Why am I always broke?

My mother used to use this phrase all the time: “That’s just robbing Peter to pay Paul.” Now, I wasn’t exactly sure where it came from, but I knew what she meant. If you find yourself always a little short, pulling money from one pot to put in another — and not having enough in either — you know the strain of financial stress.

It can flat out wear you down. Kimberly Palmer, author of the Alpha Consumer blog, has put together a handy list for the “Constantly Broke.” For those trying hard, but still fighting to keep your head above water, ask yourself these questions:

1. Do I know where my money is going? Not some of it; all of it.

2. Am I focusing too much on the month instead of the year?

3. Do I do something every day that wastes money?

4. Do I know my own weaknesses?

5. Am I saving too much?

6. Is my relationship hurting my bank account?

7. Are the big items dragging me down?

8. Am I wasting money by carrying debt?

Here are few excerpts worth noting:

Question No. 2: Am I focusing too much on the month instead of the year?

Research suggests that people often fall victim to forgetfulness when budgeting by the month. They tend to overlook unexpected and one-time expenses, such as car repairs or gifts, so underestimate how much they’ll need to spend. But when people budget by the year, they tend to factor in those costs. Research by University of Southern California’s Gulden Ulkumen, Cornell’s Manoj Thomas, and New York University’s Vicki Morwitz found that college students were about 40 percent off-target when budgeting by the month, but only three percent off base when thinking by the year.

Question No. 5: Am I saving too much?

This question might sound counter-intuitive – how could anyone be saving too much? But if you’re going into debt to fund your lifestyle and you’ve already cut back wherever possible, then it’s time to look at how much money you’re funneling into your 401(k). While it always makes sense to take advantage of matching programs from your employer, it doesn’t make sense to save additional pre-tax dollars at the expense of a hefty credit card bill that comes with a 10 percent or higher interest rate.

Question No. 7: Are the big items dragging me down?

According to Elisabeth Leamy, Good Morning America’s consumer correspondent and author of Save Big: Cut Your Top 5 Costs and Save Thousands!, it’s the big items, not the small ones, that hurt people’s finances the most. She suggests focusing on minimizing your mortgage, car, health, debt, and grocery payments. Buying a used car instead of a new one, for example, can save drivers tens of thousands of dollars. Plus, she says, since “cars these days are really well built, the risk is lower than it used to be.”

Blog question: Are you “constantly broke?” What do you attribute it to? What solutions do you have?

Follow me on Twitter @atlbargains or on Facebook at AJC Atlanta Bargain Hunter

8 comments Add your comment

LOL

April 29th, 2010
4:51 pm

I’m always broke, but its because there are not any good jobs around right now. Can’t save money if you don’t make that much.

N

April 29th, 2010
5:05 pm

If saving money is important one can save money at almost any pay level. You could hear someone making $22k and someone making $100k both saying they don’t make enough and that they are not saving anything. Most likely both of them have things they waste money on every day.

Once you get started it feels good to have that cushion and it becomes easier once you see the rewards.

Joseph Pulitzer

April 29th, 2010
6:36 pm

The prize passes on this blog this time.

Byron Mathison Kerr

April 29th, 2010
8:59 pm

I used to go to restaurants for most of my meals. That’s always a major budget buster. Over time I gained so much weight that my cholesterol level went through the roof. I finally had to take two separate statins to get it under control, and even with prescription drug benefits, that just added more to my monthly expenses.

So I got serious about my diet, starting eating healthy at home, got used to it, and even lost the extra weight. My cholesterol returned to reasonable levels, and I was able to stop taking the statins.

In effect, I was spending a lot of money on a culinary lifestyle that was only making me less and less healthy.

Bayou Chick

April 30th, 2010
10:38 am

I’m not always broke, but this is good food for thought. I spend too much money eating out. I may prepare meals at home for a while and then I fall off the wagon and start eating pricier, less healthy foods when I get tired of my own cooking. I also tend to overspend when I go to Wal-Mart. I never adhere to my shopping list when I go there. I might walk in to buy 10 items and leave with 15-20.

Kim Palmer

April 30th, 2010
11:32 am

Thanks for the mention, Rana!

BigDikDaddy

April 30th, 2010
12:51 pm

I get my ladies from CraigsList now and save a lot of cheddar. So what if they ain’t got no teeth?

Richard

July 1st, 2010
11:27 am

I’ve been an attorney working in private bank trust departments for almost 20 years. I’ve seen how people with money acquired it and how they retained it. They are smart enough to know that you can never acquire money by spending it. They would sooner die than go into debt to buy consumer goods. They’ll go into debt but only to purchase property likely to appreciate.

These are the people who, instead of buying iphone after iphone and ipad after ipad, bought the stock of Apple when it was selling for about $7 early in 2003. Today, July 1, 2010, it sells around $260.

People with money don’t care about consumer goods, cars, big-screen TV’s or anything else that the masses “must have”. They know all this stuff is junk and that to buy it simply wastes money better deployed otherwise. In short, people with money got and kept it not by buying things but by buying the stocks of companies that sell things to other people…you for example.

I’ll leave you with this unsettling thought. Suppose you’d had $15,000 in October 1980 and that you’d been of a mind to “invest it”. You might have been lured to purchase jewelry, say a diamond ring, on the utterly untrue but long spread lie that diamonds are rare. Any jewelry store would have been happy to lure you in with a lot of special lighting over plush counters served by shills who are trained in how to try to induce you to put reason on hold and think romantically about how happy you would be if only you had a $15,000 diamond ring. They’d tell you it would be “AN INVESTMENT”. God help you if you fell for the scam. The ring you’d have bought on Friday, October 10th, 1980 for $15,000 would have been worth about $3,000 on Saturday, October 11th if you’d tried to sell it. It might not be worth even that today.

On Friday, October 10th, 1980, stock of Johnson & Johnson traded around $83 per share; you could have bought 180 shares for $15,000. That investment, a REAL INVSTMENT, would today, July 1, 2010, be worth over $500,000. After 48:1 stock splits, you would have over 8,600 shares of Johnson & Johnson paying annual cash dividends of almost $19,000.

You can be young in this country and be without money but this is no country in which to be old and without money. If you have no money you have no power. If you want to end up parking cars for a high school kid who owns a parking lot, keep doing what you’ve been doing. Keep buying “diamond rings”. If you want to have some say about where and how you live and on what terms, leave the consumer good on the shelves and buy the stocks of companies that sell things to other people. Just make sure you’re not the “other person”..

Good luck.