We’ve talked a lot on this blog about how to save money, accumulate wealth, and generate peace of mind when it comes to your finances with the Fixed Income Fund. That’s all well and good, and we truly hope you’ve found something on this blog that has helped (or will help) you navigate through the murky investment waters. Whether you’re wondering how to choose an investment strategy, what are the pros and cons of fixed annuities, or how you can achieve financial security, there’s no shortage of tips, tricks, and general knowledge here when it comes to money management, retirement, and the health of your savings account.
However, sometimes it’s even more beneficial to know what steps you shouldn’t be taking. So, with that in mind, for the purposes of this blog we’re going to lend some advice not on saving money, but how to lose money and go broke. By following these guidelines, or by just recognizing that they are actually having a negative impact on your financial health, perhaps it will help you to re-evaluate your routine and set yourself up for a better future.
Remember, going broke is not fun. The point of this blog is not to encourage that, but rather to offer up some suggestions for introspection. First, let’s understand what being broke actually means.
What Does It Mean To Be Broke
First, let’s understand the basics of “going broke.” This is obviously much different than “going for broke,” a common term that means to give it your best, if somewhat exasperated, effort.
Conversely, going broke means you’ve run your course, financially speaking. You likely didn’t give it your best, nor did you fully recognize the ramifications of the decisions you were making. If you’re broke, chances are you’re doing worse than living paycheck to paycheck; your expenses greatly outweigh your monthly earnings and you have little hope. But that’s the difference between being broke and being completely ruined: Hope. When you’re broke, your situation may just be temporary.
Maybe it was one large setback, one huge unexpected expense, or a series of bad decisions. But when you’re broke, you can still turn it around without having to sell the farm, so to speak. Hopefully, by recognizing some of the decisions that led you to going broke, there is still time to get back on solid financial ground.
Now, without further ado, here are some ways in which you may have gone broke.
Credit Card Craziness
This is the most common way that U.S. consumers find to go broke. Credit cards are convenient, easy to use, and helpful…until they’re not. Racking up too much credit card debt can be a sign of a serious problem, and largely inhibit your ability to keep up with your living expenses. It’s OK to utilize credit cards for emergencies, or even some large purchases or splurges, but it’s important that you have a proper payoff plan that doesn’t involve maxing out all of your cards at once. Too much credit card debt can lower your credit score, increase stress, and make it nearly impossible to buy a car, home, or even retire.
Living Above Your Means
Maybe it was your neighbor that just bought a fancy new car. Maybe it was your friend who just bought a big new house. Maybe it was a celebrity you saw with a fancy new something-or-other. Whatever it was, you tried to fit in by making purchases that you just couldn’t afford. This is never a recipe for success. It’s called “Keeping up with the Joneses,” and it’s a big reason why you’re in this financial rut today. Reevaluate what’s necessary in life, from the size of your home to the payments on your car, to the amount of money you spend going out on the town trying to impress people you’ll never see again. It’s important to know when you’re stretching the limits of your budget, and no one things being broke is cool.
Not Having A Budget Plan
You never set a limit on how much money you could spend on extra-curriculars each month, and because of that you’re now broke. When you don’t properly budget for your monthly expenses, from utility bills to car payments to student loan withdrawals, and instead spend your paycheck on tangible items like a new TV every six months, chances are you’re not going to be set up for financial success.
Ever since we were kids, we know what gambling is (“I bet I can run faster than you”). And many of us gamble well into our adult lives. The problem arises when gambling consumes your every thought, and therefore your every penny. Most things are found to be OK in moderation, but when you’re excessively gambling on sports, casino games, or something else entirely to a point where you don’t even have money for the bus ride home, then that’s a sure sign that gambling has led you to go broke.
You Didn’t Save
Maybe you made it through the majority of your adult life without going broke. Maybe you got by on your salary, never missed a credit card payment, and completely paid off your mortgage. Now it’s time to retire. Ooops! You forgot to open up an IRA, 401K, or even a regular old savings account. Now you have no job, no savings to fall back on, and no way to keep up with your standard of living. You’re officially broke. Saving for retirement is one of the most important things you can do, which is why it should be an expense that you build into your budget at a young age.
Turn It Around
Luckily, if you’re still young enough there’s time to turn this all around. Re-evaluate your priorities, your financial goals, and have an established retirement plan that will help you create a better future. When you do all of that, and you have enough savings to retire comfortably, but still want a way to experience peace of mind with a valuable investment and stable, consistent monthly income, then contact Tactical Wealth. We’ll get you set up with our innovative Fixed Income Fund and help ensure that you never go broke again. Learn more by visiting our website today.