Home Best How to Stop Being Broke – The Ultimate Guide

How to Stop Being Broke – The Ultimate Guide

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Living paycheck to paycheck? Can’t save money? In big debt? You can stop being broke, but it takes few drastic measures to get better financially.

Here are the main strategies to apply, to never be broke again:

how-to-stop-being-brokePlan better

This is the most important stage, since it allows you to set some goals, see what your main money mistakes are and prepare for a better future.

Set goals

I know everything is hazy right now and you don’t see an end to your problems. But do take a moment to envision how you could live your life 5 years for now. Or 12 months for now. Think about what you’d like to achieve: ‘pay off my credit card debt in 12 months‘, ‘save $1500 for an emergency fund, in 6 months‘, ‘pay off mortgage in 15 years‘.

‘But hey, I can’t foresee into the future and be sure I nailed these goals!‘ – this is what you’ll tell me. Even my students who are currently learning how to work from home (legally), asked me how can they just ‘imagine‘ the future, when they don’t know what will work and if it will work.

Good question.

You cannot see into the future, that’s true and most of the time you won’t reach your goals (or maybe almost get there or absolutely crush them, it really depends on so many things).

But a great thing happens when you set goals: you also think about HOW TO GET THERE. And having a plan is already a huge improvement.

Take my freelancing course as the example once again.

For the first time in my life I actually created a small business plan (my students can use it for their own online business planning) for the course itself.

I wanted to get it done in approx. 3 months time, while working for 2 hours/day (so that I can take care of my daughter) and also doing some client work.

Without the plan I’d have been nowhere near I am today: with a course that’s been opened AT THE EXACT TIME I planned to, getting students to join after few minutes since the opening, helping people to change their lives.

Am I exactly at the numbers I wanted?

Well, not yet, but I’ve accomplished MOST of my plans and it really pushed me forward.

So, don’t expect goal setting to magically solve your money issues, but it will help you find solutions better.

Please take a look at the example goals I provided: nothing fancy, nothing ‘blurry‘. You’ll clearly state WHAT you want to achieve and in HOW MUCH TIME. We’re not having goals like ‘have no money problems in 5 years time‘. What does this mean? What’s the NUMBER we’re talking about?

Not having clear goals means you cannot make a plan to get there.

So think numbers: ‘earn 2k/month, after 3 years of business, working for 3-4 hours/day‘, ‘save $4K in Jimmy’s college fund in 2 years time‘.

Make the plan

OK, so we know what we want to achieve. Now let’s see what our main steps for this are: save money, do freelancing work, sell junk from home etc.

As soon as I knew I’ll open up the course on March 1st 2016, I had to really plan my moves. What makes the biggest impact in this exact moment?

I wanted to do the design for my website, see how to handle members and test the stuff.

But this could wait.

My website had a ‘coming soon‘ page that also collected subscribers, so I could do whatever I wanted backstage. And, since the course was far from the opening day, it could look crappy and no one would care.

So I did what made sense: WROTE like crazy, since I needed my lessons to be ready for the students.

Only 2 weeks before opening I finished the design, purchased the plugin that will handle my memberships and done some testing.

Do the same with your financial plan: find out exactly what you can do to achieve your goals and work on the highest impact steps.

Start tracking your expenses

There’s no other better financial move to make right now than to start tracking how much you spend. ON ANYTHING.

It might seem like a tedious process, but it’s gonna be worth the hassle.

You need a budget

Well, we’re not really talking about the You Need a Budget tool, which you can actually use for this. Or AceMoney. Or Personal Capital, Mint etc.

Whatever you choose, whether it’s an app, an online solution, a spreadsheet or a simple piece of paper as my grandmother used, set yourself a budget.

Based on the ‘intel‘ you are already getting from tracking your expenses, it’s not difficult to set a budget. See how much you need for rent/mortgage, what it costs to keep a phone plan and how big your food budget actually is.

Work out how much you can spend each day

A lot of people are living paycheck to paycheck (self-included, years ago), because they don’t have it clear in their minds how much they should spend on average each day.

Say you have only $900 left after rent (mortgage), utilities, taxes, fuel etc.

This is your groceries and miscellaneous purchases budget.

But it’s so easy to squander it all in 5 days, if you don’t know how much you can afford on average to spend daily.

In this case, spending about $30 each day would keep you away from any additional debt.

This doesn’t mean you’ll spend $30/day each day of the month. But it will be easier to plan for your purchases, make lists and go shopping, once you have an idea about how much you should be spending.

Set few no-spend days

For some people this works like a charm to curb their spending and also helping more with proper planning. Use some creative ways to not spend money on certain days and train yourself to stop shopping for useless stuff.

Avoid fees

Change banks, pay bills on time, try to minimize the fees you are routinely paying.

While in most cases these don’t add up to huge amounts, why waste the money on something that’s not bringing you any good.


Pay off debt

Whether it’s student loans, mortgage or some credit card debt, it’s all weighing you down.

Debt is one of the main reasons you struggle with money, not to mention it can cost you some great opportunities, so it makes sense to make it a priority to pay it off as soon as you can.

List ALL your debts.

And start paying it off.

Make extra payments as soon as you can

Extra payments are a great way to speed up your debt payment process. The moment you get some extra-cash, whether it’s from saving money on eating out or a windfall, make sure you put it to great use.

Stop paying only the minimum.

Many people are broke because just paying the minimum on their debt doesn’t help them make too much progress. Don’t fall into this trap – try to pay as much as possible each month, even if this means cutting back on some of your life joys.

Getting off debt sooner will open a lot more opportunities: you can make more meaningful savings, prepare for retirement, travel more, even indulge in some spending.

See if you can negotiate the loan terms

Some banks are more willing to negotiate, in order to make sure you can really pay off your loans. They have more to lose if you suddenly can’t repay your debt, so you might be able to get some deals on this and make it all easier on yourself.

Don’t get into more debt

Avoid payday loans, cut your credit cards, stop getting deeper in debt.

Your goal now is to pay off as much as you can and become debt free, not get 4 more credit cards and another loan that will bankrupt you in an instant.


Save money

It’s irrelevant that you make a great income, if you still live paycheck to paycheck. So saving money is yet another crucial step it not being broke anymore.

Save money in a jar.

It might sound crazy, but you can save quite some money easily: just put small banknotes in a jar (money left from groceries purchases for instance, small bills you have in your wallet etc.)

Few months ago I decided to use a plastic jar that belongs to my daughter (she had some baby toys in it) to stash some small bills there.

I told my husband that, as soon as he gets small banknotes (1 leu, 5 lei, 10 lei – Lei being our currency here in Romania), to also contribute.

Whenever I went grocery shopping, I’d put a small bill there as well.

In 2 months time we had about 175 bucks there.

Sure, it’s not a fortune, but we didn’t feel the contributions and the money came in handy when we wanted to purchase some toys for our daughter.

One buck now, 5 bucks tomorrow and so on – it all ADDS up. While you won’t afford a new Mercedes, this money can be used to buy food, spend on something you weren’t prepared for or just make up your future Christmas budget.

Break down big purchases or savings

Say you need $2,500 for your 2 week summer vacation. Travel is important for your family, so it’s not something you’ll put off. This means you do need to have all this money saved until your departure date.

Instead of worrying about saving this much at once, break it down in smaller amounts. Monthly maybe.

If you have 10 months until you leave, you’ll just save $250 each month and your vacation budget will be ready.

Automate your savings

Instead of having to remember each month to set some money aside or wait until you have paid all the stuff before saving, you can get 2 things done: pay yourself first and get everything automated. So, when you get your paycheck, just set an automated withdrawal to a separate account.

It’s less time consuming and you’ll slowly build up some pretty nice savings.

Every dollar counts!

I know many people who don’t bother save money (or pay off debt faster), because they expect a fairy to come and leave a million bucks into their laps, which should eventually end up all their money problems.

OK, it won’t happen.

So, unless you’re winning the lottery or are a big earner, you’ll need to work with what you have: which is .. small numbers.

Saving 5 bucks today, 5 tomorrow and so on, will allow you to save a little at the end of the month.

Sure, 150 bucks is not huge, but, if you keep on doing so for the entire year, we’re talking 1,800 bucks in 12 months.

Hmm, doesn’t look that bad anymore.

This gives you a pretty nice emergency fund you can build on and the effort was minimal. Instead of trying to directly save hundreds of bucks (which is almost impossible when you’re close to being broke), you’ll work with small amounts that do add up.

Save money on energy

Bills add up on a monthly basis and there’s a lot of improvement that can be done.

Here are over 100 ways to save money on energy. While you won’t apply each and every strategy, at least few of them will allow you to free up some money.

Plan for retirement

Does your company offer any 401k plans? Take advantage of them. Open an IRA account, if possible. Everything you do today to prepare for your retirement will allow you to live a stress-free life during your ‘golden’ years.


Change your bad money habits

Most of our money problems come from various bad financial moves we keep on making out of habit, laziness or just not knowing better.

Unsubscribe from shopping sites, stop reading magazines that make you buy

If you don’t get ANY news about a new sale, chances are you won’t know or care about it. Too many times we forget to de-clutter our inboxes, which means we waste time with reading all this junk and it also makes us want to buy, triggering something that’s called ‘Fear of Missing Out‘. If you know you won’t resist temptation, cut the connection with such magazines, newsletters and the likes.

Stop using your savings for whims

Understand the difference between wants and needs.

No, you don’t need a new TV set, as long as your current ones still works. You do need shelter and food, maybe medication.

It’s OK to deplete your savings for a real medical emergency, it’s not such a great idea to do so to purchase that new iPhone you crave for.

Give up expensive (and unhealthy) habits

Do you smoke? Congratulations. You’re slowly killing yourself (and those near you), while also wasting thousands of dollars each year with something that brings absolutely no value to your lifestyle.

Same with video-games (if you are paying for premium items). While you’re wasting a lot of valuable hours, that could be used to earn a side income, get better educated or just spend time with your dear ones, you’re also forking your hard-earned money for useless virtual crap.

Stop lending money to others

Yes, you want to be a great friend and help those in need. But this can (and usually does) backfire. You’ll either need to wait for months/years to get your money back or even never get it back.

Happened to me few times and I’m not willing to do it again.

Be charitable, but with a limit

There are people who are giving A LOT of money to charities, while still struggling to make ends meet.

Don’t get me wrong.

I’m all for giving back to society, helping someone in need etc. It’s noble to think farther than your own needs.

But don’t spend a lot of money on charity, when you are broke. Use more money to get out of your financial problems and then you can increase your donations.


Change your mindset

When it comes to money, there’s more to improve than just plans, budgets and habits. Most of our financial mistakes come from a flawed mindset. Let’s see how we can improve on that:

Don’t try to keep up with the Joneses

STOP comparing yourself to others. You are different, your are worth more than your net-worth (pardon the pun). You should find more value in yourself than the gadgets you own, car you drive and the house you live in.

Stop using shopping as a way to feel better

If you are feeling down, seek the presence of a dear friend. Or spend time with your family. Run. Play a video-game. Or seek professional help if you are really feeling low. But don’t shop to feel better, it’s gonna cost you dearly.

Pay for quality, don’t pay for exclusive brands

For years I frowned upon buying clothing from various super-markets in our city.

Before our daughter was born, I said to my husband that I don’t plan on clothing her with this crap.

And then, when doing our regular shopping, we noticed some baby clothing. And decided to give it a try, since it’s cute, 100% cotton and inexpensive.

Guess what. We’re in love with many such ‘no-name’ brands. The clothing is of exceptional quality and the prices are shockingly small.

We learned to stop being snobbish and look for quality. If an item is of great quality, it’s OK if it’s not a famous brand, as long as it does the job so nicely.

How many hours do you need to work for an item?

Fancy a new smartphone, even if the current one is still in great shape? Maybe you’d like to get that designer bag you’ve craved for too long?

Take the price and divide it by your hourly rate. How many hours will you need to work in order to afford it?

Maybe, after making this calculation you’ll find out you can still live a fulfilling life without that bag and you can also wait until your phone will become useless, before giving your finances such a huge blow.

Don’t buy on impulse, wait for a while

A great way to curb your impulse spending is to NOT make the decision right away.

If you want to get a new jacket (which is not really needed), wait for few days and see if you still want it. You might actually get some better deals in the meantime, since you’re not rushing to buy the first jacket you see in the store.

Start spending more time with frugal people

It’s true that a lot of our actions are dictated by our entourage.

So, if your friends routinely overspend, you’ll do the same.

Start surrounding yourself with frugal people. Ask about their money habits, how are they able to save more, what tactics should you use etc.


Earn more money

There’s only this much you can save and, with a small paycheck, it’s pretty difficult to make a big dent in your debt payment process or generate enough savings for retirement.

So, it’s always a great idea to think about how to earn some extra bucks.

Look for a better job

No matter how great your current job is, you should never stop looking for alternatives. You never know what can happen tomorrow, so,  having your CV up to date and knowing what’s happening in your industry will always give you a huge advantage.

Sell stuff

Garage sales, Craigslist, eBay.

Find a venue and get rid of some of the stuff you don’t use/need anymore.

While this can turn into a small side business, you can still use it as a means to earn few more bucks for paying off debt faster, financing a family vacation or building an emergency fund.

Create a small home business

There are lots of small business ideas that could inspire you to create your own side-gig.

From tutoring, becoming a personal shopper to dog-walking or making preserves, you’ll be able to earn a buck doing something you enjoy.

Become an online freelancer

It’s pretty easy to set up shop today. Find a skill, prepare a small portfolio website and start getting clients for your great services: data-entry, translation, transcription, web design, programming, SEO etc.

If you join our freelancing course, you’ll find out the exact steps to take in order to achieve freelancing success.


What are your strategies to stop being broke? What has worked for you so far?

24 COMMENTS

  1. I don’t even know where to start, I always have SO much to say in regards to how many ways there are to save money, you have no idea! So I’ll just limit myself to say only this: everything you wrote about here is great advice. If only more people would apply at least few of these ideas…

  2. I’ve been reading your blog for a while now but didn’t have the courage to join in and “comment” 😀 This article though reminds me of one particular situation I’d like to share here (anonymously, of course).
    One of my dear friends, who actually complains about not being able to save money, keeps getting fined for illegal parking. Now that I think about it, if he would just walk few extra meters, he would probably be able to save hundreds of dollars a month! It’s true, in front of his building there aren’t that many parking spots, but intentionally leaving your car parked in a no parking zone should not be an excuse for not being able to save money at the end of the month.

    • Of course is not the same case, but I have a friend that used to always complain about having to walk to the university everyday. So he decide to buy a car and… surprise, surprise… now he is everyday complaining about the fuel price!

    • The thing is is that this is really not that uncommon, and I bet everyone has little things like this. I know that smoking immediately comes to mind, and I was lucky enough to quit a couple of years ago, and I could not believe HOW MUCH money I was wasting on those things, without even considering the health effects. What may seem like simple math to some is a big lifestyle change for another, even if it would save them money. I get it though, it is frustrating to see others do it and wonder, but it is what it is.

    • I think seeing as there are only two ways to make money, you working for money and your money working for you, then your friend would benefit greatly from saving and investing money. The one thing I hear a lot of people saying is that they don’t have money to save, and I always tell them that then they can’t afford not to save. Just tell your friend to get into the habit of saving first, and then spending instead of doing it the other way round.

  3. We’re also trying to set more money aside each month but even if we’re aware we have to make certain sacrifices, I would call them drastic 🙂 We’ve decided to give up on certain expenses (one of out biggest money saver is eating breakfast at home. We noticed we save up a lot of money by doing so!) and plan a weekly budget for food and small expenses (a daily one seemed to drastic, and a monthly one seemed impossible to plan).

  4. This is a very pretty exhaustive list! If one follows at least half of it, I cannot imagine one not ever getting out of debt or going broke. While the list is very helpful, to me it will come down to how determine the person is going to be to change his/her financial circumstance. One can’t be half-hearted about it. Otherwise, no change will happen and the person will still end up broke. I should know, it’s only when I am determined to fix my financial problems did my financial circumstance. However, when I become lax, that’s the time some of the problems will creep back in. To those who may be having a difficulty on where to start, one can actually start by doing the hard work of putting everything down on paper; how much have you save? how big a debt do you have? how much are you spending, etc, etc. Get this done, and follow the rest of the advice here and you’ll be looking at a brighter financial future for yourself.
    tabby recently posted…COL’s New Transfer FEES and its Accumulated Loss in the Long TermMy Profile

  5. We encourage our young people still in secondary education to get part time jobs. That’s beneficial for their self-esteem and sense of handling responsibility intelligently and prudently with money matters and future goals that involve saving for buying a home of their own– after buying a car in cash. I believe that saving and paying cash is doable, And believing actively, “I can’t have it if I don’t have money.” My older daughter bought her first car at 22 years old for $16k, cash. She started saving at 18. 🙂

    • 16,000 in cash, huh? That is pretty impressive, and good for her for having that goal in mind, saving up and then go getting it. If people would do more of this and less borrowing, we would all probably be better off. Anyways, I always thought that it was great to have a little part time job while I was in school. No matter how difficult your studies are, I still think that a sense of work goes a long way in helping your determination and ability to want to finish that education. Just my opinion.

  6. This is information needs to be shared over and over again. It is full of great information that will help anyone. I can’t think of one person who couldn’t benefit from the information in this article. Even people who are not living pay check to pay check should still be mindful of their spending.

    There are a lot of tips that I have applied to my life and it has helped tremendously. When it comes to making a budget, my food cost gets deducted before utilities. In my opinion, food is a necessity and not as easy to cut back on vs electrical bills that can be adjusted or put on a budgeted plan.

    Having financial goals is one tip that really stuck out to me. Getting out of debt is my goal as it is for most people. To set a specific amount and dead line makes it feel so much more realistic that it will happen and makes it more attainable, It’s taking all the debt and breaking it down into chunks that will make a bigger difference in my future endeavours to being debt free,

  7. Every single tip you listed here, about saving money, is doable. The problem with spending these days is that we lack the will to just say “stop” or to plan ahead. I have many friends who earn enough money to save at least 1 full average salary, yet they end up penniless at the end of the month. Because of reckless spending on clothes they never wear but they simply must have, because of eating out every 2-3 days, because they enjoy it, and so on. I’m not judging any of them, and I never will because they are my friends, but many times I have said ‘no’ to their invitation of going out together because I knew we were going to spend a lot and then I would regret it at the end of the month.

    • The will to say “NO” is really tough. Much like your friends, I too have friends who earn so much more. But it really puzzles me how it is the case when they earn so much more than average. The best guess is reckless spending that includes those that seemingly cost little, but adds up when done frequently. First thing that comes to mind is coffee. Let’s say a Grande costs $4.25. If you can’t live without your daily dose of coffee, it alone can set you back $21.25 in 5 days, $85 in 4 weeks, or $1,105 in a year (52 weeks)! Just imagine if a person orders coffee twice in a day, or also on weekends, or they order a bagel or muffin with their coffee. As innocent as coffee-drinking is, if one continues to get their dose of it in their favorite cafes, it can truly set a person back as high as 1K in a year. That may not be a big amount for some, but it definitely is something. So anyone who doesn’t want to end up broke should try tracking their expenses, even the little ones, as suggested in the article.
      tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

  8. Planning and budgeting are two important things that many of us neglect to do. We lived frugally, alright, but I lost my job and since my family was fully dependent on my salary, it was such a terrible blow on our finances. I racked up credit card debts on food and anything else I could use it for just to get by. This all happened because we weren’t able to set aside some money for an emergency fund to cover situations such as sudden loss of income. We just spent whatever money came in. It took me years to recover from that financial blunder. I’ve learned my lessons and I now have multiple streams of income. I also make it a point to pay myself first. I still have some credit card debts but I have the balances transferred to one account at a very low interest rate and I’ve been paying the installment amount religiously. I hope to be debt-free in a year. I regularly read finance blogs like this to motivate me to stick my financial plans.

  9. We were never actually broke, but we did realize at one point that we actually never set money aside! We used t live month after month, never setting money aside for anything. Now we would like to start a family and – whoops! – we realize we need to start budgeting!
    So, this article come in handy! Thank you so much for the detailed guide 😀 We already gave up on spending money on useless stuff, we don’t have debt and don’t plan to get into debt anytime soon, we stopped lending money to friends a long time ago (got “fried” once, so never again!) and it seems we’re on the right path 🙂

  10. There are so many tips in your article that apply to me but that I had never considered before in my life, like the tip about selling my old stuff. I have so much stuff that is just sitting there and now that I think about it, I’m sitting on a virtual goldmine. And that money will certainly go a long way toward helping me clear my debt.

  11. Great tips overall. The only thing that I’ve tried from here that doesn’t work for me is looking at what I have to spend per day. When I’ve tried that two things happen — I feel like I can/should spend that each day or I feel guilty because I go way over if I need to make a big purchase. I wish more people would prioritize their financial health. Some of my family members don’t budget because it stresses them out. I get stressed if I don’t!

  12. Making a plan, setting clear goals, and keeping priorities straight are all biggies! So much great advice here.

    One “trick” that has actually helped my husband and I spend less and save more is to simply use real cash (rather than writing a check or swiping a debit card) as often as possible. It forces is to actually see and feel what is going on with our money in a way that numbers on the check register can’t. And of course when credit is not an option, you are forced to live on what you have. I really believe that is the key.

    Great post! I will be sharing this!

    • I know what you mean. I tend to spend way more than I would have otherwise when I use credit cards or checks. When you count out that cash and hand it over, you can really feel the difference, and you’re more likely to make wiser choices.

  13. “Stop paying the minimum” is a key point. Many cards are set up so that the minimum payment makes you pay double the balance or more over time.

  14. Ok this is one of the best well written articles I think I have ever read this in depth about how to stop being broke ever. You list many great ideas and coming from someone who has taken Dave Ramsey’s Total Money Makeover book and changed my life to become debt free..you rock. I will say one I had not heard of before though but makes perfect sense…. hang out more with frugal people! That is perfect and so true but I didn’t realize it. That would so strengthen a person to be spurred on to keep up the fight to not spend!

  15. Wow. These are really great suggestions. If someone were to use just a handful of these and invest the money they save wisely, they would be well on their way to financial freedom. Thank you for all the tips and suggestions that you provide on this blog.

  16. We all are trying to grab more money every day but some time we failed and we must have to bear the loss. Its all part of life. We only can try but all the End we will able to find what is beneficial for us. What we have saved.

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