10 Reasons Why You’re Still Broke

10 Reasons Why You're Still Broke

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In general, I consider myself a relatively frugal person. I save on the things that aren’t important to me, so that I can splurge and spend on those that do. I don’t drive a new vehicle (quite the contrary, actually), I’m fine with generic brands at the grocery store, and I couldn’t care less what emblems are sewn into my clothes. While it would be nice to have the latest and greatest cell phone, you don’t see me standing in line on launch day to drop $1,000 on a new iPhone.

The problem really boils down to one thing: People are stupid with their money. Each day, we waste money — myself included — on things that don’t matter or better your situation. If we don’t make changes here and now, we’re going to be left with nothing to show for the years that we slaved away at our jobs.

As I peruse various real estate or personal finance forums, not a day goes by where I don’t see a question like the following:

“I want to start investing, but I have no money and poor credit.”

While bad credit can be addressed in another article, I’m going to focus here on a number of things that keep you from breaking through and finally achieving your financial freedom.

1. Tattoos

I don’t care what anyone says — tattoos are tacky. I’m sure I’ll get flack for saying that. As I speak to people who have had tattoos for over 10 years, few of them proudly tell me, “Yes, I’d do it over again.” Tattoos quickly lose their appeal after a few years as trends fade in and out and skin begins to sag. Maybe it’s just a personal preference of mine, or maybe it’s the fear of my mother-in-law who once told me, “If I ever see you with a tattoo, I’ll shave it off with a cheese grater.”

Some people justify that it’s “art” or “personal expression”. No, it’s a waste of money.

I truly believe that tattoo artists are just that — artists. Some of the artwork they create is truly incredible, and the fact that they can imprint that on someone’s skin is a true sign of talent. However, tattoos are a waste of money. Full-chest or back tattoos can easily costs thousands of dollars. Rather than blowing that on your skin, invest it in yourself and your future.

2. Drinks10-reasons-why-youre-still-broke

Alcohol is expensive. I remember one night that I came home from the bar $70 lighter. While I’ll admit that I was pretty tossed after that, I could have spent significantly less by having a good time at home with friends instead. 4-5 drinks, some food, and a tip, I couldn’t believe how quickly that money left my wallet.

The biggest was it wasn’t limited to just that weekend. My entire social circle revolved around going out for drinks. It was once during the week, and then again on the weekend, and then again a week and a half later. $50 here, and $20 there soon added up to a couple hundred a month.

Coffee also adds up quickly, especially if you make a daily Starbucks trip on your commute to work. $6/day for a coffee doesn’t seem like much, but compounded, adds up to an exorbitant amount of money. Luckily for me, I’ve never been a big coffee drinker, but I know a number of people who must have it to get their day started.

Rather than dropping $6/cup, head on down to Costco/Sam’s club and purchase a Kuerig brewer. While the machine has a significant initial investment, the cups are cheap, coming out to about $0.60/cup. I work with a guy who purchases a 50-pack from Costco for $30-35/month. He brews his coffee each morning, and brings it with him to work. This saves him an average $150/month.

3. Your car

The car you drive is making you poor. If you buy a brand new car off the lot, it will lose 20% of its value within the first year. Years two and three, it will lose an additional 15%. I don’t know about you, but that does not sound like a great investment to me. Cars are NOT investments, and should not be treated as such.

Many people make the justification that they’re paying for the peace of mind, knowing that they won’t be left stranded on the side of the road. Or they might also tell you, “I’ve owned this car from day one. I know exactly what’s happened to it, and I’m current on the maintenance.” Or maybe you’ve heard, “Buying a used car is buying someone else’s problems.” I wholeheartedly disagree.

I’ve owned many used cars in my life. Few of them have given me problems that would have been avoided by purchasing a new vehicle. Tires, and oil changes are to be expected. I’m not advocating that you go out and buy a $1,000 junker. But I do think that finding a good used car in the $5,000-10,000 range is a much better solution than paying $30,000-50,000 straight of the lot. That’s just insane.

The thing that has helped me cope with my lust of wanting a new car, is to realize that its sole purpose is to get me from Point A to Point B. A $5,000 car does that just as well as a $50,000 car. Sure, you might lose out on some options or fancy air-conditioned seats, but are those really necessary? Cars these days are built much better than those of the past, and can go 150,000 to 200,000 miles easily, with proper care.

4. Television

The New York Times wrote an article about the average amount of time Americans are spending watching TV each day. They discovered the average US Citizen spends over 5 HOURS(!) each and every day.

That blew my mind. Especially with the modern advents of the DVR, and on-demand streaming services like Netflix, Hulu, and Amazon Prime, it’s easier than ever. I semi-understand the appeal of binge-watching the new season of Stranger Things on Netflix, but the daily mind-numbing need to watch TV doesn’t benefit you.

How many successful people do you know that watch TV? There isn’t a single go-getter who wastes hours each day in front of their flat-screen. Not a single one. Do you think Warren Buffet got where he was by wasting that much time? Time is our most valuable asset, and it needs to be put to good use.

Now, time aside, TV can also cost a couple hundred dollars each month, by the time you add the NFL package and Showtime/HBO channels. Cut the cable, and slim down to the cheaper monthly streaming services. YouTube also announced YouTube TV a few months back. This could be a good alternative to cable.

5. Cigarettes and/or Drugs

Addicting consumables (whether they’re illegal or not) are a sure-fire way to remain broke. When your body is relying on the addictive impulse for your decision-making, you don’t really have much of an option. Your willpower is going to lose 9 times out of 10.

Luckily, I believe Cigarettes are starting to lose their appeal. In my parents generation, they were seen as “cool” and everyone in High School was smoking. Most kids nowadays have moved onto other things.

With a pack of smokes costing you $8, it’s not worth it. Even if they were free, it’s still not worth it. It’s not an “if”, but a “when” it will give you cancer. There’s no negotiating on this one. Stop smoking. Now.

6. The “treat yourself” or “I deserve it” mentality

Ask yourself the following questions: “Do I really need that?” “Can I really afford that?” No? Then don’t buy it.

We all need to remove ourselves from the “I deserve it” entitled mentality. Nothing that we’ve done today warrants that “special” something, no matter how tired we are, or how hard we’ve worked. I can guarantee that there is someone else right next to you who is more tired or has worked longer than you have today.

How badly do you want to set up your financial future? How badly do you want to begin investing? How soon do you want to become debt-free? By constantly telling ourselves that we deserve something, we again remove our willpower by telling ourselves that we deserve a treat and all rationalization goes out the window.

7. Hiring it out vs DIY

Rather than hiring someone to do the job for you, get out there and do it yourself. Often times, you not only save money, but you’ll get some exercise too.

I often catch myself searching for some neighbor kid to come by and mow my lawn, or rake my leaves. Whether you’ve got a walk that needs shoveled, a pool/spa that needs cleaned, or a house that needs cleaned, do it yourself. If nothing else, it will allow you to slow down, and distract your mind from the stresses of work.

8. More House than you need

I understand the appeal on this one. I truly do. Having a nice, big house is the American symbol that you’ve “made it”. It’s fun to show off to your friends, have a place you can entertain, and have a yard or a shop that you can invest time into and be proud of. The problem here, however, is that almost anyone can qualify for a home. Since the crash of 2008, the Federal Government has put policies in place to limit who can qualify, but we’re almost back to pre-recession days. Those with low or no incomes are still buying houses much larger than they can afford.

The general rule of thumb is to spend no more than 25% of your gross (before taxes) monthly take-home pay on your monthly mortgage payment.

Let’s run some numbers here, shall we? Let’s suppose you make $100,000/yr. Dividing that by 12 months, we come out to $8,333 before taxes each month. 25% of that $8,333 comes out to $2,083. Your mortgage payment should not exceed this. Be sure to incorporate taxes, private mortgage insurance, and homeowners insurance in these costs as well. (Are you considering buying a house? Check out our Mortgage Calculator.)

All-too-often, I see first-time homebuyers purchasing more house than they can afford. They’re elated by the prospect of “owning” their own home and they get in way over their heads. By sticking to this 25% rule, not only will you have enough wiggle room in your budget for utilities, repairs, and a rainy day, but you’ll also be able to sleep at night, knowing that you can easily afford your payment.

Peace of mind, for me, comes by knowing that if I were to lose my job tomorrow, I could go down to the local McDonald’s looking for a minimum-wage job, and still make my mortgage each month.

9. Eating Out

I’m guilty of eating out too frequently. I’m consistently working on cooking more meals at home.

How frequently do we go out to eat? After a long work day, it’s easy to tell yourself, “I don’t want to cook. Let’s go grab something.” Those with kids, I’m sure, have this appeal to them even more.

An average family of four can cook at home, an entire meal, for around $10. Often times, that meal will make more food than your family can eat, creating leftovers for lunch the next day. That works out to $2.5/per person. Start eating out, and that meal will jump up significantly to $40, or $10/person.

Recommended: 12 Ways to Save Money on Groceries

I work with a guy who has six kids. He says each day, his family goes through a loaf of bread. “If I paid for my kids to eat school lunch, I’d be living on the streets.”

10. Saving isn’t a priority

I get it. The thought of saving money, when you’re barely making ends meet, is a daunting task.

In my own life, I’ve seen my own financial stagnation start creeping up when I wasn’t paying myself first, even though I had a good-paying job. When you get paid, be sure to set money aside first for your financial future. Not only does this help for a rainy day that will surely come, it helps set a precedence for the rest of your life.

Doing this automatically each pay-period helps improve the chances of this becoming a habit, and the more likely it will stick. You get ahead financially by making saving a priority.


This isn’t an exhaustive list, and all of the things I’ve listed, in moderation, are acceptable. It’s when we lose sight of our goals and spending habits that we get into trouble. By curbing our destructive spending, you’ll set yourself up for a better financial future.

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