What To Do When You’re Broke


If you’re broke, you have to keep your head up. 

I know it’s tough to face this situation in life, especially when you still have dreams you’re trying to pursue and goals you want to accomplish. When the bank account reflects hopelessness, that’s a difficult place to be. I’ve certainly been there. There is something you can do. You can improve your circumstances – you must believe that and get to work doing that.

Here are 5 steps to start digging out:

  1. Don’t Lie. Face the situation, be real, and be honest with yourself and others. If you don’t face this reality, you can’t fix it. Avoidance might feel like a great short term strategy to find comfort, but avoidance is also a guaranteed long term strategy to achieve misery. Avoiding this situation will only empower you to continue the same spending behavior that got you into trouble in the first place. It’s time to get real and realize this is a dire situation and you must develop new ways of thinking, spending and saving.
  2. Take immediate action. As soon as you realize you are in financial trouble, it’s time to take immediate action. Sit down, go through your bills, itemize everything, be honest about your spending, and immediately start cutting out services and expenses that are not absolutely necessary for your survival. Rather than taking the approach of whittling away your excess spending over a period of months, go in and literally obliterate expenses starting right now, today. Don’t worry – you can always add things that you love back into your life later one, once you’re back in a stable financial place. But for now, slash spending mercilessly. 
  3. Ask for Help. Verbalize the reality of the situation with the people in your life. The longer you tell yourself  lies and avoid seeking external help, the longer you’re going to continue with problematic behavior… and the longer the situation will persist and grow. Asking for help can include asking your family, friends and colleagues for ideas on how to add value in your career, how to grow revenue, and what to do in order to stand out in the marketplace. Asking for help can also include asking for a financial handout, depending on the kind of financial situation you’re in. Asking for help may require that you swallow your pride and sacrifice the ego. However, over the long term, asking for help can leave you feeling strong, bold and supported while also setting you up to receive abundance and wealth later on.
  4. Save 10% to 20% now. Regardless of your income level, get into the habit of saving or safely investing at least 10 to 20 percent of your income. You may be in the position you’re in right now due to a lack of a decision to save responsibly and appropriately years ago. Do whatever it takes, but do not live beyond your means and make sure to start putting aside money now.
  5. Retool. You need to transition from leisure time to learning and training time. Ask yourself “What new skills can I learn right now? What new competencies must I develop? What’s everybody else doing in my industry or career that I can follow or that I can implement?” Retooling is a very important step to take when you’re broke. See below for previous posts that can help you.

 Watch the video above for the full lesson so that you can continue living #TheChargedLife!

Complement with these previous posts:

How to Handle Money
How to Make More Money
How to Add Value and Be More Influential
How to Attack Life’s Challenges with Grace
How Incredibly Successful People Think

Want more training? Join Brendon LIVE at his 4-day seminar called High Performance Academy!

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[The following is the full transcript of this episode of The Charged Life with Brendon Burchard. Please note that this episode, like all TCL episodes, features Brendon speaking extemporaneously–he is unscripted and unedited. Filmed in one take, The Charged Life has become one of the most viewed unscripted, direct-to-camera self-help series in the history of Youtube. It has also been the #1 Podcast in all of iTunes and is regularly in the top podcasts in Self-Help and Health categories around the globe. Subscribe to the free motivational podcast on iTunes or Stitcher.)

Here are five important strategies to follow when you’re broke.

Now, you came here because this is The Charged Life, but by no means am I lacking sympathy for the reality of lacking money in life. So, I get this.

If you are in the position of being broke, keep your head up. I know it’s hard. I know it’s difficult when you still have dreams and you want to accomplish so much in your life, but the bank account says that there is no hope. That’s a difficult place to be. I’ve certainly been there.

At the beginning of my career as a writer and a trainer, I immediately went broke. I mean, really broke.  And unfortunately, I was living in San Francisco at the time, a place where at the time a burrito was $9. So, it was difficult.  Also, I grew up in an economically depressed Irish mining town in Montana. I’ve been around financially difficult circumstances throughout my life, from my career to my childhood, wherein we lacked funds and were unable to live a good quality of life. I just share all of that because I want to let you know that I understand the difficulty and severity of the situation.

If you’re struggling financially, I think this is an important episode for you. It doesn’t matter if you have a nice house, a car and kids, but honestly, you’ve got those four or five credit cards and you’re actually drowning in debt while everyone else sees you doing well on the outside. Or, you’re in a place where you’re just starting out and you graduated from college or you graduated from high school, and now the credit card debt or the house or the mortgage or some bad decision has left you lacking money.

Regardless of the situation, these five things are a must. You must pay attention to them. If you don’t, you will only dig yourself further and further into the hole. They’re important.

#1: Don’t Lie

 Stop lying to yourself. That’s what we do when we’re broke.

When we’re painted into a corner, concerned, and all of a sudden we’re in debt, we just say, “Ah, it will get better.”

Meanwhile, you continue with the same spending behavior, or you lie to yourself and say, “Well, something will come along. Something will change. Fate will turn my corner and everything will be fine.” However, that’s usually not true. And what you end up doing is you avoid the harsh realities of life that you don’t like.

Avoidance is a great short term strategy to find comfort. But avoidance is also a great long term strategy to guarantee misery.

So, do not avoid the situation. If you are in financial despair, do not pretend it doesn’t exist. I did that. I’ve had friends do that. Millions of our readers and followers and commenters over the last decade have shared their experience with this, asking me, “What do I do Brendon?” And the first thing I advise is: don’t lie.

Face it, be real, and be honest. If you don’t face this reality, you can’t fix this reality, and you can’t fix the revenue issue.

It has to be something you take into real consideration, and you need to be aware of and in acceptance of the fact that it’s time to deal with this. Maybe you’ve known that you were broke six months ago, but you haven’t changed any behaviors because you’re scared to face it.

Face it, or you will not change it. This is the most important step.

Stop lying to yourself. When it’s bad, you have to accept that it’s bad.

You can’t say with hope or optimism, “Eh, it will get better,” because when people do that, they dig themselves further and further into pain.

#2: Take immediate action

As soon as you realize you are in financial trouble, it’s immediate, swift, SWAT team time. It’s time to sit down, go through your bills, itemize everything, and be honest.

Ask yourself: “What am I spending?”

This isn’t just about creating a budget. Itemize everything and then be ruthless. Cut it out.

You don’t need that cable subscription. You don’t need that subscription over here for the $49 music subscription you signed up for four years ago and then never used.

You need to be ruthless. You need to start axing expenses immediately. That is what I mean when I advise you to take immediate action. Rather than keeping some of the things that you like, axe everything. Reduce down to the simplest survival terms, only including the stuff that you need. For example, you may need an internet service for your small business or your career. However, even with the internet, you can get a free connection down at a local coffee shop near your home. Basically, consider this question: “Do I need that bill?”

When you’re in a lot of trouble, just axe it all. Don’t worry: you can add it back to your life later when you are back to financial abundance. But for now, axe everything. Literally clean house of all expenses. You might find yourself saying: “Yeah, I know, but I can go out with my friends and drop $50 on sushi.” Don’t follow through with that idea, because if you don’t take immediate action now to change that spending behavior that got you in trouble in the first place, you’re never going to get out.

It has to be a cold turkey halt on spending.

Rather than taking the approach of whittling away your excess spending over a period of months, go in and literally obliterate expenses.

Some people respond to this advice by saying: “Well, Brendon, you’re just telling people to live a hard life.”

My response to that is: “Yeah, you’re in trouble. Let’s get honest.”

If you are in trouble, you need to obliterate expenses and itemize everything.

If you’re going to get on track sooner than later, you need to reduce your expenses to support minimalist survival.

Some people believe that the short term pain is too much. I’m here to tell you, though, that the long term payoff is worth it. I advise you to continue taking responsible action, pay the bills that you can afford to pay, and continue taking care of your family at the utmost of your ability. But do not be extravagant in any area. Cut everything out that you can because you can always add it later.

If you take the approach of slowly cutting things out over a period of months, you’ll just widen the length of time it’s going to take to course-correct. Like a SWAT team, you need to take immediate action and you need to be appropriately hard on yourself.  Accept the fact that you don’t need that new pair of shoes when you’re out. You don’t need the fancy dinner.  Just go Spartan. Strip it all down, and itemize.

I can’t believe how many people today are wandering around broke, but they’re still buying nice stuff, luxury goods, and subscribing to 20 things. They’re avoiding reality. They’re in so much pain that they are avoiding the credit card statement; they’re not even looking at it. They’re avoiding everything that they can, and they’re not getting real.

They’re doing everything that they can to create a falsehood that’s only digging them deeper.

You need to take immediate action.

#3: Ask For Help

You have to verbalize this. You have to ask for help.

If you are broke, you have to discuss it, because the longer you tell yourself the internal lie and don’t seek external help, the longer you’re going to continue in this behavior pattern and this problem will persist. So, you have to tell your spouse, “Honey, we have to have a talk. We’re broke”. You have to go to your parents and be honest by saying: “Mom, dad, I screwed up. I’m broke.” You need to tell the team, “You know what? We are in a harsh situation in the business right now. I’m going to have to make some cuts.”

You have to take immediate action and you have to ask for help. One way to do this is by asking your team: “What else could we do to generate some revenue”

This may seem very vulnerable, but what’s worse would be to lie and then lay them all off one day without giving them the opportunity to offer their input on how to improve the business. In this scenario, they can’t afford their mortgages because you weren’t honest earlier.

And now, you’re living at your parents’ house again because you didn’t ask the people around you the following questions:

“What else do you think I could do here at this job? What else you think I could do in this marketplace? What else could I do to add some value here?”

That’s the secret. When your back is against the wall, you need to ask for a lot of help, even if ‘help’ just takes the form of some ideas. It doesn’t necessarily mean that you ask for a handout, though that might be a part of it, depending on where you’re at. You might approach asking for help like this: “Hey, I’m in this financial situation. For a person in my situation, what else do you think I could do? Do you know of any opportunities or better jobs?”

Put it out there. If you’re not going to put it out there, no one’s going to suddenly raise their hand and throw you a life raft. No one sees you drowning.

You have to call for help. It’s necessary. Does that mean swallowing your pride? Yes,  it does.

But look, if you’re going to let pride keep you from a life that you deserve to live, you must reassess by looking at what’s more important: your ego or ultimate long term life experience.

I recommend that you sacrifice the ego by asking for help so that over the long term, you can feel strong, bold and confident while having abundance and wealth later on.  But, in order to get there, you have to be willing to ask for help.

#4: Save 10%-20% now

If you won’t save 10% when you’re making $100, don’t think 10 years from now when you’re making $100,000, $1 million or $10 million, that you will save 10%.

People always think that one day, they’ll start to save. Today’s the day to start saving. 

You need to start saving right now. Matter of fact, aren’t you in the position you’re in right now due to a lack of a decision to save responsibly and appropriately years ago? You need to change this mindset. When you receive money, 10% minimum goes into savings or intelligent investments immediately. The only intelligent long term investment is S&P 500 index funds. They are the only thing to beat the market. If you’re not at the level of investing, put your money in your savings account. Then pay the bills, and do everything else.

People used to know to create a rainy day fund. Now, people are living such luxurious lifestyles way beyond their means. They’re not facing a rainy day; they’re facing a tsunami of bills because they didn’t live responsibly.

They felt entitled. They believed that they should live like everybody else lives: $500 watches, $200 pairs of shoes, and $300 dollar jeans.

If they have those things, why shouldn’t I? You shouldn’t because you’re broke. There is no harm, no foul in buying your clothes from Goodwill. Do whatever it takes, but do not live beyond your means and don’t forget to start saving. Otherwise, you’re going to be in trouble.

#5: Retool

What new skills do you need? What do you need to master in order to get to that next level?

Here’s an example of the best thing I did when I was dirt poor. I was in a situation where I owed thousands and thousands of dollars. I was in a really bad position and I had no revenue at all. It was difficult. My then girlfriend was buying me groceries. I had to move into her apartment. I had already couch-surfed with friends at that time, and they were tired of me. I can’t tell you how many blow-up mattresses I lived on at that time. It was a rough time.

And luckily, I believed in my ability to figure things out. I had confidence. I was facing reality. I stripped down all of my expenses, while also looking at what new skills I was going to have to develop in order to either grow my business or get a new job. I had to locate what was relevant at the time that was going to help me.

I stopped pursuing hobbies and I started saying, “What are the skill sets needed to make money?” At the time, the answer for me to learn online marketing, getting my message out there, copywriting, functional aspects of doing what I do as a writer and as a trainer online. I had to figure those things out. I studied everybody.

And the questions that guided my research included: “What do they do to make money? What kinds of products do they create? How do they sell it? What sales psychology do they employ?”

At the time, I had to learn those things.

I don’t know what career field you’re in, but you better identify the skills you need to develop to go to the next level of your career. You need to start learning on the side.

You need to transition from leisure time to learning and training time.

Ask yourself “What new skills can I learn right now? What new competencies must I develop? What’s everybody else doing in my industry or career that I can follow or that I can implement? What are the masters doing?” Everything must shift to from leisure to learning.

You need to learn and retool in order to get to the next level. It’s very important to focus in on this while you’re broke.

Some people think that since they’re broke, they should wait until the situation gets better before they start learning or retooling.

You need to learn now. You need to stop your expenses to the utmost ability, learn now, and save now. I know it’s hard, I know you want to just avoid it, I know it sucks and I know sometimes you’re mad at yourself. You know what? That’s okay, too.

You were mad at yourself. You had the appropriate amount of guilt. Now, believe in your ability to figure things out.

You’ve figured out things in the past, and you got through it. You will survive this situation if you address it appropriately and you keep believing in yourself.

Continue looking for new ways to add value. Ask for help. Retool. You can figure this out.

If you’d like to learn more about how to handle money or add value, please check out more of my videos on YouTube. And as always, believe in your ability to figure things out.

You can still have confidence when you’re broke, meaning that you believe in your ability to figure things out.

Believe in your ability to figure things out, and you will.

Believe and trust in yourself, and take appropriate action right now. You can do this. It’s going to be difficult in the short term, but by facing it now, you will get back on track for the long term. You will back to living The Charged Life.