Tired of Being Broke? Here’s What to Do (7 Actionable Tips to Stop Being Broke)
Being broke is a terrible feeling.
The stress and anxiety that comes with being broke can send some people over the edge.
To make things worse, you might have an upcoming rent payment or electric bill further exacerbating the issue.
What can you do to stoke being broke? Let’s find out!
Analyze Your Spending
One of the first things you should do when you get tired of being broke is to analyze your spending. Where does your money go?
Most people tend to avoid this as it can take some time and they “think” they know how they spend their money.
However, for most people, this is simply not the case. No matter how much you think you know how you spend your money, there’s only one way to find out for sure.
By analyzing your spending, you’ll notice exactly where each dollar goes and where you might be overspending.
Each month, you should take a few hours of your time to look at where you spent money in the previous month.
To do this, you’ll need to look through both your bank and credit card statements and go through your transactions line by line.
It’s helpful to break down your spending into different categories so that you can know where you need to cut back.
For example, it’s wise to group all restaurant purchases into one category, like “Eating Out”. At the end of the month, you can examine how much money you spent in each category to understand how you spend your money.
Is one category well above the others? Maybe this is your chance to save money.
Tip: You can use Trim to save money on unused subscription services. It will analyze your monthly subscriptions and give you ideas about which ones to cut!
Cut Unnecessary Spending
Unless your income is minimal, the reason you’re broke is likely due to your spending habits.
Do you find yourself going out for drinks every Friday night?
This could be your problem!
If you want to get serious about your money, you’re going to have to make some sacrifices.
Look for areas where you can cut your spending. Some of the easiest to cut are in categories like eating out, shopping, and other entertainment expenses.
If you’ve already cut those and need to look further, you might try cutting your housing costs by moving into a lower-cost home or apartment.
There are thousands of ways you can save money, but you have to start in order to stop being broke!
Here are some other expenses you should find ways to lower:
- Utility costs like electricity, gas, and water
- Mobile phone costs. Do you really need the newest phone?
- Grocery bill. Buying generic can save you more than 20% on your weekly trip.
Give Your Income a Boost to Stop Being Broke
You probably already know you need to make more money to stop being broke. In this section, we’ll discuss a few ways you can start making more money.
Start a Side Hustle
If you have a full-time job, you’ve cut any unnecessary spending, and are still broke, picking up a side hustle might be necessary to get your money under control.
There are many different side hustles for just about anyone.
Below are a few examples to help you get started.
- Drive for a ride-hailing service. You can make anywhere from $8 to over $15 per hour depending on your location. This can be a great way to make money on nights or weekends if you have an eligible car.
- Want to monetize your car but don’t want to socialize? Consider becoming a delivery driver for services like Grubhub, Postmates, or Uber Eats. These services can pay similar rates, without having to deal with intoxicated individuals.
- Flip electronics. For those who are tech-savvy, you can flip electronics for a profit. You can purchase broken devices online through eBay, fix them, and sell them for a profit. There are many different kits and tutorials that can teach you how to repair common issues, like cracked phone screens and more.
- Rent out a room in your home. If you have an empty space in your home, use it to make money. You can list individual rooms on websites like Airbnb or VRBO to make some extra money.
Ask for a Raise
If you’ve been a valued team member at your company who consistently overachieves, consider asking for a raise.
You should make sure the circumstances are right to better your chances of landing a larger income.
Here are some tips to increase your chances of getting a raise.
- Express your accomplishments in numbers. Managers are more apt to give you a larger salary if you can prove your worth. Examine some of your accomplishments and try to attach a number to them.
- Ask for more responsibilities. After you’ve expressed your value, explain any areas that you could help out in. Maybe it’s taking on a few tasks that currently get outsourced. This will increase your value even more.
Knock out Debt
If credit card payments are crushing your budget, it might seem impossible to stop being broke. But don’t give up hope! There are a few things you can do to start paying down your debts.
Get Free Money
There are many different sign-up bonuses you can take advantage of to get free money. Between bank accounts, credit cards, and other online websites like Swagbucks or Rakuten, you can score anywhere from $10 to over $200 in free money just by registering.
Check out our post on how to get $20 instantly if you want free money now!
Do you have debts with high-interest rates? Refinancing will allow you to lower your rates potentially saving you a few hundred dollars per month allowing you to pay down your principal balance much quicker.
NOTE: You’ll have to have a good credit score to get the best rates so be sure to check your score before applying for a refinance.
Pay High-Interest Debts First
There are several methods of paying off debts.
Some people choose to pay off their smallest debts first to create a “debt snowball” effect where you gain confidence knowing that some of your accounts have been paid off.
My preferred method is to pay off your debt with the highest interest rates first. This will save you more money in the long run and it will take less time to pay off all of your debts.
Consider Selling Assets to Pay Debt
Do you have a large car payment for a new car that you purchased a few years ago? This is likely one of the reasons you’re broke.
One option to consider is selling your vehicle and using any leftover cash to pay off your auto loan.
Some owners might find that they are “upside-down” on their car payment, meaning if they were to sell the car they wouldn’t have enough money to pay off their loan. If this is you, consider waiting a year or two. A vehicle’s value deteriorates rapidly in the first few years before plateauing to a more steady decline. A car that is 4-6 years old is likely to be sold for close to the amount of the loan.
For those not upside down on their car payment, you can pay off your auto loan and purchase an older used car to get by for the next few years.
Most people do not have the guts to complete this step, which is why many people will continue to be broke for years to come.
Like mentioned earlier, it will take some sacrifices to get out of debt and get your money on track and this is certainly worth the cost. After all, do you really need a new fancy car? No.
Do you have a large portion of credit card debt with a high-interest rate? Or personal loans that cost you hundreds per year in interest?
It’s worth analyzing if consolidating your debt is a good decision.
You’ll often find that consolidating debt will provide you with a much lower interest rate, saving you a nice portion of interest payments while also making it much easier to manage by only having to make one payment each month.
If you have a debt that has been outstanding for some time, there’s a good chance your lender will settle if you offer to pay a portion of the debt.
Usually, this will work for those who have missed payments and owe a significant amount in fees and penalties.
Lenders are looking to get any amount of money because it is better than nothing.
When deciding to settle a debt you need to get everything in writing. If not, the company or lender might consider your payment towards your total balance, leaving you owning the total amount of outstanding debt.
Keep a Budget
Budgeting will help to keep your expenses in check. After you’ve examined where you’re overspending, a budget is a way to plan how you will spend your money going forward. After a few months of budgeting successfully, you’ll find that your savings will increase and you won’t be broke.
Creating a budget can be difficult for beginners. Check out this post on how to budget your money!
Have the Right Mindset
When you’re broke, you might want to blame others. You may think that the world is against you. But in reality, the only reason you’re broke is due to your decisions.
Whether you purchased a home out of your price range or always have the latest tech, being broke is a problem that you created.
You need to have the right mindset if you want to stop being broke.
You need to be positive, confident, and understanding of why you’re in this situation.
By doing so, you’ll be more likely to stick with a plan to pay down debt, boost your savings, and ultimately stop being broke.
Taxes are necessary for many reasons, but overpaying taxes can hurt your finances.
There are many ways you can decrease your payments to Uncle Sam with a few listed below.
- Keep short term capital gains to a minimum. If you hold an investment for longer than 1 year, you’ll save a nice chunk on your taxes owed. Long term capital gains have lower interest rates than short term capital gains, so it’s wise to sell investments only after you’ve held them for at least one year.
- Take all available tax credits. There are new tax credits added almost yearly. Make sure you analyze these credits to see if you qualify. You might be able to receive a few hundred dollars off of your tax bill by using these.
- Contribute to retirement accounts. By saving for retirement, not only will you have more money for later in life, but the amount you invest is not taxed. This can save significant amounts on your tax bill each year.
- Write off donations. If you make frequent donations, be sure to include this information on your tax filings. This can help to lower your bill by a few hundred dollars. Be sure to check the limits on your donations as this can also be a red flag for the IRS if you take too many deductions.
Conclusion: Stop Being Broke Today!
If you’re tired of being broke, one of the first things you should do is examine why you are broke.
Is it because of your spending habits? Or perhaps a low income? Both of these problems can be solved.
There are many ways you can give your income a boost to help balance your budget while simultaneously cutting any unnecessary expenses. This will help to get your money back on track within a few months.
Are you tired of being broke? What’re you doing to combat it? Comment below!