13 Lies Making You Broke

By Mark
  • Join my community and get a
    FREE Complete Budget Pack
    sent right to your inbox!

    Lauren Greutman Recovering Spender

    Grab a copy of my


    If you've ever asked yourself, “Why am I broke all the time?” or “Why do I feel broke?” or “How come I never have money?” Sometimes it's perception, and sometimes it's reality. But in any case, we all know that our culture lies to us daily. We've gotten used to it. Just watch any advertisement.

    “Take this pill, you'll lose weight.”

    “Save 15% on your car insurance.”

    “This cream will make your wrinkles disappear!”

    Those lies are so blatant. Most of see them coming from a mile away and have wised up not to fall for them… or to at least take the claims with a grain of salt. But then there are these other lies… the ones that seem to have become ingrained in our culture.

    “If everyone is thinking alike, then someone isn't thinking.” – General George S. Patton

    Their claims are much more subtle. Marketers have been more clever with these. They've played the long game and let these lies take hold without actually coming out and explicitly telling them. And they're happy to have us play along. Just like General George S. Patton said, if everyone thinks and accepts the same thing, then no one is really thinking it through.

    Many of these lies prey on our desires to be wealthy. But is wealth what we really want? More and more I am convinced that true wealth is not what we are looking for at all. Instead, we are lied to and told that if we FEEL wealthy, then that's basically the same thing. But having wealth and feeling wealthy are 2 vastly different things. Feeling wealthy will have the opposite effect.

    And then there are also lies that come from our own insecurities. Many of these financial insecurities come from believing and acting on the aforementioned lies in the preceding paragraphs. And we need to learn how to overcome them.

    Because they're making us broke. No matter what the numbers in your bank account are, if you've been asking, “Why am I broke?” Here are…
    Why am I broke - 13 lies keeping you poor

    13 Lies Making You Broke

    1. You need to make car payments

    If I had to pick one single monthly cost that is wreaking havoc on Americans' finances and making you broke, it is the car payment. It is KILLING us. The average car payment on a new car is almost $500 a month. I'm convinced that car payments are the biggest thief of middle-class wealth in America.

    Almost everyone I know has at least one car payment. I was there too… I made car payments from 2006 through about 2011. Never again.

    Look… I get that you need a car. You gotta get to work. But if you're making car payments, I can guarantee that the car you financed is too expensive for your budget. You may feel wealthy driving it around, but it's making you broke.

    Make your current vehicle the LAST vehicle that you finance. Then save up cash and buy a used car. It will take time, but your future will thank you.

    Why am I broke - you don't need a bigger house

    2. You need a bigger house

    In 1973, the average size of a new home was 1,525 square feet. In 2015, it was 2,687. That's a dramatic increase, folks. And if you look at these stats per family member, it's even more dramatic given today's smaller family size.

    The average living space per person in 1973 was 507 square feet… in 2015, 971. That's right, almost double.

    You don't need a bigger house and the accompanying bigger mortgage payment. You might just need less stuff. And please stop calling that house you're in right now a “starter home“. It doesn't have to be.

    Smaller house = more wealth.

    3. There's no point in budgeting when you don't make much money

    I believed this lie for way too long. Having barely enough money to pay bills and feed my family (sometimes not enough), what is the point in budgeting?

    If you don't get a plan for your money, then you will never get out of that situation. Not budgeting – even when you in dire financial straits – is a recipe for perpetual poverty.

    Here's one reason why – when your income does eventually increase, you will be so used to having no income leftover that your spending will simply increase accordingly, and you won't even realize it. And you will remain broke.

    Here are 5 essential tips to budget when you don't make enough money.

    4. You can't invest

    Investing simply means taking some of what you have now, and instead of consuming it, putting it to use to make your future better. That's it. It doesn't mean that you have to hire a broker and watch the stock ticker on CNBC all day long.

    This could be investing in an IRA, investing in your kids through a 529 account, or investing in yourself through an online course. Even if you're in the process of paying down debt, that is a form of investing since decreasing debt is increasing your net worth.

    And with regard to setting up investment accounts, it's easier than ever today. Setting up an IRA with Betterment is SO easy. super low fees, and there's no minimum. you can literally start with $5.

    Click here to get started with Betterment.

    5. Your kids will be emotionally harmed if you don't take them to Disney every year.

    I might get hate emails on this one… but it needs to be said. There is a massive wealth transfer occurring in this country from broke, debt-shackled families to the massive empire that is Walt Disney World. Their marketing is amazing, and parents have bought into the hype hook, line, and sinker.

    Your kids do not need to experience Disney World. Sure it's magical, they will have a blast, and you love seeing their faces light up upon seeing Mickey Mouse. But you've got to count the cost here. It might be the most expensive vacation that you can take.

    If you're in debt up to your eyeballs, going to Disney is a great way to keep you there.

    Why am I broke - Teens on smartphones

    6. Your kids will be emotionally harmed if you don't get them iPhones

    Growing up, imagine if you had all of the world's knowledge at your fingertips at all times. It would have sounded like science fiction, right? But with smartphones, that's our world today.

    And if you have kids (especially kids over the age of 11 or 12), most of their friends probably have smartphones. Now look – I'm not going to get into a discussion of whether or not adolescents should have smartphones and access to social media, I'm just gonna carefully point out that they do not NEED them.

    Shelling out $500+ per kid every couple years just so that they can have an up-to-date gadget isn't the best use of money. Either make them pay for it or give them an old-school flip phone.

    7. You need to buy all organic food and shop at whole foods or your family will be unhealthy

    These days, there is so much pressure on moms. On any given day, my Facebook, Instagram, and Pinterest feeds will show me dozens of pictures of 100% raw, organic, cage-free, GMO-free meals that other moms have prepared for their families.

    You know exactly what I'm talking about.

    Don't let it get to you. You can feed your kids and family a very healthy diet without spending $5 per pound on chicken breast at Whole Foods. You have so many options.

    Firstly, many foods really have no benefit to having the label organic. Secondly, you have other options besides grocery stores. Look into buying local meat. Each year, we buy a half of a cow from a local farm, and the price works out to be less than $4 a pound after being butchered.

    Lastly – check out ALDI. They've got a huge and growing selection of organic foods. Being pressured to shop at the most expensive grocery stores to buy the best organic food might be keeping you poor.

    8. Once you get a raise, then everything will be fine.

    I remember this time in 2008… Mark and I were broke, and it was our own fault (you can read the detail of our story in my book, The Recovering Spender). We thought – if only Mark could get a raise, a new job, something – THEN we would be okay.

    In early 2008, he did get a new job. And his salary increased from $60,000 a year to $70,000 a year. Of course, an extra $10,000 a year would make the difference, right?


    We were so accustomed to spending every single dollar we took home, that it didn't make the difference in our budget that we thought it would.

    Making more money is great. But if your spending habits don't change too, then you will still be broke.

    9. You can start saving for retirement later

    Right now, time is on your side. And by that, I mean, you can use the power of compound interest to your advantage. Allow me to put a little bit of math on you…

    Let's assume that at age 30, Dawn decides to invest $500 a month for 25 years. She then stops at age 55, and waits 10 years. At age 65, Dawn will have just over $800,000!

    But Stephanie waited. At age 40, she decided to make the same investment and contribute $500 a month for 25 years. At age 65 she only has $407,000.

    Do you see the power of compound interest? The same exact investment, but the one who started 10 years earlier ends up with almost DOUBLE the amount as the procrastinating investor. You cannot wait to start saving for retirement. It is making future you poor. Bump up your 401k contributions. Or open a Roth IRA.

    Again – don't be intimidated. Companies like Betterment make it so easy to start.

    10. You can't afford to give to charity.

    I get it. Money is tight. And you aren't sure if there's gonna be anything left over after you pay the bills.

    But guess what? No matter how bad you have it, someone else has it much worse. What you might consider a small amount of money is a very large sum of many in many parts of the world.

    Giving isn't just good for the recipient. Giving is good for YOU. Giving makes you wealthy in ways that matter so much more than finances. And whether you believe in God or some kind of a higher power, I truly believe that those who are generous have more opportunity and wealth given to them.

    If you believe that you can't afford to give, then that is keeping you poor.

    11. You are stuck in your current financial situation.

    There are two ways of looking at the world.

    Some believe (whether they admit it or not) that all available money in the economy is a pie, and each person is allotted a small slice. If you have a job, that's your slice. Your paycheck is what you get, and you've got to make your budget and all of your living expenses fit within those confines.

    Others don't see the world this way. Money and finances are more fluid… and if you want to make more money, you can go out and DO IT. You are not allotted just a small slice of the pie. Take as much as you want! And that doesn't mean you are taking from someone else; the pie can simply get bigger.

    There are so many ways to make extra money. You can switch careers later in life, you can work side jobs, or you can start a business. Sometimes those side jobs and little businesses making money from home end up completely replacing your normal paycheck. I'm living proof of it, and I know so many others with the same story.

    Your current paycheck is NOT the only money available to you. You are NOT stuck. Limiting yourself and your potential is keeping you poor.

    12. Your job sucks.

    You feel underpaid, underappreciated, and overworked. And then you are passed up for that promotion. Oh, and that guy who got the promotion that you felt you deserved? Do you want to know something about him? I bet you $100 that he doesn't hate his job. I bet he might actually enjoy it.

    The number one self-sabotaging career mistake is to hate your job. Gossip, a bad attitude, and a sense of entitlement are the results. And trust me, even if you think you are doing a good job keeping it to yourself, it's not a secret.

    But this is something that you can change. Only you have control over your attitude at work.

    But your job might not be a good fit or your superiors are awful (let's face it… some jobs really do suck – this one might not be a lie all the time). But if that's the case, then why are you still there? Develop an exit strategy and find a better fit. You'll be happier, and probably make much more money in the long run.

    13. Your home is a good investment.

    This lie made me broke 8 years ago.

    Many believe that their home is their most valuable asset. I disagree. It's more of a liability.

    Unless you buy and sell homes for a living, a home should not be treated as an investment; it should simply be treated as the place that you live. If you view it as an investment, it might just set you up for the poor house.

    Historically, the value of residential real estate has provided a return right at the rate of inflation. But it's been much more volatile. Remember the early-mid 2000's when everyone was going crazy buying expensive homes because it was a great investment in addition to a place to live? Didn't end so well, did it?

    The stock market has fluctuations too… but it's a different animal altogether when it's your dwelling place. If your home suddenly loses 20% of it's value and puts you underwater, you're stuck. Physically stuck… as in, you can't move. You can either ride it out and wait for the value to increase, or lock in the loss and sell your home (but you might have to come up with a bunch of cash).

    If your 401k portfolio loses 20% of it's value, it sucks, but it doesn't really affect your living situation.

    Purchasing a home as an investment instead of a dwelling usually results in bad choices. You will likely buy a more expensive house than you need, you won't have much of a down payment, and you are putting yourself through unnecessary risk.

    As I said in #2, smaller house = more wealth.

    Any more I should add to the list? Or maybe there's some you disagree with. Do any of these resonate with and speak to your “Why am I broke” question? Let's discuss in the comments!

    These 13 lies might just be keeping you poor...


  • Coming from a very poor upbringing, I carried around the “poverty mentality.” I watched my mom, who was a single parent of 5 at that time, spend way too much at birthdays and Christmas to “make up” for the rest of the year. As a teenager we spent the tax return to go to Florida for 2 weeks, Disney for a week. It was much cheaper then, but we shouldn’t have been doing it. I carried these habits into my adulthood and passed them to my children. Fortunately, my son and his wife have taken a financial course and do much better. My daughter is getting better. We not only had horrible spending habits, but it was generational. Thank God it is ending in our children’s generation, and we are getting help!!

      • I feel you on that mentality. I was a food stamp kid and I am trying to break the cycle with my daughter. Friends keep telling us to get on assistance but even though we both work and are most likley around the poverty line we rufse to get on goverment assistance. It feels good to pay for our daughter’s stuff with cash even if we have to struggle right now.

  • Hi Mark, I received a raise that will go into effect 4/1. What is the best way to handle it so it won’t be consumed into the abyss. Should I contribute the % to my 401k or have the corresponding amount deducted and transferred to my account used to pay off bills? Thank you!

  • Awesome post! I especially relate to # 1, 2, 5, 7 and 13. I do have one question: what is your opinion on leasing a car? My husband and I currently save and buy used, but I’ve been wondering about leasing lately.

    P.S. I hope you don’t get nasty comments about the Disney comment. I’ve seen that happen to other bloggers, and it is truly ridiculous!

    • Hi Claire! Thanks for the compliment 🙂
      Regarding leasing a car, in my opinion, it is often worse. The payment is lower, but factoring everything in, it works out to a higher APR. Plus, at least at the end of a payment cycle if you financed, you own a car outright. When you lease, you have to give it back and then you’re in the same spot again.

      • You also have to pay for higher insurance limits which you’re required to have with a leased car.

  • Your article has helped me a lot to understand that you always have to live within your means in order to make create space for your future. I am apparently a low income earner and I always used to think that because I earn so little then there is no need to budget, although I haven’t yet started making use of budgets I do really believe that its worth it. Thanks so much

  • Hi. What is your opinion on saving for retirement before debt is fully paid off? Dave Ramsey says not to but then you miss out on company matches and the benefit of compound interest. Any thoughts?

    • Hi Lali – paying off debt should be priority number one. But if you have a company match in a retirement plan, I think it is a mistake to leave that money on the table. Contribute enough to get the match even if you’re paying off debt.

  • I grew up poor enough that I never really understood much about money beyond trying to be successful and make more so that I could have everything that I had always thought meant success as a kid (a big house, new car, etc). We started going down that cycle of upgrading and seeking more and more until I (fortunately) had some circumstances that made me see how ridiculous it all is. Using money to create a stable current and future life can provide so much happiness and freedom, instead of that Disney vacation (unless you can truly afford it and reach your other goals!) or brand new phone. Every one of these things you shared is so prevalent in society.

  • The advice is great. My car was dying and the gas mileage was 8/12 but I loved it. It had major issues, 3 doors didn’t work right, there wasn’t enough room for my kids to have a friend in the car, but the thing that made it time to replace was the noise in the engine. My mechanic said he wouldn’t fix it because he’d be wasting my money, he knows I’m a single mom without much money to spare. So with a little saved money and my tax refund I paid in cash for a 2005 Chrysler Town and Country, it has a few dents, and one of the sliding doors needs repair, but it was low miles and super clean. We had to replace the thermostat about a week later, $16 and my son and a family friend did that. So far it’s been a dream and there’s room for everyone plus a few. I only ever bought one new car, it was a nightmare, I’m all for buying used vehicles.

  • Amen! Someone who finally agrees on the Disney trap! I can’t wrap my brain around how some families spend $5000 EVERY YEAR to go to the money hole in Florida. I can easily think of a million better ways to use that big chunk of change.

  • This is a great article. In regards to Disney, my family of 4 (6 and 9 y/o girls) just got back last week from our first trip. We used credit card bonuses for hotel, airfare and tickets (paid in full each month). I bought $500.00 worth of gift cards spread out before hand-just added up what we charged for our 10 day trip…$2500.00!!! Disney was a blast but incredibly expensive. I would have done many things differently,

    • $2500 for four people to ten days is a bargain for a vacation. Or do you mean that’s just cash on top of credit card bonuses and such? Still a great price. Unless you go camping or stay local, it’s hard to beat that.

      We go yearly, and it’s worth it to us. We don’t charge a dime though.

  • I lost my job a few years back. I was working three jobs part time while my husband was recovering from a major surgery. I finally got my full time job back and my husband is working full time but we are in major debt. I am currently working with a debt consolidation company and still have two cards with over a 1000 owed each and of course student loans over 25,000. I started a few months back putting $200 in my 401k from work. Should I stop doing that and continue paying off credit cards? I tend to use my card and then when I get paid write a check to the credit card company. However I end up running out of money every two weeks. I know I don’t budget. I have taken money out twice from my 410k when I lost my job and had little money coming in. That is why I want to contribute again. However I see in my future this summer that I will need to borrow from it again because I won’t be getting paid in the summer because I am a teacher. Any advice?

    • Kristy,
      I’m also a teacher. I have my yearly salary divided into 24 equal payments so that I don’t have to worry about the summer thing. Is there any way you can afford to do that? Is it even an option for you?

  • I could relate to most of these in the past. Now that I’m retired I can see the whole picture. It is never to soon to start putting money away for retirement. if you do that right away when your young you won’t have to worry later when, on no I’m 45 and I have no retirement. We are working longer but just in case something happens. Like to me at 52 brain aneurysm, automatically retired and you guessed it no retirement. I had not worked the previous 10 years because my hubs at the time wanted me to stay home. Wrong, as I found out you can work your whole life but if you don’t work the last 10 years before you retire you get the minimum which isn’t much. Try living off of 740.00 a month. Thank goodness I had my home to keep a roof over my head. We had an old saying “Keeping up with the Johnson’s” just don’t do it. It only feels good as long as you can keep up. Besides think about spending more time with your family and quit spending your hard earned money on frivolous stuff you don’t really need. In the end no body wants it, you can’t sell it for much and your kids will take your precious belongings to the good will or the dump. So live smartly and save that money. Enjoy your family time. Those kids are not small for long.

  • Coming from a generational poverty family too, a relative finally took my kids and I to Disneyland in 2009. We were so excited!! We packed up and were completely underwhelmed by the lack of seating, $9 hot dogs(plain) and 2 hour lines for a ride. Many rides were down for repair and it was a long day. The next day, we rented a car and went to Knotts Berry Farm nearby. It was wonderful! Much smaller crowds, small lines, awesome rides and a lot of places to sit and relax. Far more family friendly for little ones and older family members. Free live music and for $7 we got a half a grilled chicken, roll, and drink for dinner. I’d go back to Knotts but Disneyland was a super big disappointment.

  • I disagree about a home being not an investment. It is. We invested in our house, and in return have received stability beyond anything we could have hoped for, the security of knowing a landlord can’t evict without cause or raise the rent drastically (those are happening in this area at an alarming rate…you might have heard of the problem the Portland area is having), and the freedom to really make our dwelling a home rather than something we’re paying to borrow. If worst comes to worst in our lives, we can get an equity loan or sell if we must. Our money isn’t going into a black hole. In another 29 years, our home will be ours free and clear, while our renting friends will not only still be paying, but paying at the rates 29 years from now.

    We also, though, didn’t buy a house more expensive than we can comfortably pay for. A lot of people do that hoping that raises will make them comfortable in a few years, and they end up screwed.

    A house can be a great investment if you’re realistic about what you’re likely to get out of it, and understand that, like all investments, you’ll need to maintain it, which means more money.

    • Aria – I totally get what you are saying. And this might be more semantics than anything – but yes, a home is something you invest in. But it is not a traditional investment. Since you will always need a place to live, a home is more of a liability and it costs you money rather than making you money. Unlike a traditional asset, you can’t cash it out without going into debt to the bank or finding a new place to live.

      And I disagree when you say “like all investments, you need to maintain it, which means more money”. I don’t think this is true. Like I said, assets make you money. Liabilities cost you money.

      It gives you benefits for sure, and I am definitely pro-home-ownership.

    • I agree with Aria on this one. Over the past 6 years, I have dumped at least Q60,000 (local currency; for reference, my husband earns about Q5,000/month) into renting, and that’s not counting the cost of stuff that has been lost due to leaky roofs and bad electrical systems that the landlords (and landladies) weren’t interested in fixing because it wasn’t their stuff getting destroyed. We haven’t fixed it ourselves because we’ve repeatedly heard stories of renters in our area fixing stuff up that their own expense and then having the owner raise the rent because of the “better condition of the house.”

      So, perhaps owning a house isn’t an investment in the strictest sense of the term, but it gives you somewhere to live that no one can kick you out of, that you can put money into as you choose, that you can pass along to your children so they are stuck renting with lousy landlords/landladies. I won’t knock renting completely as it’s great when you’re not sure what you want to do with your life or where you might work or if you want to change jobs, but when you know what you’re doing with life, a place that you can call your own is pretty important in my book. We’ve been looking for a place (or even land) to buy for about 2 years now, but either it’s too expensive (priced to sell to foreigners) or poorly thought out house designs/construction.

  • I’m a single mom of 3 teenage boys. We are minimalists. I hate lots of stuff. There is no point and they feel the same way as me. We are looking for a small 2 bedroom apt or condo as cheap as we can get and still live in a good neighborhood. Let someone else pay for whatever breaks. I have a good job and could buy a nice house for us, but I do not want a big fat mortgage and to be stuck if I can’t sell it when I want to leave. Also, we don’t own enough stuff for a big house. I would rather have experiences and have enough money to enjoy life and time with them while they are still home with me.

  • I am retiring and was living in Florida, my younger sister had breast cancer and I moved back to Ohio. I’ve been back for a year and haven’t found a job and my husband is working part time . We are staying at 2 separate houses and have lost most of our belongings. Should we file for Bankruptcy or try to find a debt consolidation and try to pay our debt. . I am going to get around $700.00 a month starting June

  • I think an additional lie you could add is that it is normal to be broke. People seem to think that is it just an inevitable part of life and it certainly is not! I am in my early 20’s and I have lots of friends who live pay check to pay check just because they always hear about how college students are supposed to be poor. When you think that way it’s easy to say I might as well spend this last $20 at the bar or on Starbucks. It’s like they are waiting for the day they grow up and suddenly become wealthy instead of taking initiative to work towards their goals now. It takes effort and changing your mindset to get motivated and believe you can make a difference in your finances right away.

  • Leave a Reply

    Your email address will not be published. Required fields are marked *