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What to Do When You’re Completely Broke

Updated on March 26th, 2024
What to Do When You're Completely Broke

Your gut sinks with that sinking feeling that wakes you up in the middle of the night. You’re completely and utterly broke.

Everybody experiences bad luck from time to time – job loss, unexpected bills, or just plain bad luck. You are not the only one, though. Ninety-two percent of your fellow Americans agree with you. What’s more, it is estimated that less than half (45%) of Americans can comfortably live on their current income.

Whatever the reason, being broke is stressful and challenging. More importantly, there are steps you can take to help yourself through this difficult time.

That said, this post’s purpose isn’t to sugarcoat the situation. There is nothing worse than being broke. Stress, embarrassment, and a sense of helplessness can accompany it. But it’s important to remember that this is only a temporary setback. Moreover, a clear plan combined with resourcefulness and resilience can help you recover.

1. Breathe and be honest.

First of all, don’t panic. Yes, there’s nothing more nerve-wracking than realizing you’re broke. But, again, many of us have been there. Occasionally, even the most frugal people face financial hardships.

Instead, acknowledge your situation. You don’t need to beat yourself up or bury your head in the sand. Embrace reality by taking a deep breath. The first step to finding a solution is to face the problem head-on.

Furthermore, you should remind yourself that your financial situation isn’t a reflection of yourself and that you can cope with it. Tell yourself that your resilience has seen you through far worse, so you’re confident you’ll also get through this.

2. Diagnose the problem.

In many cases, becoming broke is caused by two factors.

Firstly, you may not be earning enough money. Often, this occurs suddenly after losing a job, getting sick, or being injured. Or, in some cases, you’re underpaid or unable to work as much as you would like.

Secondly, you may be overspending. Usually, this occurs more slowly. As an example, you charge a few things to make ends meet. As a result, you have to charge more next month since you have to pay your credit card bill for last month’s expenses with this month’s money. As a result, the situation slowly spirals out of control. Even if you are working, you end up broke.

It is also possible that these two factors are contributing to your financial hardship, for instance. An income reduction can occur when you spend more than you can afford. If you weren’t overspending, you might have been able to handle the reduction in income.

3. Don’t point fingers.

I love this quote; “There is no point in pointing fingers because three fingers are pointing back at you!”

In other words, it’s easier to blame others or specific events for your financial woes. Maybe you had to quit your job because you clashed with your boss. I may have been fired because I couldn’t get to work. After all, some idiot ran into my car. Or, I just couldn’t pass up on that new iPhone with all its excellent features.

This may sound harsh. Ultimately, your money is your responsibility, so if you are broke, you must also deal with that. Even though life has dealt you a lousy hand, only you have the power to pull yourself out of a rut.

To make changes in your life, you must understand and accept that you are responsible for your present situation. When you blame others for your predicament, you prevent yourself from taking responsibility for your situation and making necessary changes.

4. Develop a game plan.

Let’s say you’re coaching your son’s losing little league team. Are you telling these kids that they’re terrible? No way. By identifying weak points and practicing, you can improve. Guess what? Your winning streak begins.

You’ll approach your finances precisely that way. To get started, you might want to do the following:

  • Gather your financial statements. Collect your income, expenses, and debt statements to understand your finances.
  • Categorize your expenses. List your essential and non-essential expenses (rent, utilities, food) expenses. Is there anywhere you can cut back?
  • Calculate your runway. With your current resources, determine how long you can last. This will help you prioritize your actions.

Basically, you want to track how much money you bring in and where it all goes. After that, figure out how much more you will need to make to cover the expenses for at least the next 1-2 months.

Once you get a better grasp on your finances, try out different budgeting methods. Choose the one you like best to get your finances back on track.

[Related: Frugal Meals That Shine When You’re Broke]

5. Redefine your necessities.

Many things in your life will need to change to survive being broke during this time. Particularly — necessities should no longer be necessities.

What does that mean? What’s essential when you have enough money to pay all your bills is oftenn’t necessary when you are broke. This will prevent you from constantly asking yourself, “Why am I always broke?”

Put another way, it’s the familiar conversation about needs versus wants. After all, you probably don’t consider your needs the same now as when you got your first job and moved out of your parent’s home. Our needs become more significant as we earn more, and our wants become fewer.

Ultimately, tough times require you to decrease your needs and increase your wants.

Therefore, if you’re broke, you’ll have to put a freeze on your wants and focus on what’s essential.

Honestly, you don’t need much. A person needs food, warmth, and shelter at a minimum.

Taking necessities to the extreme:

  • It is possible to eat rice and beans as a basic meal. You can handle this.
  • Four layers of clothing could provide warmth.
  • You could find shelter in a shared house or rent a room.

When you buy fewer necessities, you need less money to pay for them. This is one of the most productive things you can — do when you have no money.

6. Make a radical change.

For me, being in debt is very different from being broke.

When you’re in debt, you’re paying interest on the debt, and you’ve spent more money than you make. You are still paying your debts and trying to make ends meet.

Alternatively, being completely broke means you have exhausted your options and cannot take on new debt. You can’t buy groceries or pay your bills right now because you don’t have enough money. At this point, you should get radical and ignore everything else.

If you just lost your job and are drowning under a large mortgage, it might be time to sell your house or bring in a roommate. After all, cutting cable might save you a few dollars each month, but it won’t make or break your finances.

The bottom line is that you need to consider every aspect of your life. That might mean making drastic changes until your head is above water.

7. Face your debts head-on.

You won’t be able to magically get rid of debt by ignoring it. As such, don’t hesitate to contact your creditors and explain the situation.

In the case of student loans, you may be able to apply for forbearance, deferment, or income-based repayment options. The payments can be drastically lowered or even paused altogether if you choose to use these options. Or, contact your lender if you are having trouble keeping up with your credit cards, personal loans, or auto loans.

In short, you may want to consider consolidation programs, hardship programs, and repayment plans. But if that’s not possible if you don’t have an open line of communication with your creditors.

8. Take advantage of public assistance and free opportunities.

There are many public assistance benefits you could take advantage of, especially SNAP (commonly called “food stamps”), the TANF program (Temporary Assistance for Needy Families), and Medicaid. Using them is also not something to be ashamed of.

There are even funds for home heating and cooling in some circumstances. In cases where your electricity or gas is in danger of being shut off, these can be lifesaving public assistance programs.

Additionally, don’t hesitate to contact local charities, social service agencies, or religious organizations if you need help with food, utility bills, or temporary housing. The 211 phone number, for example, provides access to local community services. Multiple languages are available for 211, so people in need can get information about physical and mental health resources, housing, utilities, food, and employment, as well as crisis interventions and suicide prevention.

Furthermore, many free resources are available. Public libraries offer free Wi-Fi connections, computers, and educational materials. You can also take online courses and workshops on everything from boosting your earning potential to exercising for free.

9. Ask for help

In order to love yourself through tough times, you need to allow yourself to be loved.

Don’t be afraid to ask for help from family and friends, and be willing to be vulnerable. Perhaps they’ve been where you are now, and you’d be surprised how readily they’re willing to help out.

If you’re uncomfortable asking for money directly, try getting a loan and paying them back over time. It’s also okay to ask for non-monetary help, such as coming over for a home-cooked meal or asking if they have extra pantry items.

You could also organize a carpool with colleagues to reduce your commute time and allow you to pick up another shift after school. In the end, you don’t have to do everything yourself.

10. Hustle and look for income-producing opportunities.

You don’t have to stop moving forward just because you’re broke. Find ways to make extra money, such as:

  • Freelance work. You can sell your skills on platforms like Upwork or Fiverr.
  • Gig economy. You can drive for rideshare companies, deliver food, or complete online tasks.
  • Sell unused items. You can turn unwanted items into cash by selling them online or having garage sales.
  • Odd jobs. Provide services such as dog walking, house cleaning, and tutoring when available.

11. Focus on your mental wellbeing.

The effects of financial hardship can have a negative impact on your mental health. Invest time in self-care activities like meditation, exercise, and spending time with family and friends. If anxiety or depression are affecting you, you may want to consider seeking professional help.

Remember that maintaining a healthy mental state is just as important as maintaining a healthy financial state.

12. Celebrate small victories.

It takes time for progress to occur. Whether it’s paying off small debts or sticking to your budget for a week, celebrate even the smallest wins. Whatever the size of the victory, it is a step in the right direction towards your financial goals.

Keeping motivated is key to success. As such, recognize your progress and continue to march forward.

13. Build a safety net.

When you return, put an emergency fund at the top of your priority list. To prepare for future unforeseen events, try saving at least three to six months of living expenses.

Maintaining a safety net can keep you from falling back into financial hardship and provide peace of mind.

14. Focus on long-term solutions.

In addition to taking immediate action, remember to keep the long-term in mind. To improve your employability, consider upskilling or enrolling in a job training program if job instability is the underlying cause.

If possible, consider educational opportunities to enhance your qualifications and help you gain access to higher-paying jobs. In the future, you will be glad you invested in yourself.

15. Learn from the experience.

There is a lot to learn from this challenging experience. Identify areas where your financial literacy can be improved by understanding what led to your financial situation. To start, learn about budgeting, saving, and debt management.

As a result of this knowledge, you will be able to make informed financial decisions in the future.

[Related: Stuck Being Broke? Here’s How to Fix It]


What if I’m in debt?

It is possible to manage and repay debt with the help of many resources. Getting in touch with a non-profit debt relief organization or a credit counselor may be a good place to start.

How can I improve my financial literacy?

You can find many resources online to help you better understand personal finance. Books, articles, and online courses cover topics such as budgeting, saving, and investing.

What if I feel hopeless?

Please keep in mind that this is a temporary situation. Despite the challenges, there is hope for the future. If you’re feeling overwhelmed, you may benefit from talking to a therapist. They can offer support and guidance during this difficult time.

How do I stay motivated when things are tough?

Don’t be afraid to celebrate small wins. Despite small changes, they can have a significant impact over time.

What are some resources that may be helpful?

You may also find the following resources useful:

Image Credit: Nicola Barts; Pexels

John Rampton

John Rampton

John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due.

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