6 Mistakes to Avoid When You’re Absolutely Broke

Tuesday, October 16, 2018, 6:00 AM | Leave Comment

Money always seems to be at the root of everyone’s problems, and when you don’t have any money, it becomes an even bigger problem.

When we’re faced with having utilities shut off, eviction, or accruing interest for unpaid bills, we often turn to desperate measures. However, there are certain mistakes you can make that will actually end up costing you more in the long run.

If you are in a bad financial situation, whether you just have more expenses than you do income or you had a financial emergency, be sure you avoid these six mistakes.

  • Mistake #1: Taking on more debt

    Sometimes when we don’t have the cash to fund something, whether a bill, our necessities, or a wanted item, turning to credit cards or loans seems like a viable option. However, while that influx of income may seem like a nice treat, it’s important to understand you still have to pay that money back.

    If you are in a bad financial situation, taking on more debt is not the solution. Instead, you need to find other solutions, whether that means making some extra cash or finding ways to cut back on expenditures. Doing this is more of a solution than taking on more debt.

  • Mistake #2: Unnecessary spending

    If you are struggling with funds, then you need to take a good hard look at your current finances and stop unnecessary spending. This means you may have to forgo some of your favorite things, at least until you get back on your feet financially.

    For instance, figure out what exactly it is you need to pay on your house, your utilities, and any debts you may have. Then, things you can go without, such as Netflix, dining out, gym memberships, etc. all need to be cancelled. This is all considered unnecessary spending and is not helping you get away from being broke.

  • Mistake #3: Not look for solutions

    Being broke is not an enjoyable time, but it doesn’t have to last forever. In fact, the worst thing you can do is to not look for a way out of your situation. Instead, you need to find a way to financially get back on your feet.

    For some people, this means looking into Chapter 7 bankruptcy help, finding ways to make extra money, or looking for ways to offset some of your bills. No matter what solution you come up with, a solution is better than adding to the problem.

  • Mistake #4: Ignore the situation

    Sometimes it’s easy to have the mentality that “no news is good news”. However, it’s not the best mentality to have when dealing with finances. If you are struggling to pay your bills, ignoring the situation will not help you in any way.

    Instead, you need to be completely familiar with what is happening and understand that adjustments need to be made in order to move forward and get back on the right path. By ignoring the situation, you are just putting yourself at a bigger risk of making the situation worse.

  • Mistake #5: Avoid your debt collectors

    Sometimes you may feel like not paying your bills will free up some extra cash on your end, and while it may in the short-term, it’s not the right solution. Instead, it’s important for you to face your situation head on and talk directly with your debt collectors.

    If you are going to miss a payment, then contact the company and ask them if there’s anything you can do. Most companies will either extend your due date or provide you with other solutions until you get back on your feet. However, if you don’t talk with them and just stop paying your bill, you’ll find yourself facing a worse financial situation.

  • Mistake #6: Gamble

    You may cross your fingers and dream of that big win that will put all your debts on hiatus, but gambling will only make your situation worse. That’s because your odds of winning while gambling are very slim.

    Instead of solving your financial problems, you may find that gambling simply adds to them in a worse way. If you are broke, the last thing you want to do is spend money you don’t have on something that isn’t a guarantee.

Being broke is never easy, but there are ways you can make the situation better. Avoiding these six mistakes is a start to helping ease your situation by ensuring you don’t create more problems for yourself.

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