There are some obvious reasons people stay broke; unemployment, underemployment, sick, disabled, lazy or unemployable.  If you’re working, living paycheck to paycheck, and feel broke all the time, check out this list of the top ten reasons people find themselves poor.

1.  Borrowing money to get out of debt.
There’s an old saying, “robbing Peter to pay Paul,” which basically means borrowing money to repay debt–and it’s a bad thing.  Here’s why:  When you’re in debt, your first priority should be getting out of debt.  Many people made the mistake of taking home equity loans to pay off school loans, credit cards and consumer loans.  When the housing market fell out and they found themselves upside in their house, they already had a new batch of credit card and consumer loans –and they lost their home.  When you’re broke, the rate of interest you get on these loans is higher than when you’re flush with cash.  Don’t ask me why this is, it just is.  Also, people that are broke often borrow from payday loans or pawn their stuff and the interest rate is astronomical.  If you’re broke you need to be “all cash, all the time.”  If you don’t have the cash for it, you can’t afford it.  And don’t borrow from family and friends because when you can’t repay it and you won’t, it causes break-ups of these relationships.

2.  Recurring Bills and Auto Withdrawals
Recurring bills are those things you purchase and pay monthly for, ie.  insurance, cell phone, cable, broadband, movies, music, utilities, etc.  You know it’s recurring because you’re either in a contract or if you don’t pay for it, they shut it off.  If you’re broke, you should look at every single recurring bill, decide that you can or can’t live without it and get rid of it.  Because of online banking, many people take on new recurring bills and set them to auto pay.  While it may seem convenient to do this – if you’re living paycheck to paycheck, there will be a day when there’s not enough in the bank to cover that auto withdrawal and that will cost you $35-$55 per occurrence.  Shut off all auto pay and manually pay those recurring bills, a $5 late fee is better than a $50 overdraft charge.

3.  Dining Out/Fast Food
As a culture, we’ve gotten lazy about our food preparation.  Everyone has to eat and there is always an expense to it but eating out regularly is a recipe for being broke.  Taking your lunch to work will save you hundreds every month.  Eating in can save you thousands in a year.  And realize this – when you do go out to eat, the most expensive thing you can do is drink something other than water.  At fast food restaurants, they’ll sell you a double cheeseburger for $1 and a large Coke for $1.75.  Where do you suppose the profit is for them?  If you’re in a restaurant and order beer and wine, you’re likely to double your ticket.  If you want to stay broke, keep eating out, order the so-called value meals and pay retail for liquor.

4.  Not saving money.
The silliest thing you can do with your earnings is spend it all every check.  The old saying pay yourself first should be your rule.  Yes, this can seem hard at first, especially when you’re broke but it’s the only thing that can provide you a light through the broke down tunnel to financial freedom.  When you get paid, take ten percent of it and put it in savings.  Then when your car breaks down at least you can get it fixed without having to take a payday loan or borrow money from family or whatever.  You might even be able to take an opportunity that can make you more money if you just had a little you could invest.  Broke people consistently spend everything they make – don’t do it.

5.  Mishandling creditors
This is a huge area of being broke with many aspects.  Mishandling creditors includes not communicating with creditors when you have a problem.  Most creditors will work with you if you cannot pay one month.  You can call and negotiate settlements of old debts.  You can even call and get a lower interest rate on most loans.  Broke people stick their heads in the sand with regard to their problems with creditors.  The result, poor credit history, increased rates, collection calls, lawsuits and finally lack of any credit whatsoever.

6.  Not staying current
In addition to mishandling creditors, many broke people just cannot stay current with their bills.  When these are “optional” bills like cell phone, cable, movie rentals, and other luxury bills, this is just stupid.  Late charges, suspended accounts, bad credit reporting, are just a few of the problems that come from not keeping current.  Staying current is really just paying attention, particularly if you actually have the money to pay.  Maintaining your mail is a must and timely writing the check is essential.  Don’t be silly, pay those bills on time or get poorer.

7.  Sin Taxes
Ok, so you like to drink, smoke, take drugs, go to strip clubs, whatever.  Know that the one pack of day smoker pays at least $150 per month for tobacco.  Do these things if you want but know that they’re all heavily taxed, leave you nothing to show for your money and are a reason that you’re always broke.

8.  Making unrealistic promises.
Every broke person knows this situation:  your cable is due to shut off on Friday so you call the provider and tell them that you’re expecting a check on the following Monday if they could just wait.  They might but that check you’re expecting probably won’t arrive.  Unfortunately your best bet if you’re unsure is to just let the cable go – if you’re broke you shouldn’t be watching tv anyway.  This goes for all credit accounts and loan repayment obligations.  Don’t promise anything, just pay when you can and negotiate to get rid of it as fast as possible.

9.  Excessive Consumer Goods
We live in a consumer based economy and are constantly bombarded to buy new stuff.  What broke people tend to do is when they get paid, they buy new stuff.  If you’re broke you shouldn’t be buying stuff, you should be selling it.  You should try to recoup your losses on luxury items and non-necessities you’ve purchased over the years.

10.  Ridiculous Repayment Programs
Sometimes it’s helpful to consult with a professional about how to go about getting out of debt but under no circumstances should you sign up for a debt repayment program.  What happens to you in those is worse than filing for bankruptcy and they’re profiting at your expense.  If you really want to get out of debt and get some financial freedom, make sure you’re not guilty of numbers 1-9 of this list and do it yourself.