11 Habits of People Who Go Broke
Fortunes can change in no time and how you handle your finances in the good times will have a lot to do with your prospects for surviving a financial crisis with your future intact, because tragedy is always closer than most think.
In this article, we'll look at 11 habits that are known to make people go broke, so you'll be able to avoid these relevant money-wasting traps and ultimately avoid going broke, because sometimes good offense is the best defense.
1. Do crappy work
For most, a 9-5 is how they pay the bills and there's nothing wrong with that. In fact, 157 million people are currently employed in the US. The income that your job produces is critical to your ability to live a comfortable life, whether it be from employment or self-employed pay.
The place some folks struggle is in performing as if your career depends on it. When it comes to work, showing up late and generally not meeting targets leads to unemployment.
2. Oversleep daily
Sleeping in every once in a while on the weekend is recommended. Good sleep makes us more productive, attentive, and alert throughout the day. But sleeping in until 10am during the workweek and missing work is a career-ending habit. Employers are required to get results for clients and stakeholders and will not tolerate laziness or lateness.
3. Spend more time thinking than acting
You know the guy. The one who has 'ideas' but rarely leaves the TV tube. Self-motivation is required in the real world and it's our individual responsibility to bring it every single day. Forget perfection and take massive action. Less talking and more action is key.
4. Obsess over everything you can’t control
The only thing you have control of is you. You cannot control the weather, politics, breaks, people, family, etc. The world would love you to stay caught up in the never ending drama that is woven into society. Stop wasting energy focusing on what can't be controlled and get laser-focused on what you can do. Obsessing over things you can't control leads to waste and waste leads to being broke.
5. Get addicted to frivolous purchases
Fancy shoes, cars, apartments. And on and on. As a Coach, it's painful to see the folks you care about spiraling out of control with addiction-based spending habits. I'll say this...
You cannot buy happiness because happiness is not for sale. Please take heed from someone who has seen wealthy people ruin families (and their lives) due to out-of-control spending. Lifestyle inflation is a real issue in a high-flying modern society and it can be a huge money trap. If you or your loved ones struggle with this, please get someone in your corner to help your and your loved ones navigate to safer waters.
6. Rack up credit card debt
Like #5, choosing to finance your lifestyle is a recipe for disaster. If you don't have cash to fund your lifestyle then that lifestyle is not the right lifestyle for you. The saying goes - act your wage. Financing a high-flying lifestyle is a quick way to go broke. This behavior has ruined more fortunes than anything on this list.
If you use a credit card, the full balance should be paid in full every single month. Never ever carry credit card balances because they will absolutely crush you in a financial emergency. Don't by the lies about points. As a 10+ year Banker, I can tell you points are a marketing play to trade pennies in rewards for dollars in fees. Don't make banks rich!
7. Pay bills late
As a Financial Coach, this one irks me more than most. Bills should be paid early for the simple fact that late bills hurt you pocket by way of fees. Did you know that payment history is also the #1 most important fact of a good credit score?
Additionally, late payments show a lack of awareness around your financial life. It's simple, pay your bills on time. If you cannot do that due to income loss then you have failed to build your emergency fund. Use the The Foolproof Steps.
8. Buy housing you can’t afford
Buying or leasing over budget a more under-the-radar way people go broke. You see, the American Dream has been conflated with living in an MTV Crib and the cost in interest on a 30 year loan nearly doubles the total cost you'll pay for the home by the time it's paid off. Don't be ridiculous. Your family needs a stable roof over its head for a lifetime not an MTV Crib lifestyle for 2 years before losing it all to bankruptcy or foreclosure.
Your monthly housing payment should be less than 28% of your household income. Any more than this and you're overspending on your home.
9. Eat out every chance you get
For the financially responsible, dining out is a big deal because it's a rare occurrence. If you're rich, this point is less important because your indulgences are less likely to hurt you financially. However, it is a fact that many people in this world are starving or broke or both.
Americans are notorious for blowing their income dining out. Set a food budget and stick to it so that youre savings and investments are not impacted.
10. Keep your cable bill
With streaming services in full effect, it's alarming that anyone still wastes money on cable tv. Cable companies are infamous for raising rates, hidden fees, and changing terms at every renewal. Not to mention the fact that the average cable bill is $116 per month.
Sling TV's streaming service is less than $50/month for the premium package. These savings add up over a lifetime. Get the programs you like and save money by switching to a streaming service. Not to mention, no breakup is more satisfying than breaking off a long-term relationship with the cable company.
11. Build lifestyle inflation into your family
We all know someone who's like this. You see, a friend of mine lives life like a rapper. What they don't realize is that rich people are not about an MTV lifestyle. They are about purpose. Do they have fun? Sure. But the cost of creating a high-flying lifestyle has not only money implications but even more importantly, emotional implications. You see, people have complicated lives and do not care about your lifestyle. Will they at certain times, maybe in passing. But overall, life is too complicated to care about other people's fancy car, high-rise apartment, and $2,000 bar tab. One day, you'll realize that the only person this type of behavior hurts is you.
As a Financial Coach, I'm all about solutions. While it's not fun to talk about the downside of bad financial habits, it's extremely important to be real and to level about financial traps because they really hurt people. I get it. Life is complicated, money is tight, and the world is like a social engineering project. As we've said often - forget those external factors we cannot control and - control what you can control.
In my situation, I sold nearly everything I owned to get out of debt and was able to just barely miss a not-so-happy date with bankruptcy. I was fortunate and learned a valuable lesson about overspending. Today, I'm better off because I now focus on saving in every area of life.
If you control what you can control - your income and expenses, no amount of external factors can keep you from your dream of finding financial peace. However, to get there faster, you need help.
Download The Foolproof Steps to start our proven plan and begin your journey towards financial peace.
With love,
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