How to Stop Saying ‘I’m Broke!’ and Actually Fix It

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    Besides being a popular song, ‘I’m broke’ can be a common phrase uttered by folks struggling with finances. If you’re living paycheck-to-paycheck, or can’t seem to get ahead, let’s talk about why and how to fix it.

    Why Am I Broke? (And How to Fix It)

    There are several reasons you might be broke, from not making enough money to not living within your means. Let’s look at each reason people say they’re broke and how to fix it.

    1. You have too much debt, and/or you’re only paying the minimum.

    empty jean pockets pulled out of pants

    Your debt-to-income ratio can wreak havoc on your finances if you’re not careful. It’s easy for debt to snowball and become bigger and bigger, eating up your cash before you can even write a check.  

    Debt-to-income means you have too much (or more) debt than the income you bring home. If you’re finding yourself living paycheck-to-paycheck on a tight budget and cannot get your debts paid off, it can be the reason you’re muttering “I’m broke” every day.

    What should I do if I’m broke from too much debt?

    If you have too much debt, start by gathering all the information on your accounts and organizing them (including any odd debts like parking tickets). Figure out how much you have and the interest rates and payment terms. Start by paying off the smallest debt first, and make minimum payments on the rest. Then, roll that original payment to the next smallest debt once the first debt is repaid. This repayment process is called the snowball method and can effectively tackle your debt.

    Some helpful articles on how to become debt free include:

    2. You’re not using a budget or are avoiding dealing with your finances.

    If you have no idea where your money is going, you can’t possibly know if you’re overspending. Without a plan for your money, it’s easy always to be broke. You’d rather look up I’m broke gifs to post than deal with deal with the hard things when it comes to finances.

    What should I do if I’m broke from not using a budget?

    Start by listing all of your money bills on a sheet of paper. Next, log into your bank account and see how much they were for the past three months. Figure out an average for each so that you know how much all of your bills are a month. 

    Next, you’ll list your income for the month. Subtract your expenses from your income, and see where you’re at. If you have too many expenses, see where you can cut them down. Apps like Trim and Truebill are great for helping you find and cut costs.

    If you have extra income after your expenses, figure out where you want it to go. Pay it towards debt, emergency funds, sinking funds, or wherever makes the most sense.

    For a more in-depth review on budgeting, try the Begin to Budget Bundle!

    Other budgeting articles to read:

    3. You’re not making enough money.

    It’s a basic fact that your income needs to be greater than your expenses to get ahead financially. If your costs are more than your income, and you can’t shave them down anymore, then you need to make more money.

    What should I do if I’m broke from not making enough money?

    You can start by looking at your current job. Can you ask for a raise or find another job that pays more? Can you take on more responsibility to earn more?

    Next, you can pick up a side hustle. There are many great side hustles out there; you need to find the one that fits your schedule and workload. You can find some of the best side hustle ideas here:

    You make too many impulse purchases or can’t say no.

    Maybe you make more than enough money, but you can’t seem to stop overspending. It’s easy to use shopping to cope with feelings, such as sadness or boredom. And FOMO with friends can also help feed into that when they’re all going out and spending cash like there’s no tomorrow.

    What should I do if I’m broke from impulsive shopping?

    There are several solutions to help with impulsive shopping. You can try this overspending trick to help you stop and think before spending. You can also:

    1. Unsubscribe from emails and magazine mailing lists to stop spending money you don’t have.
    2. Remove your saved credit cards from your online accounts so that it’s harder to spend.
    3. Put away your credit cards, and switch to a cash envelope system.
    4. Try a no-spend challenge to reset your financial goals.
    5. Use the trick where you put items in your online cart and walk away for 24 hours (or longer). You can purchase it if you still want it after the waiting period.

    You’re not living within your means. 

    It’s easy to overspend by not deciding between wants vs. needs. Again, keeping up with the Joneses can lead to massive overspending. Living within your means shows that you’re not spending more than you make.  

    What should I do if I’m broke from not living within my means?

    It’s essential to take a look at wants versus needs. Is every single bill that you pay every month a need? Or is it a want? The same goes for your other expenses and spending. Remember, just because you cut an item from your budget doesn’t mean it’s gone for good. It’s just for right now until you get your spending and budget under control.

    Don’t forget to look at bills like your car payment or lease. Consider downgrading or selling your car – even if just for a couple of years – to get ahead.

    You don’t have an emergency fund or savings.

    When it comes to emergencies or unplanned expenses, it’s not a matter of if they’ll happen, but when. You’ll never get ahead financially if you don’t have anything saved up to cover these extra expenses. It takes just one accident, car repair, or sickness to crumble a financial house of cards built without any savings.

    What should I do if I’m broke from not living within my means?

    To start, build an emergency fund that is just $1,000. That should be enough to cover any immediate family emergencies, like car repairs or deductibles. Your primary emergency fund needs to be saved up even before tackling debt.

    To build your emergency fund quickly, try one of these savings challenges:

    You don’t have a positive money mindset.

    Believe it or not, your mindset can play a huge role in your finances, as well as your life. I think we all know a Debbie Downer in our lives that finds everything to be negative, nothing is every right, and it’s not worth fixing because something else will be a mess then. Personally, folks like this are exhausting – I can’t imagine living like that; it’s got to be even more exhausting!

    What should I do if I’m broke from my money mindset?

    Learning things like gratitude can help to adjust your mindset. Start your day with money affirmations, meditation, or listing ten items you are grateful for.

    More importantly, stop saying, “I’m broke.” Have you ever heard the suggestion that how you speak to your kids becomes their inner voice? The same goes for you. If you’re constantly negative or telling yourself that you’re broke, don’t understand money, or will never get ahead, it’s impossible to break out of that mold.

    Start by taking a week and writing down every thought about money to identify the narrative you’ve been telling yourself. Or, try journaling to figure out what your core money beliefs are.

    To learn more about your money mindset and identify your worth financially, try reading You’re a Badass at Making Money: Master the Mindset of Wealth by Jen Sincero.

    Other great articles to help with mindset:

    Now that you know the main reasons you’re broke, which will you work on? Which resonated with you the most? Let me know in the comments below!

    Text that reads welcome to Debt Free Forties

    A forty-ish web designer/developer by day, a budget & financial fanatic by night. I’m a mom, wife, avid reader, and DIY enthusiast who’s tracking our journey to debt freedom. Read More

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