Even your own mind deceives you when you’re broke. Being in a financially broken stage is quite natural for most people. What works here is how well you tackle the crisis to find the way out.
Have a glance here on what Warren Buffet said about the broken people.‘ Give a rich man $1000 he will return with $100000. And give the same amount to a broke man he will return with a pair of jordans and true religion jeans’.
This shows how malfunction your brain is when you are financially broke. So how to tackle this is the main question here?
Before going into the details of this topic, First, we will well define what exactly is a financially broken state. How people react in different ways to this and what exactly is the solution for a way out.
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How To Define That You Are Broke?
Let us simplify the answer for you here, Financially broke is the situation of the crisis in your life of not earning enough money to meet your expenditure. Your dreams and goals that link to money may eventually fail.
This stage has various causes, One thing you might be spending more than you earn without financial care. The second thing you aren’t well placed to earn enough to lend a normal life.
The second thing can various causes, sometimes even your country’s situation or your lacking skills may be the reasons. If you are missing your shot in the 1st thing that will be completely your fault. Raising expenditure without income can be stated as the main fault in your budgeting techniques.
Are You Poor If You Are Broke?
No! but Yes! Even though these 2 words related to the same situation/crisis there is a slight difference that everyone must catch. These 2 words are used interchangeably for convenient purposes but they are not the same.
Poor may be a long-term run, where you don’t have enough money to lend your normal routine life. Being broke means you ran out of your money, Basically, your resources are exhausted. You can overcome the situation of broke, But getting out from the poor stage may require serious efforts.
So if you are poor, You are relatively broke. But if you are poor you may or may not be poor. Being broke is a temporary stage of the financial crisis.
This law states that our expenses will relatively expand to always fill or consume the money as well as the time available for the completion(Execution). Our expenditure always tends to defy gravity unless and until we pressure this law. This pressure here inversely related to our financial freedom.
You must always break this law in order to get out of the state of ‘Broke’. So what exactly we need to do here? These things are the main things for this article. There are a few things you need to cut when you are broke then can be as below.
Significant Costs To Cut When You’re Broke
There are a few things you need to avoid or cut those expenses to balance the sheet of income and expenditure. Each step is very crucial and important for you in this stage, as every move counts.
1. Opt-Out From The Plans Of Getting A New Vehicle
When surveys of most people’s aspired dreams are kept together, Buying an own vehicle will be one among the top list for sure. But what if it may drench you in the debt cycle and make you not get served the real purpose for what you bought?
You may think this broken stage is temporary and think to afford a vehicle on EMI. That’s a pretty worst idea to choose with, This can create more burden of money repayments and interest can slap you hard.
2. Avoid Lavish Staying
If you are away from home or opted for a job far from your native you must choose to stay in a rented house. Don’t choose an expensive house for just the reason you can afford it, Things are always not the same.
Choose wisely, mark your expectations and requirements. Go with the best selection, Expensive things not always bring back the real value. You can use digital platforms to search according to your whims and fancies and can opt-in.
You can compensate for the money saved from the rent to groceries or any other purposes. Not just the apartments or the regular house, You must always keep a check on lavish spending and avoid them soon.
Check the advertisements regularly and negotiate with the owner by documentation and opt for a lively home.
3. Avoid Restaurant Food
If there is a thing that should be named as dangerous and expensive is spending on outside food. Your health may deteriorate if you choose to eat outside food regularly. This can even be an additional burden on your pocket.
Save and use the same money to get some kitchen stuff for your home and cook your own food. Trust me this is fun inducing activity and healthy too. You can try different dishes by using digital platforms.
This could not only make you healthy but can also help you to gain relative skills in this field. Try to analyze the 2 possibilities with cost-benefit analysis and choose the best one. Penny saved is a penny earned.
4. Being A Gadget Freak
Are you a gadget freak? If yes, this could potentially be the main reason if you are broke. Yes! the markets are upgrading with new and new devices with the best features, but that doesn’t mean you need to run along all of them.
The price may drop significantly if the model has a false hype and based on the new releases, old devices may lose their spot and can have a price cut. Never ever run for gadgets, Buy which is only useful for you.
If you really want to avoid being broke, Upgrading electronic gadgets with no resale value could turn to be a terrible idea. And this even increases the chance for you to stay broke.
5. Spending On Amusement
There is a significant rise in the spending of money on entertainment. This spending ranged to a 5% surge that can be nearly $44.8 billion in the previous year. This lavish and overspending on amusements can be related to a term called ‘Experience Economy’. Of course, this can be beneficial to one set of the economy but really not for you when you are broke.
Because of the reason you are bored or kids forcing you can write-off your other important expenses and use this money to spend on experience economy this could drag you to real-life amusement. Where you left penniless and can end up in relative poverty.
This doesn’t mean you need to avoid entire amusement spendings like Movies, Concerts, Cricket Match, Theme Parks, Etc. But a well-planned budget must be allotted and you must contain it. Surpassing the limit you are well aware of consequences by now.
6. Stick To List
When it comes to shopping we tend to buy more items which are of less use. Shopping malls or any supermarkets tempt us to buy more than our list. If you don’t want to stay broke never ever exceed your list.
Check your groceries before stepping out to purchases and make a strict list of them. Never enter into the section of no items from your list to avoid useless purchases. Keep your tummy full before getting into grocery shopping this can cut off your purchases on eateries.
Not keeping stock of unneeded groceries can not only save your money but then can also help you keep the limited stock available for a longer time. Piling up stock can only make them expire or out of validity.
Buy what you really want, avoid the rest. This listing is very much important. If you are not a person who prepares the list before shopping, Immediately make it a habit. You can save a lot, Trust me.
7. Vacation Planning
Vacations are mostly pre-planned, Without knowing the future complications we plan for our vacations. But what if you were broke in the meantime of vacation time arrival? Will you plan accordingly? or move as per the plan? We suggest you choose the former.
This is not to discourage you, Our present planning must never hurt out future planning/living. Never opt for expensive vacations, Always be on a budget and enjoy more places.
Categorize your savings into different sections, If you are a travel freak, Then make a section to travel and save from the beginning. Never go beyond your budget.
Opt for a tour planner to plan your vacation in the budget, Our suggestion is to postpone till the broken situation is under control.
8. Structured/Organized Repayments
If you have loans pending either it may be a house loan, vehicle loan, or any other loans, opt for an auto debit. As you may tend to spend the money for other purposes. By spending this way can fetch you additional interest charges, and end product to ‘Debt Cycle’.
Always stay on time to save or boost your credit score and this can also avoid additional charges. The best credit score can help you gain more loans in the future. Loan gaining can be the best way out of the broken state.
I have seen many people broken just because of the reason they opted for unorganized repayments of their loans. You cannot skip your repayments, someday or the other you have to pay the whole principal amount added with interest rate. On the date, payments can help with fewer interest rates without getting you into a debt trap.
9. Not Opting For Multiple Income Streams
Not meeting expenditure has only one reason, Not earning enough! What can compensate better than multiple streams of income for earning money? Nothing right!
If you have any other skills than your current job, Never hesitate to start a part-time job with those skills, You may regret sure in the future. There are various opportunities in the market to opt for. You can earn on average up to $5000 per month by just working part-time.
Sometimes the part-time business you choose may fetch you more money than a full-time job, In that medium, you can leave the former and choose the part-time and make it full-time to earn more to get out of the broken state.
These alternative jobs may include Blogging, Freelancing, Virtual Assistant, Transcription, Proofreading, etc.
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Do you know what’s killing us easily? Probably our bad habits. Vices can affect you more than what you may think. Financially, Physically and mentally. Even after knowing this would you continue them. That’s your own choice, how well you organize your life.
We recommend you to make an appointment to the rehabilitation center to get over from them, De-addiction is not as hard as you think. Try the formula of 90 days, where you should keep yourself away from what is dragging you more either it can be Smoke, Alcohol, Coffee, whatever. Try keeping it away for 90 days this can become your lifestyle.
‘Health is wealth‘. Without taking care of your health is indirectly showing that you are inviting a financially broken state. So take care of it wisely. Avoiding vices can also save more pennies which can alter to an emergency fund. These funds can always help you when you are broken.
11. Get Away From Gambling
By frequent advertisement suggestions or heavy promotions by gambling companies, you may think gambling is one of the best ways to earn more money in less time. Initially, you may start with little money for fun, when it starts returning you, this trend may turn aggressive and finally drench you in debt on debt.
Gambling always stays and depends on luck. The only sure thing about luck is that it will change with time and levels. If you are financially well settled and have enough money to handle the losses, you can start this. But we suggest you avoid gambling, and this is never a good idea.
If you are broke directly states that the situations are acting odd towards you, In addition to them gambling can turn situations, circumstances worse and worse.
Sometimes taking time to analyze and act is the best way to find the light on your way to the destination. Your habits, Routine, Thinking, Acting, everything can place you where you are today.
Every step is precious and crucial if you really want to stay financially independent. Avoid the mentioned things above when you are broke. Your patience, Courage, and actions can pull you out of that state in no time.
Build trust in yourself and act wisely! Have a happy life. Suggestions are very welcome! Thank you.
Siva Mahesh is a full-time blogger and personal finance expert featured on US News, Yahoo Finance, Legal Zoom, The Simple Dollar, Databox, Business.com, Business News Daily, and more. He is the owner/founder of Dreamshala, a go-to place for 100,000+ monthly readers to find legit work from home jobs and make money online ideas.