The 7 Keys to Not Being Poor Anymore
First of all, there’s nothing wrong with being poor. My dad grew up poor. I was poor into my thirties. I have family and friends who either have been or still are poor. I don’t look down on anyone for being poor and I don’t think less of anyone for being poor, other than I’m not taking any stock tips from them.
I wanted to say this right up front because I believe one of the reasons there’s so much habitually bad financial advice floating around our society is that so many people…let’s not say “lie”…but they sugarcoat things. They don’t want to make anyone feel bad. They don’t want anyone to feel like they’re being talked down to, so they basically give people worthless advice that really all boils down to, “Do whatever you want and it’s someone else’s fault if it doesn’t work out.”
I’m going to do something very different and tell you the truth, which is that anyone can be poor at some point, but if you stay poor in a rich country like America, it’s your fault. Not society’s fault, not some rich guy’s fault, and not even the government’s fault.
It’s your fault.
Some people may not like hearing that, but it’s actually good news because if it’s your fault, that means YOU CAN FIX IT.
That being said, the things I am about to suggest to you are in line with what financial experts will tell you, but they run counter to the sort of terrible, passive advice most people get online or from their family and friends. Worse yet, many of these suggestions are not fun and easy. Of course, struggling to pay your bills isn’t fun and easy either, is it?
I remember accidentally bouncing checks for pizzas, not having the money for car repairs, sleeping in an elevator once on a business trip, wearing clothes with holes in them, having my power cut off, my phone cut off, having to make it a week on a $10 food budget, driving a car so broken down that I had both the rearview windows taped on – the indignities of poverty go on and on.
On the other hand, most of us aren’t born on third base, so there are also sacrifices we also have to make to avoid being poor.Is it worth it? Absolutely – and I can tell you that if you live in America and you follow my advice, you will not remain poor.
1) Live below your means: Unless they consciously plan to do otherwise, most people make the mistake of letting their lifestyle rise to meet their income. By that, I mean let’s say they’re barely making it at 30,000 dollars a year, they get a promotion and suddenly, they’re making 40,000 dollars per year. Next thing you know, they’re going out to eat more, they’re getting Starbucks every day, they take a couple of nice vacations, buy some expensive new clothes and they realize they’re barely making it at $40k. Rinse and repeat and they spend their whole life living paycheck-to-paycheck.
Don’t fall into that trap! Keep your expenses low for as long as you can. Get roommates. Drive your car until the wheels fall off. Bring lunch from home. Clip coupons. Do whatever you have to do to keep your bills minimal. Don’t try to, “Keep up with the Joneses.” They may have a nicer house and a nicer car, but they’re probably going into debt to get it and screaming at each other about what they’re spending when no one else is around.
Yes, that is hard to do, but you don’t have to do it forever. Build up some money in the bank along with some responsible spending habits, learn to enjoy the peace of mind that comes with having your bills handled, and THEN start deciding how much you want to spend. You won’t be sorry. Absolutely nobody regrets having money when they need it.
2) Breaking the 40-hour mark for a while: If you want to start accumulating money, you either need to cut expenses or raise the amount of revenue you’re bringing in. We’ve already covered “living below your means,” but this covers the other side of the equation. If you’re struggling, rack up overtime if you can. If not, look for a side hustle or a second job. You don’t have to do it forever. In fact, speaking as one of those freaky people who’d LIKE TO DO IT FOREVER, you can’t.
If you stack 60–80-hour weeks long enough, most people will eventually come to a point mentally and physically where they’re unable to continue doing it. However, that usually takes decades. In your case, we’re talking about a few months or years to accumulate some more capital. The average American lives to be 78. If you spend even just a couple of years putting in some extra time working, what percentage of your life is that? Not much for a benefit that can hopefully help you stay ahead of the curve for a lifetime.
3) Set money back: Why are you cutting expenses to the bone and working more? That’s no fun, so what’s the point? The point is to stack the money you need to change your life. That does two ABSOLUTELY CRITICAL things for you.
First, it puts you in a position where you’re not always missing a week of work, a car breakdown, or an unexpected bill away from being in desperate financial straits. You don’t need that kind of stress in your life and just having a nest egg will enormously improve your quality of life.
The other key thing having some extra money around does is it allows you to invest. You may think, “Investing? That’s for rich people! Not people like me!” IT CAN BE for you. For example, you could put $100 per month in an index fund, which covers the whole stock market. There’s not much special knowledge needed there and look at how it can play out for people that are patient with it and aren’t trying to time the market.
Having money flowing into your pockets that you didn’t have to earn by trading your time for it will change your life. Yes, this is how a lot of rich people get rich, but it’s also how a lot of people get out of poverty and stay out of poverty for good.
*** Those three really do cover the bulk of the practical parts of it, but there are a few other things to keep in mind that may not apply to everyone. ***
4) Be willing to move if you need to do it: If you live in a horrible ghetto where businesses are scared to set up shop or some one-horse, factory town that somehow kept staggering along after the factory closed, you may need to move to get ahead. Theoretically, the threshold for moving may be even lower.
At one point, I lived in Charlotte, NC, where the job market was cold and my brother encouraged me to move in with him in Alexandria, VA where the job market was white hot. I did and in short order, I was literally making 50% more than I was in Charlotte. You may want to do the same. That doesn’t mean it’s easy, mentally or financially, but you don’t sow seeds on concrete because it’s where you happen to be standing, you go where the ground is fertile.
5) Don't leave one job until you have another one: Despite the fact I’ve always been smart and have worked hard, I had a particular habit in my twenties that kept me poor.
I would get a job, work at it for a while, and build up a little nest egg. So far, so good, right? But then, I’d get sick of the job or just get tired of being told what to do and I’d quit without having another job lined up. Very quickly, the money I saved up would be drained and I’d take pretty much anything to pay the bills. Then the cycle would repeat.
I know someone in their fifties who’s still doing this and it’s no surprise that they just got evicted. Learn from us. Don’t do what we did and get the same poor results that we did.
6) Don’t blow your good work with big mistakes: The bad news is that all of us are often just one big mistake away from being poor. The good news is we almost always know that we’re doing something dumb that’s a big risk.
You know you’re supposed to get healthcare insurance and home insurance. You know you’re not supposed to break the law and end up with a criminal record that will keep people from hiring you. If you want a high-end, office job, you don’t get tattoos on your hands, face, or neck. If you use crack, you can expect some poor decision-making that goes along with it and by now, you know not to give money to a Nigerian prince.
Drunk driving? You know it’s a bad idea. So is having 10+ kids by several different baby mamas if you don’t have rocket-ship money to pay for everything. Imagine saving thousands of dollars and then spending all of it on a new living room set for your house and going back to square one. People do this kind of thing ALL THE TIME and the more big mistakes you make, the harder it is to catch back up. Don’t get me wrong. Any determined person with a work ethic can pull themselves out of poverty in America, but it’s a Hell of a lot easier to start from scratch while you’re young than when you’re heavy in debt at sixty.
Too many people allow self-sabotage to keep them poor. Don’t be one of those people.
7) Embrace the idea of “earning it:” So many people in America have a victim’s mentality. “Life’s not fair! I have to work so hard when the Kardashian kids are born into wealth and there are women making millions just to get naked on OnlyFans. Life should be easier for people like me!”
Meanwhile, if you live in America, you’ve won the global lottery. If you can’t make it out of poverty here, chances are you would be poor in every country in the world, in every time in history. Accept that it’s going to take some work and sacrifice to get out of poverty, commit yourself to doing it, and then spend the rest of your life taking pride in what you did.
Certainly, every single successful person I know who used to be poor ABSOLUTELY LOVES to tell people about it. You can do that, too, with your own kids one day. Accept the idea that if you can’t afford it, you don’t deserve it, and then do what it takes to earn what you want in life.
Don't get divorced. Be married to the right person.
Thanks for saying the obvious, John. It may not be the popular thing to do, but telling the truth is often unpopular.
Let me add a few more specific suggestions:
1. Unless you’re making NFL money, don’t get tattoos. They’re expensive, pointless, and frequently become barriers to getting better jobs. Everyone sees people who are struggling but had to have spent thousands of dollars on tattoos. It’s just stupid.
2. If you’re struggling, don’t go out and get a huge dog that requires $50 a week of dog food. That’s real money.
3. Stay in school, at least through high school. It’s not just the education, but getting that HS degree or a college degree shows potential employers that you can stick with and finish things you start.
4. Don’t do drugs. Sure rockstars and celebrities do them all the time but they already have money. If you don’t, drugs (and too much alcohol) will not only eat up the little money you have, but they make it less likely that you will make it to work and do what you’re getting paid to do.
5. Accept that you’ll take direction from others for a long time, maybe your whole career. There’s nothing wrong with that. They’re paying you to do what they want. Accept it and understand it’s often easier to follow the direction of others than be the one who has to make the decision and be responsible for that decision.
6. Find a job you like. If you can wake up on Sunday and not dread Monday, you’ll enjoy the whole weekend, which makes the five day work week so much easier.