{"id":100907,"date":"2020-10-04T10:00:19","date_gmt":"2020-10-04T16:00:19","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=100907"},"modified":"2024-02-24T13:06:47","modified_gmt":"2024-02-24T20:06:47","slug":"top-reason-youre-broke","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/top-reason-youre-broke","title":{"rendered":"The No. 1 Reason You\u2019re Broke (&#038; How to Change Your Fate)"},"content":{"rendered":"<p><iframe loading=\"lazy\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC1834649890&amp;light=true\" width=\"100%\" height=\"200\" frameborder=\"0\" scrolling=\"no\"><\/iframe><br \/>\nWant to know the number one reason that you\u2019re broke?<\/p>\n<p><span style=\"font-weight: 400;\">You can work as hard as you want. You can hustle around the clock seven days a week, but you won&#8217;t change the dynamics of your finances and the amount of your free time\u2014not unless you get to the root of the problem.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By no means am I a financial guru. However, I can tell you that I have personally seen a significant change in my income and real net worth by rewiring how I think about money\u2014and grasping and practicing this one key fact:\u00a0<\/span><\/p>\n<blockquote><p><em><span style=\"font-weight: 400;\">The top reason most people are broke and stay broke is that they\u2019re consumers, not investors. <\/span><\/em><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Some might make a good six-figure income and have a nice job title, car lease, and big house. Still, most of those people are very broke. Most have zero\u2014or more likely a negative\u2014net worth, virtually no free time, and little disposable income.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you want to have more control over your time, have more financial security and freedom, or just put an end to being broke month after month, be an investor\u2014not a consumer.<\/span><br \/>\n<em><br \/>\n<strong>Related:<\/strong> <a href=\"\/renewsblog\/2016\/06\/20\/12-reasons-poor\/\" target=\"_blank\">12 Reasons You\u2019re Poor<\/a><\/em><\/p>\n<p><span style=\"font-weight: 400;\">Now, that doesn\u2019t mean you can\u2019t spend money. It doesn\u2019t mean you can\u2019t enjoy nice things. It does mean that you <em>invest first<\/em>. Then you let your investments pay for all of these other things.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Anything I earn, I invest in myself or in real estate deals. I put my money into things that increase my worth and passive income, instead of buying things that go down in value over time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some examples of that.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-99934\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/06\/college-tuition.jpg\" alt=\"\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/06\/college-tuition.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/06\/college-tuition-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h2>Education<\/h2>\n<p><span style=\"font-weight: 400;\">The most important investment you can make is in yourself. Ask any billionaire, and they\u2019ll tell you it is the best investment you can make. Invest in your knowledge, skills, and performance, which will ultimately help you earn more, because you can bring more value to the marketplace. Obtaining skills (along with knowledge) are things that people can\u2019t take from you.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, if you\u2019re considering investing in a college education, think twice before accumulating that bad debt. Those are years you won\u2019t get back. Money is often spent on irrelevant information, and those loans will keep taking money out of your pocket for years to come.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instead, consider books, seminars, events, and training with a mentor. This information tends to be more transferable to the real world. Do what you can afford, and as it pays off and increases your income, keep dedicating a part of everything you make to more learning.<\/span><\/p>\n<h2>Cars<\/h2>\n<p><span style=\"font-weight: 400;\">Cars are easily one of the top two or three things that keep Americans broke. For most, it is inconceivable not to be driving the most expensive car they can possibly get a loan or lease for. That means they are always tapped out on their income. A big portion of their income every month goes into an depreciating asset. Buy a new car, and you are instantly throwing away half of the money on the price tag. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Now, once you have already invested, and if that money will be coming from passive income from investments and cash you don\u2019t have anything better to do with, then absolutely treat yourself to a sweet ride.<\/span><\/p>\n<h2>Houses<\/h2>\n<p><span style=\"font-weight: 400;\">The same goes for houses you live in. For most, this will be the biggest expense of their lifetimes. <a href=\"\/renewsblog\/2016\/01\/26\/liability-asset-own-house-you-live-in\/\" target=\"_blank\">Buying a home can be a somewhat smart financial move.<\/a> Still, few get how much they really pay for a home when they factor in interest and taxes and other fees and maintenance. Like cars, most max themselves out to the limit. They chain themselves to those big piles of bricks that can hold them back from many other things they\u2019d prefer to be doing\u2014like free time or the ability to pick up and move elsewhere. <\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-98023\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/04\/home-value-factors.jpg\" alt=\"home-value-factors\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/04\/home-value-factors.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/04\/home-value-factors-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><br \/>\n<em><br \/>\n<strong>Related:<\/strong> <a href=\"\/renewsblog\/buy-a-car-within-budget\" target=\"_blank\">4 Steps to Buy the Car You Want Within the Budget You Can Afford<\/a><\/em><\/p>\n<p><span style=\"font-weight: 400;\">Invest and let your investments in income-producing real estate pay for your own home. Don\u2019t sacrifice your ability to invest for a home that is a burden as soon as you get those keys.<\/span><\/p>\n<h2>Summary<\/h2>\n<p><span style=\"font-weight: 400;\">The number one reason people in America are broke is simply because they are spenders first. Those who aren\u2019t broke are those who invest first. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This article shows some classic examples where you can change the odds in your favor and get control of your money. If you ever get stuck in deciding how to use a dollar, just remember to ask yourself whether that purchase or investment will take you closer to your goals. If not, it&#8217;s taking you further from them.<\/span><\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/real-estate-investment-calculator?utm_source=renewsblog\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-91220\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg\" alt=\"\" width=\"700\" height=\"85\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02-300x36.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><em>What&#8217;s your opinion\u2014is consumerism the top reason Americans are broke?<\/em><\/p>\n<p><strong>Comment below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you&#8217;re seeking a significant change in income and net worth, you need to rewire your thinking about money\u2014and grasp and put into practice this one key concept.<\/p>\n","protected":false},"author":12140,"featured_media":113664,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4433,7119],"tags":[1038,6214],"class_list":["post-100907","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","category-biggerpockets-daily","tag-financial-freedom","tag-financial-security"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/100907","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/12140"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=100907"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/100907\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/113664"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=100907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=100907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=100907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}