is obviously, OK if one is selling some items at consignment stores or on E-bay, but even that isn’t always worth the time and effort it takes, especially if one is using petrol to drive around to various places in order to do that. It is so easy to see a bargain, and to buy something, because it is such a good deal. But, if we don’t really need it, it can become come something else to add to the growing pile of items we surround ourselves with, and end up having to take care of, and haul from place to place when we move home, unless we are very well disciplined. Like portion control when one is trying to lose weight, buying more than we need, even if the items are used, can add up to several thousand dollars a year. Better to either save our money, buy just what we need, and save for experiences not things, unless of course, we really do need them. It can be shocking to realize that weekly visits to thrift stores can add up quickly. Even making use of 20% Veterans or Senior Discounts, and spending $20.00 a week, can add up to $1200.00 a year, which is quite a substanial amount if one is living on a fixed Social Security income. I find, I do a lot better if I pay for everything with cash, and leave the credit cards at home taking a ‘holiday’ to ‘let off steam’ in the teapot. At least there is less chance of temptation getting the better of me. Taking classes, or persuing hobbies, is another way to keep me out of the shops, out of sight out of mind!

  • It’s my belief that most people believe a credit card is for buying things when they don’t have cash on them, or enough of it to buy something out right. I remember owing $5K on my Capital One credit card and I had hardly anything coming in. So I made some sacrifices and didn’t use it anymore or any other cards until it was paid off. I found a part time job as well as my regular job and started paying that balance off weekly so the interest didn’t accrue as fast. Sometimes I made two payments in a week just to knock that balance out. I fought tooth and nail to get it to zero.

    Things have turned now exponentially. I don’t buy anything on a credit card that I can’t afford to pay IN FULL when the bill comes. Now my FICO Score is over 800, no debt and about 7 years of emergency cash as well as investments in stocks and ETF’s. I remember what it was like to be broke and I will never let myself get in that position again.

  • Great article. i would like to recommend 1 more to add to your list. ++ You must have credit cards to survive in the world. This is sooo untrue!! Many people get into HUGE debt because they believe that these cards are a must. They are not!!The reason is that credit cards are just a fancy word for “loans”. Many look at them as money they can just use for anything- It is a loan. Very few are able to pay them back before interest payments have been added and lots dont even know how much they owe or their interest rates!!

  • Often people buy cars that are more expensive than necessary because it makes them look and feel better off than they truly are financially.
    My $16,000 Kia gets me back and forth to wherever I need it too just like someone’s $60,000 Mercedes BMW, or Lexus. It costs l.j rsw to run, maintain, and insure.
    Cars are first safe, dependable transportation; it doesn’t need to be a status symbol.

  • Great article. I have never had a budget, but I sure know how to save money. My husband calls me a manager. I do not like to stress myself over money, If I have, I buy, If I don’t, I just take a chill pill. Your article has shown me a lot of lies people use to confuse others. I have learnt big time. Thank you.

  • Some very good advice here. I will add something I have done for years. I never buy the day I see the item I want or need. I go back later, if I still think it’s worth buying. At least 75% of the time, I don’t even remember wanting it. Only twice have I regretted not buying. First time I really couldn’t afford it and the second time it was no longer available. Im 74 and that has saved me a ton of money.

  • Mark I agree with Disney. My kids don’t even care after we went once or twice. They do like roadtrips for spring break or summer so we try to do economical camping trips to get away once or twice a year. Was wondering what your thoughts were on kids sports? They are draining us. We have a sophmore & 6th grader in travel soccer and a 7th grader in hockey (which is an inhouse program so its cheaper). Its about $4,000-5,000 for them to be in these sports total. They don’t start out this expensive so they sort of lull you into this as they get older until now in HS you feel trapped. All for the sake of possible scholarship money. They do all love their sport so we did get that part right. And, I am on board for keeping them busy so they don’t get into trouble but the cost is killing us.

  • Thank U so much i needed all of this. Especially about the job. I’ve been stuggiling with my boss for a while. Thanks again

  • Waoo ! This is the best article I have read this year. Yes I made mistakes before but through budgeting and setting financial targets am slowly building my finances for my retirement. How I wish I knew what I now know 20yrs back ? Am now 46 yrs and have a 10 yrs target . It’s never too late to start. Am teaching my 2 children on good financial management through experience. I agree with the one who said bad habits can move through generations. We should break this cycles.

  • I also grew up with the mentality that you can have no savings, but you still need to have a nice car, nice house, new phone, etc. I was getting teased about my older used car for years even though we drove it payment-free for 14 years. The cycle ends with me so that my child doesn’t inherit the same dysfunctional thinking.

  • I have a 2011 ford and im a month behind and my montky payment is $350 i barelycan make the payments and i need to either sell it or trade it infor something cheaper and smaller payment and credit isnt that great what are my options??

  • My first house was a duplex and, after renting the other side, my net payment was 35% of my previous rent. Selling after 3 years yielded a 600% return on my down payment & improvements. On vehicles – have always told youngsters to start with a “junker” and pay the expected “payment” into savings. Take repairs from the savings & then use the net amount to buy a better car when the first one dies. (this also saves on insurance & taxes).

  • I think these are great tips! I truly appreciate a grew up in an economical family and didn’t have to learn most of this the hard way. I think it may only be semantics but I disagree with a home not being an investment. My husband and I are near retirement with a paid for home and that will certainly make it easier to live on a fixed income. My husband’s grandfather died when we we in our late 20s and left each of the kids $20,000. While there was a tremendous temptation to do all kinds of things with it, we used nearly all of it as a down payment on our first house which we paid $40,000 for. A small modest well kept home. We sold it 10 years later for $60,000 after enjoying years of below market rent payments. We have bought and sold modestly a couple of times, nearly always paying a smaller mortgage payment than typical rent. My current home is worth about $250,000 and is totally paid for with about $300 per month going out for insurance and taxes. When we retire we have the option of selling, renting or staying. We always bought what we could afford and it is not a huge home.

    We did take the kids to Disney twice while they were growing up but saved and did it with cash. I agree it wasn’t worth the expense and we have better memories of other trips. My dad always said you have to live within your means whether you make $10,000 or $100,00 a year. I tend to think of it as mindful spending. Are you wasting money on things or have you made a conscious decision that this is worth It? The purpose of budgeting is to have money for the things at matter to you while being financially stable.

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