Do you want to enter the ranks of the working poor and live paycheck to paycheck? Have I got a plan for you! I’ve ranked the top 5 ways to ruin your finances – reminds me of a funny movie from the 80’s “Brewster’s millions”. Richard Pryor had to spend $30 million in 30 days and have nothing but the shirt on his back after his spending spree.
#5 make sure you don’t have a monthly budget and certainly don’t have any emergency savings (at least $1,000) set aside for a rainy day (e.g., roof repair, car repair, etc.). I have read a lot of books and articles about millionaires and one of the common themes is to give each dollar an assignment – tell your money where it should be going, otherwise your money will own you!
#4 have an alcohol or drug addiction problem and certainly don’t seek any treatment. I don’t think this requires a great deal of elaboration – drug or alcohol abuse is a significant problem and definitely a recipe for ruining your life, including your finances. Seriously, if this applies to anyone, AA is a great resource and you should go!
#3 lack of reliable transportation – my limited research validates my theory that lack of reliable transportation is a strong predictor of a lack of upward mobility. This is probably pretty self-evident; thank you captain obvious! My point is a little counter to conventional wisdom – most personal finance experts (including many I deeply respect), recommend you pay cash for a car – for many that is getting the cart in front of the horse (IMHO). I personally would bless a small car loan, if it advances one’s upward mobility and wealth creation. I absolutely think being debt free is the goal (of a successful personal finance plan) but it could prove significantly more challenging (to achieving this goal) without the ability to get to work.
#2 become a single parent – I’m confident the evidence is overwhelming – single parents face significantly more financial obstacles than married families – I believe this is true both anecdotally and academically. If you want to read more about the decline of marriage and the rise of single parent households, read more below. Suffice it to say, I am a proponent of having children within marriage – I think it’s smart financially and it’s a Biblical principal.
and finally, the number 1 way to consistently turn your finances into a hot mess (our southern term for a really bad situation, usually of your own doing) is, wait for it;
#1 make sure you spend more than you make
“when your outflow exceeds your inflow than your upkeep is your downfall”
hey, it worked for Greece, Detroit, Puerto Rico; and the US government has been consistently trying this great strategy for years (20 trillion in debt and counting). The goal is to live beyond your means, max out your credit cards, and pile up as much debt as you possibly can (car loans, mortgages, student loans, you get the picture).
honorable mention; items that didn’t quite make the top 5, but are sure to help with your poverty goal nonetheless:
- make sure, whatever you do, don’t graduate from high school (college, fugetaboutit (the way New Yawka’s say it (especially in Brooklyn))- captain obvious strikes again! – lack of education is another great way to get, and stay, in the poor house your entire life.
- have a really bad attitude at work, be sure to sprinkle in a little tardiness, and you are well on your way to becoming a lazy, unreliable employee; that will get you fired, at the worst possible time (count on it!).
In all seriousness, I encourage everyone to think about your daily financial decisions and consider the consequences of your lifestyle, behavior and choices. If you haven’t done so, I strongly encourage you to attend a financial peace university class and read Dave Ramsey’s book, “complete guide to money”, I’ve done both!