On episode 5 of The Careful Cents Show, host Brian J. Roberts provides a step-by-step blueprint on how to not be broke…
How To Not Be Broke
Tired of being broke? Here’s how to fix it..
1. Make Up Your Mind
- “Enough is enough, I’m all in.”
- No one else will take charge
- Up to you to save yourself
2. Review Your Statements
- Income problem? Spending problem?
- “What’s coming in, what’s going out?”
- Print them out, sit and really review
3. Create A Budget
- What’s essential? What’s not?
- What can be negotiated? Cut?
- Simple (pen/pad vs. spreadsheet)
4. Wipe Our Debts
- Tackle high interest debts first
- Will free up and build your credit
- Save money on fees and interest
5. Make More Money
- Easiest: Overtime? Extra shifts?
- Sell your stuff: DeClutter, eBay, etc.
- Sell products online via Shopify
- Freelance: Upwork, Fiverr, etc.
- Make lifestyle adjustments, too
6. You’re Not Just A Number
- Life doesn’t happen in a vacuum
- Take care of physical/mental health
- Be mindful of what you consume
- Have courage, confront the monsters
How To Not Be Broke: Detailed Breakdown
Want to stop being broke? It starts with making your mind up.
That’s why it’s called personal finance. Because it’s up to you personally to decide if you want to stop being broke or not.
It’s up to you carry out the steps necessary to change your situation.
And here is the second most important step…
Get To The Source
First, get to the core of why you’re broke.
- Is it an income problem?
- Or is it a spending problem?
You have to assess your finances, comb through your bank statements, credit card statements and the like. Figure out exactly where the source of the problem is.
Why are you broke? If you can’t answer that, no one else will.
Why are you broke? No one else will answer it for you. Remember: if you don’t take charge, no one else will.
It’s up to you to break the cycle.
You need to know exactly what’s going in and what’s going out. Here’s another thing: you don’t have to go and create a spreadsheet. Don’t get too bogged down in the details of how you figure this all out. Just figure it out.
This will give you a better understanding of your financial reality.
If that is outside of your comfort zone too, don’t do it. Because you’re just going to burden yourself with further complexity.
And that’s going to drive you further away from the purpose of this. Which is to bring you closer to a better understanding of your financial reality and how to fix it. Not having the nicest looking spreadsheet.
Start Off Simple
So in the beginning, keep it simple–
- Break out a pen and pad
- Print your statements out
- Then turn off the computer
- Sit with your statements
- Figure out what is coming in,
- What is going out and when
- Don’t stop until you know
This may be uncomfortable.
I was afraid of looking at my bank statements and credit cards. I used to just ignore them and sweep it all under the rug. Reflect back on that classic story of the monster under the bed. Grab your plastic sword and confront that monster–because no one else will do it for you.
It’s up to you to save yourself.
As you get more comfortable with this process, you can start to flesh it out a little bit more. Figure out what you’re spending on clothing, on toiletries, on subscriptions, on your gym, membership on eBay, and you can get very granular.
And that is a good segue to the third step.
Create A Budget
After you’ve made up your mind and after you’ve begun to assess your finances, you need to build a budget.
You need to figure out what’s going out, in, when, and why.
You need to figure out your paycheck situation, your bills, your gas, your utilities, your negotiables, and your non-negotiables.
That way you can start to build a plan as a segue into the fourth step here on what you can cut back on, what you can potentially negotiate down and what you know you absolutely need.
Figure out exactly where you’re overspending.
If you’re spending an extra 50 to a hundred dollars a month on your cell phone plan or on your television or on subscriptions, after you figured out that you are going to stop being broken, you’ve made your mind up, you’ve assessed your financial situation, you’ve put together a budget and you’ve trimmed the fat and you’ve cut the excess.
Make Extra Money: Part I
So again, you’re going to have to really reflect and look hard on the uniqueness of your situation to evaluate which of these steps are going to work best for you. Perhaps there’s some things in your house that you can sell. You can check out Declutter or eBay.
Here’s how in-depth guide on how to earn money online.
Another thing to consider is selling your skills, selling your passions and your hobbies, monetizing those talents of yours online. Let me tell you, if you’ve never done it before, it can sound overwhelming, but I promise you it is not.
Technology has made it easier than ever for anybody to monetize their skills.
Technology has really opened up the floodgates and it has made it easier than ever for anybody to monetize their skills and their talents online. Whether it is by selling a product or a Shopify store, selling a craft or homemade item through Etsy, selling goods that you own that you don’t use on Declutter.
There are so many options and so many ways for you to monetize your skills and your talents on line.
Make Extra Money: Part II
Another thing you’re going to want to do if you figured out that it’s an income problem and not so much a spending problem is create more income for yourself, increase your monthly cashflow and I promise that it’s really not as difficult as it sounds.
Check out our 2019 guide on how to make extra money on the side.
There’s a lot of ways that you can free up more money for yourself month over month. Let’s start with the easiest and most obvious.
The first two things that you can do to get more cashflow. Number one, ask your coworkers to pick up their shifts. Number two, ask your boss for overtime if available. Or, number three, switch a couple of things in your lifestyle around. Downsize in some way.
Pay Off High-Interest Debts
The next thing you need to do is get rid of your debts because debts are as sneaky, pernicious little monster that will eat away at your excess cash like you have no idea. Those credit cards that you have right now, they are not your friends.
Discover how you can boost your credit score overnight.
Those loans that you may have right now are not your friends because all of those things have massively high interest rates attached to them. If you have a car loan out right now or if you have a hard money loan out right now, if you have any of that outstanding right now, you are overpaying big time and that is the next most important step here.
Repurpose extra income to wipe out high-interest debts.
You need to repurpose that extra income and wipe out those debts and that’s going to have a one two effect on your financial life because one, it’s going to increase your credit score and two, it’s going to save you a lot of extra cash every month in interest rates and what you’re gonna want to do is wipe out the ones that have the highest interest rates first.
Even if you have smaller ones, you’re going to have to tell yourself, I got to let those accumulate in the background because I am not paying as much compared to these other bigger, higher interest rate loans that I have that are costing me way more and extra fees every month.
So you’re going to have to prioritize and execute.
Money Isn’t Everything
You can rid yourself of these financial ills all while not making it a miserable process–or at least not any more difficult than need be.
There is a chance that you can turn something that is weighing you down into an opportunity and suddenly your mindset about tackling this problem has shifted from one of drudgery and a glass half full mentality to a noble quest or a hero’s journey that you are leveraging the very best of your physical, mental, and emotional self to combat and overcome.
And also viewing it as an opportunity to test yourself and to prepare yourself and become the best version of yourself and by conquering your money challenges, but also taking the time to conquer the other challenges of your life, to make yourself into the optimal human being and the very best version of yourself.