How to Become Poor
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How to Become Poor
Most of us have enough income to be able to live comfortably and have enough left for some of the simple luxuries in life, but most find themselves out of money a week before payday. Why? Because they have the habits that help them become poor. These are:
1. Spending indiscriminately.
While it is good to pamper ourselves once in a while, watch closely how you spend your money. Dining out every single day, getting a massage every week, buying that latest gadget can easily drain your wallet and bank accounts. Think before buying, instead of buying your third laptop just because it is on sale, or buying an iPhone 3G S even when your Nokia E78 and Chocolate 3 VX8560 are working just fine.
Impulse buying can easily get you in trouble.
2. Getting a lot of credit cards and maxing all of them out.
Credit cards are handy when you need to buy something and you do not have the money for it, but it is also a good way to spend much more than you can afford. Because you are not spending money, you think that you are not going to worry about it until the next bill comes along, which of course would be too much for you to pay.
Most people end up just paying the minimum amount on their credit card charges, thereby accumulating debt that grows bigger with interest.
3. Not understanding interest and how it works.
When you are in debt, you must understand that the longer you pay it, the worse you are for it. When you prolong paying on a certain debt, like your credit card or mortgage, you waste money by paying for interest. Understanding interest spurs you to fast-track your paying your debt, instead of just letting it go on for a longer period of time.
4. Not having a budget to work with.
A budget keeps you in line to pay what you need to pay (utilities, bills, rent, gym membership), while also telling you just how much money you can burn and still have enough left to tide you over the next few days, or until your next paycheck comes in. Neglecting to budget and account for your money is a sure way to overspend and becoming poor.
5. Not having enough savings.
As a rule, you should be keeping at least around 10 percent of what you earn. This would help you get a substantial savings over time that steadily earns interest and keeps you from borrowing money when you really need it.
6. Not taking care of your health.
Getting sick can easily wipe out your savings and empty your pockets. Medical charges, hospital bills, doctor’s fees and medicines can be very costly.
7. Having Vices.
Gambling is one of the vices that could have you in financial trouble in no time. Cigarettes, alcohol, drugs and other vices can work its magic slowly but surely over time. Much worse if you develop an addiction for substances because you cannot help but to sustain this addiction, by hook or by crook.
8. Getting and following bad advice.
When was the last time you earned money on a penny stock? Chances are, it has been too few and far between. Yet you still find yourself gobbling up a penny stock just because some expert recommended it to you on Yahoo Finance or your favorite stock alerts.
9. Not investing your money.
When you invest, you are bound to lose some and win big. Putting your money in the cookie jar or in the shoebox under your bed will not make it grow. Instead, you are letting inflation eat away most of its value.
10. Getting way in over your head.
This could mean a lot of things, like getting a mortgage on a house that you cannot afford, having one too many children, starting a company that needs more capital than you can raise. All of these situations can easily deplete your finances and can drive you into debt.
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