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Do you seem to never have any money at the end of the month and always ask yourself, “why am I broke?”

No one likes being broke. And it’s stressful, uncomfortable, and counterproductive to achieving your financial goals.

I know what it feels like. I spent most of my adult life being broke. By the time I had my second job, I had moved out on my own. I suddenly had to pay the rent, utilities, buy food, and have transport money, to get me to work. There were times I wasn’t sure I would have money to buy food after I had paid everything else. Now because I was working I was able to get a credit card, which made my situation worse. When I was short I used my credit card, but now had to pay that back too.

For many people, to the outside world they look like everything is going well for them. They drive a nice car and have a nice house, but they are drowning in debt.

So what do you do when you are broke?

Follow the steps I’m going to share with you. If you don’t, you’ll simply find yourself further down the rabbit hole.

Stop kidding yourself

Have you ever said: “It will get better”? But did you change anything to make sure they will be better? The reality is unless you change your spending habits, nothing will change. In Fact in all likelihood it will get worse.

Avoidance is a great short-term strategy to find comfort, but it is also a long-term strategy to guarantee misery. – Brendon Burchard

If you don’t face reality, you can’t fix the situation.

 

Take Action TODAY

Deep down you probably know that if you keep doing what you have always done, you are not going to achieve financial success.

Trying to get ahead in life when you are broke, it like trying to swim with bricks strapped to your back.

So it’s time to sit down and analysis your spending habits.

Go pull out our credit card/s and bank statements, all those bills that you still need to pay. I want you to itemize everything you spend money on and be honest with yourselves. This is more than just creating a budget. You need to get real and realize you are where you are because of your spending habits or bad decisions you’ve made. We have all been there. So make sure you include things like student loans, personal loans, credit card debt, overdraft, be clear on EVERYTHING.

Now you are going to go through your list and you are going to cut out ALL the non-essentials. You don’t need that subscription to cable TV, nor that music subscription. That gym contract you took out 3 years ago and never use. You need to be ruthless with yourself. In order to get out of the hole you in, you need to clean up your financial house.

You are in Emergency Lock-down until you are out of this financial crisis. You are broke! You need to live on the bare minimum for now. You are still going to pay your bills, but the Friday drinks with your friends are going to stop till you are back on your financial feet.

Stop wanting to keep up with the Jones. Stop living beyond your means. And don’t say “I will cut out expenses gradually over the next few months.” All you are doing is prolonging the situation you are in. 

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Shift Emotions

Ok so you are probably experiencing some emotions around your situation. Feeling such as anger, guilt, shame or embarrassment. You are going to shit those feelings. You need to get neutral, if you are going to fix the situation. It is what it is, but you can change it.

Firstly be grateful and honor yourself for wanting to change the situation.

Stop and notice how those feelings of anger, guilt shame or embarrassment make you feel in your body. These emotions will ensure we stay broke. They reduce our creativity and the ability to see that we have other options. They make us shrink and hide. They prevent us from asking for help.

This is not about being a victim; it’s about doing something about your current situation.

 

Start Saving

If you won’t save 10% now when you making R5,000, you sure as heck not likely to save it when you earning R50,000. Aren’t you in this situation because you have no savings?

It’s time to change your mindset. Pay yourself first. Before you spend any money and that includes paying bills, put 10% of your income into savings. Set it up to happen automatically, if you still have to do it every month it won’t happen.

Start building your rainy day or emergency fund. Firstly this teaches you how to keep some of your money in your life. And it creates a safety net for you. If you don’t create this savings, first what happens is you could be doing well sorting out your financial situation. Then something happens, then car breaks down, or you get sick and have medical bills to pay. Without an emergency fund you fall back on using the credit card you were working so hard to get rid of.

Rich people save first and spend what’s leftover. Broke people spend first and save what is leftover. – Robert Kiyosaki

 

Change your habits

Managing your money is going to require a whole set of new habits, which you are going to need to build into your life.

If you don’t change your spending habits now, nothing will change.

Take some time to understand your spending habit. Keep a journal for a week. Every time you spend money, note where you were and how you were feeling before you made the purchase. Then notice how you felt afterwards. Ask yourself what reward you were craving.

Once you understand your habits, you have two options:

  1. Avoid it, it is something you can avoid – for example, don’t go shopping to improve your mood
  2. Replace the habit with a different habit – go for a walk on the beach to clear your mood

Once you understand your triggers and the real emotional source behind them, changing your habits gets much easier.

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In light of all of this uncertainty, we're all having to make some financial changes to ensure that we can survive the next few months, whatever they may bring.