6 More Reasons Why You Are Broke

 In my previous article, Why You Are Broke, I listed reasons why many people live paycheck to paycheck. After some positive feedback, I decided to create another list which digs deeper into why you are low on funds all the time assuming you have a steady income. These reasons go beyond the normal reasons you read and hear about. These reasons do not include how much money you make because that’s not the problem. You would just spend more money if you had more money. These are things you can fix today and get on the right track to financial flexibility.

1.You Create Bad Debt

What is bad debt you ask? Pretty much any debt you know you can’t pay back quickly or doesn’t appreciate in value. If you are financing items that have no long-term value you are creating bad debt for yourself.  This is the kind of debt that pretty much hinders you financially in your pursuit to financial well being. Credit card debt is the most common debt because it makes it easier to purchase those items you probably don’t need. You are just too impatient to just save for it. You should never accumulate debt to purchase everyday items like clothes or food. If you use a credit card for these types of purchases, you should pay the balance in full each month. If you cannot pay your balance in full you are just setting yourself up. No vacations, food, clothes, or anything of the sort on credit. You are looking for a way out of the hole you have dug yourself, not dig deeper.

2.You Don’t Know What You Want Your Money to Do

According to Yahoo Finance, financially peaceful people, ” focus on two or three big goals they value, set a timeline, and then break the goal into smaller steps. They automate their savings through a weekly or monthly electronic transfer to a savings account, or by participating in a 401(k) plan.” You know for a fact you do not want to stay broke but you may not know how to get there. Instead of paying for a big ticket item with that credit card you only have for emergencies, ask yourself how do you buy that same item with cash. Set small goals and set a timeline on when you want the item.

What about savings? Do you have an automatic deduction on pay day into your savings account? Better yet, do you even have a savings account to start? Even if its $10 a paycheck, you are making your money work for you and you know where it is. Many times people spend money and have nothing to show for it of value. Focusing on what you want your money to do instead of not paying attention to it. If you don’t know what your money is doing, you might as well take your wallet or purse and dump it out. Same difference…

3. You Live Above Your Means

Stop trying to keep up with everyone else you see on television or people around you. Stop worrying about what people would think of you if you didn’t drive the latest car or have designer clothes. If it means going broke or expensive items of no value many people pick the latter. Do you really need cable or latest IPhone? Probably not. You do not need the latest fashions or cars so people can envy you. You income only allows so much and if you are trying to keep up with the latest trends most likely you are living way above your means.

Normally when you are living above your means it is because of things you think you can’t live without. These “wants” will keep you in the debt hole forever if you let it. Sit down and evaluate everything you spend money on and really ask yourself do you really need it. If you won’t even do that, have fun staying broke.

4.You Don’t Check Your Credit Score

Checking your credit score regularly will help save you hundreds of dollars. Your report and score will determine how easy it is to get financed for a car, credit card, or any other form of financing. If there are inaccuracies in your report, it can lower your score which will increase your interest rate on any loan or credit card you may apply for. There is a huge difference in a credit card at a 9% interest rate compared to a card at 22% interest.

Checking your score regularly will help make sure those inaccuracies don’t do damage you didn’t deserve. I have found plenty of inaccuracies on my report that would have cost me hundreds of dollars.

One of the main reasons for checking your report is to prevent identity theft. The worst thing that can happen to your information is someone opening an account you don’t know about and you paying for it. The sad part is the first time you hear about the bad debt that has been created behind your back is when the creditors start calling.

Websites such as annualcreditreport.com and freecreditreport.com  can help you obtain a free credit report to all three bureaus. There are also credit monitoring services that help monitor your activities. Check you credit as soon as possible and fix any inaccuracies to save money today.

5. You Don’t Talk About Money Enough

When I mean talk about money, I’m not talking about complaining to someone. I mean do you discuss your financial goals with someone of a similar situation? How about with someone who has reached goals you are trying to achieve?

It’s always good to talk about money in positive ways such as how you are reducing your debt or how you are trying to save money. Budgeting is another great topic to discuss with someone who is also on a budget. Talking to someone money is an excellent way to motivate yourself and to find tips that you may not even though about. There are a few people I talk money to on a regular and it has helped me tremendously.

No one wants to hear someone complain constantly about their money problems while you have your own. On the other hand if there is someone who has what you want financially or is in a similar boat and is improving his/her situation, talking money will work wonders.

 6.Your Circle of Friends Have the Same Bad Money Habits

Do your friends love shopping as much as you do? Do they ever talk about saving money or cutting down on expenses? Do they know about the latest sale but don’t know about a 401k account? If so then that’s a problem for you. In most cases, many people are influenced by their peers whether they sense it or not. Like reason #5 above, the conversations you have about money if any can influence your spending habits. We all think we are strong minded individuals who are not easily influenced but think again.

 The Choice is Yours

So what’s it going to be? Do you want to change your financial situation and sleep better at night or stay broke? No matter what, the changes you make start within so you have to want to change.