When I tell people that our family used to live broke 2 weeks before payday, half of the people are usually confused and the other half totally get it. My husband Tom used to get paid once a month (still does), back when I was a stay at home mom and while I worked part time occasionally, for the most part we depended on his income. No matter how hard we tried, without fail, every month, we would have little to nothing in our account 2 weeks before getting paid again. The stress of this caused me a lot of anxiety which then lead to me pre-planning how I would spend our next paycheck. Thankfully, those people, and that way of living is foreign to us now and I wanted to create a little How to Stop Being Broke GuideBook for anyone who might find themselves in a similar situation.
Try to avoid rock bottom
I wish I could tell you that after a few months or even a year living this way we realized we needed to change our ways, but the truth is, it took years and hitting financial and emotional rock bottom before we were shook enough to make a change.
As the kids got older, I started working more which meant more money was coming in. Of course, as anyone who has ever struggled with money knows, you can never make enough money to compensate for bad money management. We stayed broke and struggling. It was simply that we had more money to spend on more things. This of course gives the impression to the outside world that we were doing fantastically.
If I could offer you any piece of advice it would be to avoid rock bottom — because a lot of people won’t. So many of us tend to stay stuck in our bad spending cycles because we don’t have the answers to how to get out. Well, I’m here to give you the answer guide.
Rock bottom realizations
- No matter how much stuff I bought, it was never enough
- All-inclusive vacations aren’t actually relaxing when you’re still coming home to debt
- Making monthly credit card payments doesn’t actually get you anywhere
- Not knowing what you don’t know is the most helpless feeling in the world
Going cold turkey on shopping
I had to admit to myself that a big part of our problem living paycheck to paycheck was my spending habits. Being home with the kid(s) all day usually left me feeling antsy and craving an escape, so I would take the kids to Target just to look around and see if anything caught my eye.
I lived for the rush I got from buying something new. A lot of times this meant stuff for the house, new outfits for the kids (even though they had plenty), and clearance rack outfits for myself. (There is this funny thing shopaholics tend to do and that is trick themselves into thinking that when you buy something at a discount, you’re saving money. In reality, you’re still spending money, therefore saving nothing.)
When I came to the realization that shopping and buying new stuff wasn’t actually bringing me any lasting joy, I decided to go cold turkey on shopping. I created a minimalist closet for myself, and only accepted hand-me-down clothes from friends.
Guidance for shopping addiction
After going through and recovering from a major shopping addiction, I wanted to create a guide to help other shopaholics ditch their bad spending habits and get their finances back on track. It’s called Shopping Rehab and it is designed to help you:
- Get familiar with your spending urges so they don’t sneak up on you
- Practice “high maintenance spending” and ditch buyer’s remorse
- Keep a consistent shopping fund while beefing up your bank account
A note on spending freezes
Before I go on, I feel that I need to make it clear that I’m not necessarily in support of spending freezes. My decision to stop buying clothing came from this deeper-seeded knowing that constantly shopping wasn’t actually making me happy.
A lot of times, I believe that going on very strict spending diets are the same as going on a very strict real diet. You may get some fast results, but chances are, you are going to relapse and you are going to relapse hard.
Pursue something bigger than stuff
My biggest recommendation for those of you who feel you might benefit from spending less or reducing how much you shop would be to remind yourself of the stuff you want for your life that is bigger than your next purchase.
Create more income without working more
One of the biggest realizations that so many of us never consider is that a lot of times we are staying broke out of habit rather than necessity. This of course isn’t me saying that people are broke by choice, or that everyone who struggles can simply make a few tweaks to find more money.
Life is getting more and more expensive today and many people are living in true poverty. That being said, let me take a moment to acknowledge my privilege when it comes to matters of money.
My family had plenty to live on and plenty to spend. Yet the habits and lifestyle we created still kept us broke. This is what I mean when I say that most people living in middle class or higher often times are able to free up more income by learning to live within their means.
How to free up more income
The best way to create monthly income is to review your monthly expenses and find areas where you can eliminate or cut back completely. Some ideas on where to cut back are:
- Monthly subscriptions
- Gym memberships
- Entertainment spending
- Pay off your debt
By doing this our family was able to free up thousands of dollars each month largely due to the fact that we were able to downsize our house and reduce our mortgage payment.
If you need additional help in this area, this is a topic I go in-depth with in my Shopping Rehab guide.
One of the things rarely, if ever, discussed when it comes to money and spending is the immense benefits of practicing mindfulness and gratitude.
By learning to be happy and content in each moment I was currently living, I was able to slow my spending impulses and my cravings for more, more, more.
When you are not chasing the next high and rather fully living in each moment you have, you begin to find an inner peace that slows your bad spending habits and forces you to face the real reasons you’ve been running from your present reality in the first place.
More resources on mindfulness:
- 9 Ways to Practice Mindfulness Before You Get Out of Bed
- 5 One Minute Zen Practices for Life in a Busy World
- What Happens When You Stop Speaking Negatively About Yourself and Others
Learning to really budget
When we were living paycheck to paycheck my method for budgeting only included making sure we could pay our bills and that was it. In reality, there is so much more to consider when it comes to budgeting.
Here is a quick breakdown of how to better budget your money:
- Review your previous spending to know how much you are spending and where
- Budget for every single dime you spend (entertainment, out to eat, gas, car and home repairs etc.)
- Make adjustments to areas where you are spending more than you want to
This is again a topic I discuss in greater detail in my Shopping Rehab guide.
Pay off debt
One of the best and biggest ways to free up more money each month is to set a plan to pay off your debt. This was something my family and I did and we were able to pay off over $6,000 in just 6 months!
We used the Debt Snowball method to pay off debt as made popular by Dave Ramsey. Here is a quick breakdown of how this method works:
- Free up an extra $200 per month
- Apply this amount to your smallest debt along with that debt’s current minimum payment
- Continue making minimum payments on all other debts
- Once you’ve paid off your smallest debt, take the amount you were paying and begin applying it to your next smallest debt
Healing a relationship with money
One of the toughest parts (at least for me) was learning how to shift my mindset and habits around spending. I slowly gained the tools I needed to better manage my money, but breaking the bad spending habits and negative beliefs. I had around money was a much more difficult, slow, task.
Some of the best tips for healing a broken relationship with money are:
- Stop judging or condemning those who have more money than you
- Understand where your desire to spend is coming from
- Get comfortable with watching money sit/grow in your bank account
- Find guidance and teachings that encourage you to pursue a life bigger than stuff