Advertiser Disclosure Please note that some of the links below are affiliate links and at no additional cost to you, we may earn a commission.

What to Do When You Are Completely Broke

If you’ve had to ask yourself the question, “I’m tired of being broke, what can I do?” then you are in the right place.

what to do when you are completely broke
  • If you are completely broke and don’t know what to do next, this article is for you.
  • You have more control over your current situation than you might be willing to admit.
  • For more ideas on how to make money, check out our articles on increasing your income and making money online.
  • Surveys are a great way to get some extra cash in your pockets.

If you’ve had to ask yourself the question, “I’m tired of being broke, what can I do?” then you are in the right place. Do any of these situations sound familiar to you?

  • I’m completely broke, my next check is gone, and rent is due in a few days.
  • I have zero dollars in my bank account but need food and diapers for my baby.
  • I have bad credit, so I can’t even take out a personal loan to pay my bills.
  • I’m stuck, work a horrible low paying job, and feel miserable.
  • I’m feeling angry and ashamed that I can’t support my family.

If you can relate to any of these situations even just a little, then again, you’re in the right place, and you should continue reading this article.

A short backstory of why I can relate to your current situation

When I first graduated from college and got married to my wife, we had no money. We both worked low-paying jobs and always had close to $0 in our bank account. We would say to ourselves, “we really need to start saving our money.” But, it seemed like all the money that came in disappeared before we could save even a penny of it.

Fast forward only three years later. I went from making $20,000 a year to almost $80,000. I was able to start working on building MayoFi to help other people like myself become financially successful. We saved over $17,399 in less than three months and $30,000 in about eight months. And we closed on our first home.

So how was I able to do that?

It may be hard to figure out what to do when you are completely broke, overwhelmed, and struggling financially. However, despite how gloomy your life may look (and feel) right now, it doesn’t have to stay that way. And by the end of this article, it won’t stay that way.

I’m not going to give you vague advice on making more money or give you a cheap pep talk on how you should be thankful for whatever. Instead, I’m going to focus on the things that you can control in your life. The things that you can actually get your hands on to make a real permanent change in your life. I call these the controllables.

You’ll be able to start taking real actionable steps toward bringing in more money, increasing your outlook on life, and having a positive brighter future.

In an effort to keep this as simple as possible, I’m going to break down this article into five major points. Each point will build on the next, so you must read them in order from start to finish.

And one last piece of advice before we dive into the meat and potatoes of the article. Some of the information I’m going to give you may sound cliche, or perhaps you’ve heard it before. However, I guarantee you that if you take what you read seriously and apply it to your life, you will see positive change. How do I know? Because they’re the same steps I used.

Let’s get started.

1. Assess your current situation

This first step is one of the most important steps—taking a step back and assessing your situation. What does that mean? It means to be objective. To look at your situation without any blinders, emotions, or biases.

If you are in a situation where you are living paycheck to paycheck and can’t make ends meet, then you need to change. Period. And not just change in some mystical, philosophical way. I’m talking about literally changing your day-to-day habits, thoughts, and actions. Forcing yourself to form new rhythms.

However, you can’t begin to make that change until you first sit down with yourself (and/or your significant other), assess your situation, and decide what needs to be changed.

In the spirit of being as practical as possible, let me give you a real-life example of how this process of “assessing your situation” might look.

  • Problem: You work a low-paying job, can barely afford rent, and don’t have any savings in your name. Every month it just seems like you worked all month just to barely survive that previous month. And now you have to do it all over again. It feels like you’ll never get ahead.
  • You assessing your situation objectively: “I am broke, and I need to change. But how can I change my situation? What must I do to move forward and get myself out of this hole? There’s so much to think about; where do I even start? Okay, let me take a breather. Maybe I should create a definitive plan of action on what my next step will be.”

Do you see what you are doing? Instead of becoming overwhelmed with fearful thoughts, feelings of inadequacy, and bad emotions, you decided to be objective and form a plan of action.

Without a plan, you are merely guessing. Without a plan, you have no goals. And without goals, how can you score points to win the game? Creating a plan is crucial to your success moving forward, and it’s what we will go over in the next step.

2. Make a plan and decide your next steps

Now that you’ve assessed your situation and decided that you are committed to making a change in your life, it’s time to form a plan. This is where things start getting real.

For starters, it’s important that we make a distinction between necessities and luxuries. Necessities are things that you absolutely need to survive—food, water, shelter. On the other hand, luxuries are things that you can live without—Netflix subscription, Starbucks, a night out with friends.

Are you prepared for a gut punch? You absolutely need to cut all luxuries. All of them. Until you are in a situation where you can comfortably afford to have luxuries in your life, you are only hurting yourself and your family by having them.

Next, you’ll want to set your priorities. Once you’ve set your priorities, you need to eliminate everything else from your life that is costing you money. Priorities go like this:

  • Keep a roof over your head. Even if you have to eat beans and ramen noodles in your underwear just to pay rent. Do not lose your shelter, especially if you have children.
  • Feed your kids first. If your kids are hungry, that is very dangerous territory. Child protective services does not care if you’re hungry. They don’t care. But if your kids are hungry, you may have to kiss them goodbye. Aside from the fear of protective services, it’s your duty as a parent regardless to take care of your children.
  • Pay your utility bill. However, avoid using energy eating major appliances such as your HVAC or air conditioning. If it’s cold where you are, use a space heater in one room, and congregate in that room. Need hot water? Set very strict limits on your hot showers to avoid high energy bills.
  • Pay your water bill. Unless you live somewhere that includes water in your rent, you’ll need to pay for water usage. Again, this is a necessity, so be sure to pay it. However, set very strict rules on water usage in your house to keep your bill down.

Other than those four items above, everything else should be considered a luxury. Need diapers? Buy cloth diapers so that you can reuse them over and over again. Diapers are highly expensive and will leave your wallet empty. Need entertainment? No, you don’t. If you are really serious about getting out of your current situation, you need to focus on being productive. Instead of wasting your time and money watching cable TV or Netflix, cut those bills, and use your time to learn a new skill or build something that will make you money. More on that later.

It’s also worth mention that you should also not be afraid to apply for government programs. Yes, if you are in a situation where you just paid your rent and didn’t have any money for groceries, you need to drop your pride and apply for government assistance. This is especially true if you have a child. Programs such as food stamps and affordable housing could literally save your life.

These programs are not as bad as you might imagine. Food stamps are not stamps that you use to buy food anymore. Nowadays, you’ll likely receive a plastic card that you can swipe just like a credit card. In most stores such as Walmart, you can typically buy anything that says “EBT” on it, which is many things (including diapers).

Apply for these programs. Pride will not keep you dry and warm. Pride won’t keep your stomach full and your kids safe. Use these programs while you work toward building yourself up to a brighter future, which you will after reading this article.

3. Eliminate as much spending as humanly possible

I know we just discussed cutting spending, but this step is so important that it bears repeating. Do you know why so many Americans are broke? It’s because they spend everything they earn. And typically, most things that you spend money on are not necessities.

Let me plant an essential idea into your head

Your income will take some time to change, but your spending habits can change immediately.

Did you get that? Because if you understand that one statement, it can change your life. Your income can and will increase over time, and we’ll make sure of that. But your spending will stay the same unless you decide to change it right now.

There will be things that you love and enjoy doing or eating that you will need to cut out of your life for this reason. Soda, ice cream, beer, wine, steaks—these are all luxuries you need to cut out. Replace all luxury beverages with just water from the tap. Replace all luxury meats with cheaper alternatives that are still healthy, such as chicken.

Love shopping for new clothes? Stop doing that for now. If you absolutely need clothes, shop at thrift stores. There are even online thrift stores such as ThredUp or Thrifted you can use.

Stop spending money on everything that isn’t truly a necessity. If you are going somewhere that is within walking distance… walk, don’t drive. Every penny counts. And until you change your spending habits, you’ll never get out of the rat race.

4. Find a way (or ways) to make more money

This step is where you’ll need to start putting in some sweat equity. Or as some like to call it, hustle. Let me give you a real-life example of this.

Do you remember earlier when I mentioned that I went from earning only $20,000 a year to over $80,000 a year in just three years? Do you want to know what exactly I was doing? I’ll tell you.

Every day when I got home from work, I would learn how to build websites. It started as a hobby of mine, but then I realized that I could earn money doing it. I learned about WordPress and how to use themes and plugins. I practiced and practiced. I didn’t go out drinking with the boys or watch Netflix. In fact, during that period of our life, my wife and I didn’t even own a TV.

Anyway, fast forward less than a year from learning how to build websites, I started applying for jobs on a site called Upwork. Upwork is a very popular freelancer marketplace that clients post jobs to, and you apply for.

I got my first job, and it was to build a website for $5. That’s right; I built my first website for only $5. And boy, was I so excited. I was earning some extra cash, even if it was just $5. And that was fine with me because I needed to build my reputation on Upwork. Fast forward less than a year after my first job, I was earning anywhere from $1,000 to $3,000 per website I built. And I was building several websites every month. And by the way, I didn’t have any coding skills at the time. Zero. I would use a drag-and-drop page builder called Elementor to build all my websites.

By that point, I left my other low-paying job and was able to work full-time from home. Every morning, I would wake up in my pajamas, make coffee, and watch everyone get in their cars to drive to work while I sat in the comfort of my home and worked at my computer.

Now at this point, you might be saying to yourself, “that’s great, but I don’t want to build websites.” And that’s fine. I’m just giving you an example of what I did to start earning more money. You need to find out what is going to work for you. What can you do to start earning more money? And perhaps, even more so, what can you do to leave your low-paying job to focus on your new income full-time?

Luckily for you, we have several great articles here on MayoFi about making more money. Open them in a new tab and read them when you’re finished here:

5. Save as much money as possible

Once you’ve found a way to make more money, you’ll need to save as much of that money (and the money from your job) as possible. You’ll want to adopt the same methods millionaires use to save money.

When it comes to saving, there are many tools you can use to automate the process. For example, take advantage of all the money saving apps available. Apps like Acorns will automatically round up your purchases to the nearest dollar and save the difference.

Additionally, you can save money while you spend money. Take advantage of cash back websites that give you a certain amount of cash back on your purchases. Apps like Ibotta are great for getting money back when you shop for groceries. If you find yourself shopping online for necessities, use an app like Honey or iConsumer, which will pay you cash back plus shares of real stock.

Additionally, you can set up auto-transfers at your bank to have money automatically transferred the moment it is deposited into your checking account.

I recommend you automate as much of your saving as possible because it eliminates all temptations. It’s beneficial if you open a savings account outside of your home bank; this way, the money is completely out of sight. We recommend a high-yield savings account, which will earn you more interest on your savings than a traditional savings account.

Conclusion

To end this article, I want to leave you with an idea: change your input, change your life. It would be easy to read through this article, feel motivated, create a plan, and start acting on it. However, if you are always surrounding yourself with negativity—negative thoughts, negative friends, negative radio shows—ultimately, you will slip back into your old way of thinking.

I want to challenge you to start surrounding yourself with positive, successful thinking. Perhaps you don’t know anyone personally who is positive and successful. That’s fine. There are thousands of hours worth of content on YouTube that you can consume of successful entrepreneurs, leaders, and teachers. Listen to these people and consume their content like your life depended on it.

My dad always said to me, “garbage in, garbage out.” if you are always intaking garbage into your mind, you will inevitably manifest garbage. However, if you take in positive thinking and thoughts of success, you will eventually start to manifest those things.

I hope that this has been valuable to you and that you can walk away feeling empowered to take action in your life. If you’d like to learn more about investing money and building true wealth for your future, check out our endless supply of investing content.