Just because you have a vehicle loan or mortgage does not mean that you are broke. Borrowing money is not necessarily a bad thing. If you are capable of maintaining your repayments, then you are considered an ideal borrower to lenders. So, it’s important to beat the broke mindset that seems to come attached to that of taking out a loan. You may owe money, but it doesn’t mean you don’t have a steady income flow coming in. Rather than expecting and accepting being broke, you should rejoice in the fact that you are capable of repaying a loan whilst maintaining your lifestyle, and saving money along the way. Here are our top broke beliefs that need to be kicked for you to start thinking wealthy rather than in destitute.
1. Credit cards will keep us on top of things
Don’t get me wrong, credit cards can be great if they are used correctly and you are guaranteed the funds to pay it off – avoiding high interest fees at any cost. Many people trying to juggle their bills and keeping in line with their current lifestyle may find themselves at an odds when they take out finance and don’t make the sacrifices to save. Instead, many keep with their pre-finance budgets and leave overflow of financial responsibilities for the credit card. Not a good idea when your income may not go up during the course of the loan and you end up with 20% overflow of your budget on a credit card every month for the duration of your loan. Not exactly a good way to set yourself up for a good credit history or a healthy financial mindset.
2. It's hard to manage when you have a loan
Being broke and having a loan do not go hand-in-hand. Having a loan means that your lender hopefully took the time to consider whether you are capable of repaying and maintaining your other billing obligations. If you think that you are going to be broke for the remainder of your loan, you are going to be penny pinching for quite a while. Cut back on your everyday expenses, avoid living paycheque to paycheque, and you’ll be happy to find that you are more than capable of managing your money with a positive attitude and willingness to cut out unnecessary expenses.
3. It is what it is
Rather than accepting the idea that you are eternally broke, change your attitude to have “done all that you could.” Don’t justify putting expenses over your budget onto credit cards because you are earning less. You should adjust your expenses to suit your circumstances instead. Expecting to be broke because of a low income isn’t financially viable and can lead to a lengthy period of money mismanagement. You’ll end up with no savings, no budget discipline, and worst of all hefty credit card bills because you didn’t use initiative and adjust to your income.
Conquer this broke attitude by acknowledging your past mistakes, taking hold of your finances, and saying no to falling into a “poor, unfortunate me,” mentality. Cut down on your expenses, get an additional income, have a garage sale of all the things you no longer need. Take the measures to decrease expenses, find ways to increase income, and payoff your debt ASAP before it becomes completely all-consuming.
4. I'm not as bad as the others
You may not be as bad as those horror debt stories you see on television, but having a broke mentality still isn’t great. Don’t compare yourself to others and think it could be worse, because if you continue to travel the way you are going, you could end up being one of those human interest segments being chased down by collectors. Using this justification when making constant small purchases will increase your debt. You might not think it is that bad, but putting $10 on your credit card every day for various purchases over the course of a 3 year loan could lead to a $10,950 credit card debt without interest included. Just because you’re not doing too badly right now with your money management doesn’t mean you are necessarily doing well. You may not have a broke mentality right now, but keeping these spending habits up could lead you to it…
A broke mentality is still a broke mentality, no matter how in debt you actually are. A healthy mindset will motivate you to take the steps to bust out of debt and start living a life within your means, and most importantly, free of unnecessary debt.
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