We talk a lot about politics and macroeconomics but what matters most for everyone is their personal situation. It doesn’t matter how good the economy is if you still struggle with your finances. Most people don’t understand money. It’s not an easy subject. You would assume that because everyone uses money there is nothing complicated about it, but that’s not true. And when we add the people’s stupidity to the equation, managing personal finances becomes hard like rocket science. People go broke because they are stupid and they don’t know the power of money. That’s why in this article I’m going to tell you 5 easy steps on how to go broke.
I want to save you the pain of the process, go broke now, why would you wait anymore when you are going there anyway? … Just in case you don’t want to go broke, you might try to avoid these steps, you know.
1. Take bad debt
One of the biggest reasons many people struggle financially is because they have taken huge loans that they have to pay off for many years. Student loans, house loans, car loans, personally guaranteed business loans, etc – all these are huge expense and the bills are coming every month whether you have money or not. If for some reason you don’t have money to pay them off (you have been downsized or anything) you can go bankrupt really easy.
2. Invest all you have in “sure things”
You have some money and you want to invest them in something you believe will make you a lot more. Not a bad idea, BUT you have to be smart. So many people have lost all they have chasing “sure things”. Educate yourself before doing something really stupid. There are not 100% sure things in the world of investing.
3. Buy everything with credit
Credit cards are the only way many people buy stuff. It’s not that bad of a habit if it’s well calculated. But when it’s not, you can get in trouble.
4. Give money to everyone who asks you for
Everyone needs money and there are always people who ask for it. If you can’t say NO, people will ask you more and more. And eventually you will have none.
5. Buy all the new things
You like to be up to date with all the new technologies and fashion things – great, that means you spend a lot. I guess the feeling of having a new iPhone before all your friends is worth every dollar, After all you have to be happy, and yeah you should probably make sure that you will have some money for food after that.
Bottom line, if you spend more money than you have, you will go broke.
The fundamentals of personal finance are not so difficult to understand. First you have to know them and then you have to apply them, and that’s the tough part. Going broke is easy and you better avoid it. By the way you don’t need 5 steps to go broke.
Category: COMMON SENSE