How To Stop Being Poor and Broke: Step By Step Guide

Is there a recipe on how to stop being poor?

If yes, I wish everyone to know it to put an end to their poverty

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You hate being poor and perhaps you may wonder “Why am I poor?”

how to stop being poor

Luckily I experienced the condition of being poor to feel those who are currently poor

This occurred during the 2008 deep recession where I was laid off

I realized that my knowledge in my career was very shallow and I was not up to date

That's why I couldn't land a job till mid of 2011 so I had to work at Walmart with minimum wage

I still remember the same emotions I passed through as if they happened yesterday

That's I will discuss below how to stop being poor and broke

Why are you poor?

There are so many reasons why you are currently poor

I will discuss here what is so obvious

There can be hundred reasons but main one are

1- You come from unequipped family

Actually I was hesitant about the above title

I did not want to say you come from poor family

Because there are poor families but educated ones

I cannot forgot Richard Kiyosaki in his famous book Rich Dad Poor Dad

I cannot forget this book, I recommend everyone to read it

The book's slogan what the rich teach their kids about money that the poor and middle class do not

I felt the word unequipped or unprivileged both fit better

Unequipped in teaching you how to pursue your dreams

Or may be you lack the ambitions as you don't see your parents successful

And so you don't have a model to follow

2- You are poor because of your location

You are poor due to where you were born

I know an acquaintance who is a Vet

Back in his mother country where people there are poor

Only few of the rich people own pets so his career is completely useless

He immigrated to Canada and worked hardly on himself

Nowadays he is working in his career as a well known Vet

He is the same person but he just changed where he lives

3- Unfortunate tragedy struck your life

This can happen to anybody discovering a disease that can bleed all of your hard saved money to cure yourself

Medical expenses can cause bankruptcy to anyone

GOD forbids any unexpected health condition thing to occur that makes you spend all your money in hospitals

4- You made bad financial decisions

I have to admit I committed few bad financial decisions

Luckily I learned from my lessons and I moved forward

When I recently got married, we purchased a new car with 5 years car loan

I remember my car on the third year was not worth the full price

Meaning if I decide to sell it, its sales value will not cover the remaining installments

What do I do if you are poor?

I considered myself being poor one day

But I did not surrender

I believe what I will mention below is verified on myself

When I was looking for a solution on how to stop being poor

1- Educate yourself – horn your skills

I knew I was not up to date with my IT skills

Take myself as an example, any job requires certain skills

I worked on myself in a way that I used to record in my memory or on my cell phone the entire interview

Even when I was good at the technical questions, it wasn't enough

I had to practice the human resources questions

2- Attend a college or diploma but don't do it accumulating debt

I will not be practical if I tell you to go study 4 years of college

Look for a certificate, one year college or diploma that takes your career to the next level

3- Look for competitive opportunity

I heard a lot of stories of people working with minimum salaries only to find that they are worth more than that

Someone told me once that he got doubled his salary and his employer beat this offer by 10%

4- Always buy what you need and not what you want

You have to differentiate between your needs and wants

What you really need is something you cannot live without

Like Shelter, food and transportation, you need them to survive

But you won't want Apple watch to survive – I think you got the idea

5- Fight falling in debt by all means

If it takes you to cancel your GYM membership and not to charge it on your credit card – I would ask you to do so

The debt cycle can drag you into poverty

All of your extra money will be sucked to pay your debt

6- Find a side hustle to make more money

There is nothing wrong if you look for an extra side hustle to make more money

You can drive Uber or Lyft or even join skip the dishes

I recommend to read the below

How to Make an Extra 1000 a Month From Home Doing Easy Side Hustles

How do you survive being broke?

Again I remember my experience when I was really broke making just minimum wage

What I learned when I decided to stop being poor helped me a lot nowadays

I would like to share with you what I did to survive being broke

Never give up and keep fighting

I have to admit living 3 and half years working with minimum salary kept me thinking

Am I going to live the rest of my life like that

I realized I am the same person who never used to face this kind of crisis

It was just the circumstances and not being ready for situation like that

When bad things happen to you, keep faith that you would be able to restore yourself

Sell belongings you don't need

There is nothing wrong if you sell things you don't need

If you look around you, you may find a rug or a watch you can get rid of them

I love Facebook Marketplace as my number one resource to sell and buy used items

Also I tried Craigslist and eBay but Facebook Marketplace can attract local buyers in your neighborhood to pay cash

Live below your means

Sometimes it happens that you lose your job or get bankruptcy

You have to assess your current situation and adapt yourself to live below your means

Mortgage or rent is number one issue to look at

It doesn't make sense to pay high rent or mortgage with minimum wage

Also GYM membership would not be suitable if you are working paycheck to paycheck

Cut from your expenses

I am not referring to the fixed expenses that you cannot decrease like mortgage/rent and insurance

Here I refer to flexible cell phone plans or discretionary expenses like your morning take away coffee

You have to make few sacrifices to survive while being broke

Get rid of your debt

I know few will wonder how can they pay their debts despite being broke

Actually if you don't decide to get rid of your debt

You are still be broke

The only way to break this cycle is to waive the debt that suck your income

Increase your income with side hustle

You may be working full time with minimum wage

It drains you and thinking about working another part time job is a nightmare to you

But you can look for a side hustle to make few bucks where you decide the time you want to work

I wrote a post on how to make 200 dollars a day with lots of ideas of income you earn from home

How to stop being poor and broke?

If you are serious to stop being poor and break the broke cycle

Then follow the steps below and have a strong will to change your life

Be positive and keep your faith

I know you may not like what I will say now but this is what I believe

Acting positive and believing in yourself is the only difference between rich and poor

Spending 3 and half years working with minimum wage could have made me stay like that for the rest of my life

Only I was acting positive and kept faith in GOD

Be accountable and take responsibilities for your actions

Before blaming circumstances or your family for not saving money for you

Perhaps you may be born from a poor family but take a look at your past actions

You should be accountable for any action you should have done it to improve your situation

The difference between any two human beings in their lives is the actions they take

Taking no action is an action by itself to stay where you are

Learn some financial knowledge

You have to learn what is liability and why it makes you lose money

Liability is anything that takes money out of your pocket

Also asset is anything that puts money in your pocket

I recommend you read my post about personal financial literacy

Once you understand difference between assets and liabilities

You try your best to increase your assets and decrease your liabilities

Set clear financial goals

Without a clear and written financial goals, it will be hard to achieve what you aim for

But why written goals, well without writing down your goals you have less chance to achieve them

We as humans are able to process things visually hundred times than imagining them

When you write your goals

  • It helps you boost your motivation
  • Helps you to stay focus
  • Also it will reduce your stress level as you don't have to keep everything inside in your memory
  • You will be able to track your progress
  • Aim to achieve bigger goals
Financial Goals Roadmap
writing down your financial goals

The above is financial goals roadmap which comes with a bundle of all what you would need for managing your budget from my download page

Make an assessment of how poor you are

I was hesitant to talk about this solution as it would be useless if you use it without changing your situation

The solution here is to make assessment of how poor you are

Some people they discover they are not that poor

They possess gold and diamond jewelries to sell and make some money right away

As I said earlier if you are not planning to change your current situation then selling your possession will not stop being poor but it will make things even worse

Also beside your physical possession, assess your skills and talents

Perhaps you have a talent to make money from like painting or playing a musical instrument

Stick to a budget

Building your own budget is not an option here

You have to know and sort out your expenses and all sources of income

I always recommend budgeting for couples to help them save money

Now if you are looking on how to stop being poor then budgeting is a must do thing

Pay your bills on time

Paying your bills on time will avoid you unnecessary penalties and interest

For hassle free, I always use the below control your bills sheet and mark all my bills that are due on calendar as shown on the bills on calendar

how to catch up on bills by using the control your bills PDF file
pdf file to help you catch up on your bills
tracking your bills on your monthly calendar
tracking your bills on your monthly calendar

I have the above sheets in my ultimate budget binder product page

If you really need these 2 sheets and you don't want to pay for them – just email me and I will send them to you

Get rid of your credit cards – use envelope system

Unfortunately I realized it is impossible to track how much I spend when paying with credit cards

I know it is hard for many to abandon their credit cards – I heard stories that some decided to tear down their credit cards and replace it with cash envelope system

I am not here to judge if you should switch to the cash envelope

You have to decide if you are uncontrollable with your credit cards or you can tame yourself and force your spending to fit under your budget

Fight your debt

I call it here fight your debt as you have no other option

You have to list an item under your budget for the amount of money you want to assign to your debt every month

You know what, you pay this amount every paycheck and not at the end of the month

By doing that you guarantee to pay the assigned amount toward your debt

You can survive if you skip your grocery for one week or buy only the bare minimum

What will be worth is you lose confident in yourself being able to finish your debt

Cut expenses and practice living frugally

I though it was hard to cut expenses as everything I spend money on I cannot sacrifice losing it

But I was wrong, I was able to cut the cable and replace it with IPTV paying $30 annually

I gave up home phone and replace it with VOIP paying $2.5 monthly

Even I can get rid of it and keep my cell phone

I know it takes time to practice living frugally but it is really worth it

Because once you start to increase your income, the same man inside you will keep thinking frugally every moment in your life

Evaluate how worth you are in today's market

Be honest to yourself and see how much you're worth in today's market

If you don't judge yourself, others will judge you

I was very cynical to myself when I get an interview with written exam – I hated it as it was proving how I was delayed compared to my peers

It took me lot of time to work on myself and I was glad I did that

Time is money so stop wasting time

That's really true especially if you have 3-4 hours after getting back from work

What you would use your spare time for

Are you going to watch TV? or hang out with your friends?

Or you would rather use some of your spare time to work on a side hustle

I am not against relaxing and meeting your friends

What I am asking is to be reasonable and give some time to improve your condition

Final thoughts on how to stop being poor

Working on the decision to stop being poor is the best thing you can do to yourself

Don't ever think accepting your condition is a good behavior

Or according to your belief you show GOD that you are not chasing money

And you accept your fate thinking that this is what GOD wants you to be

That's not true, GOD wants everyone to be successful

Remember what the bible says about the man who travelled and gave his three servants different talents

He gave his first servant 5 talents and to the second servant 2 talents and the third servant one talent

Even if you have only one talent, don't hide it in the ground, go make profit out of it

Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.