There’s plenty of people out there that want to begin investing in real estate, but they say they don’t have any extra money or they’ve got horrible credit. They’re broke and frustrated. They genuinely may want to become real estate investors, but they have a tough time holding onto money.
Granted, each scenario is different, but there are some common reasons why a majority of people are broke and living paycheck to paycheck. Here’s 7 reasons you may be broke:
- You buy cars new
If you buy a new car, that car loses 11 percent of its value as soon as you drive it off the lot. That’s a lot of depreciation within a minute. There may be those that think buying a used car means you’re taking on someone else’s problems, but if you do your research and purchase smart, you can buy a car that’s 3 to 5 years old with low miles that will last you a long time. In the long run, you’re paying less money per mile.
- Leasing a vehicle
If you’re leasing a vehicle, you’re renting a car that you’ll never own. For the time you have that lease, you’re paying more money than if you were to purchase a used car and drive it for the same amount of time. Even if things go wrong with that used vehicle, chances are you’ll still be spending less money over time than with a lease, and you’ll eventually have an asset when the car is paid off.
- You live in a huge house
When you decided to buy a home, did you bite off more than you could chew? Did you decide to go with that huge house in the suburbs over the more affordable, smaller home? Many people are broke because they buy (or rent) a bigger house than they really need. They fall into the trap that “more is better” and then the living paycheck to paycheck starts happening. It isn’t long before they feel trapped financially and should one major thing go wrong with the home, they start digging a debt hole that will keep them broke.
- You eat out at restaurants often
If you’re broke and you’re eating out at restaurants often, this may be contributing to your lack. The average restaurant meal costs $15 to $25, and with drinks and tip you could walk out having paid $35 or more per visit. If you’re broke, buying groceries and cooking at home is by far the wiser choice when it comes to food budget. There are plenty of meals you can make that are budget friendly and delicious.
- You have every channel there is on cable
Do you really need 200 channels? Some cable bills can get quite expensive when you go with the large packages. Ask yourself if you really need all those channels? There are plenty of affordable options now due to other companies providing streaming services.
- You think you deserve everything
You do deserve some great things in life, but if you’re buying things or the “best” things out of an “I deserve it” attitude, you’ll likely stay broke. Learn the difference between wants and needs. You need things like shelter, food, and clothing. You may need a vehicle, but pay attention to what you want and what you need. Do you need a new vehicle that costs $38k? Or is that a want? Can you settle for a more economical vehicle? Do you need a boat? The largest flat screen there is? The latest iPhone? Before making purchases, really consider your wants vs. needs.
- Luxurious vacations
If you’re dropping thousands on luxurious vacations several times a year, this could be contributing to your empty savings account. Sure, vacations are wonderful and it’s great to schedule them regularly, but stick with a small budget if you’re struggling with financial issues. Go with a short, affordable get-away rather than a week or two at a luxury resort. There are plenty of ways to enjoy rest and relaxation without over-spending.
These are simply a few of the reasons you could be struggling with finances. To change things around, it will take some effort to really get honest with yourself about your spending habits. You may need to create a budget and stick to it. You may need a financial expert to help you get on track.
The bottom line is that you can begin to change things around financially, and start saving money, but it will take discipline. Then, once you’re socking money away, and experiencing more financial freedom, you’ll then be able to start investing in real estate, which can help you make even more money to sock away!