5 Habits of Broke People (And How to Be Different)

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According to Websters Dictionary, the word “broke” means penniless.  While there are people who have no money because of misfortune, there are many people who are broke because of their habits.

Top Broke People Habits

Here are five habits of broke people that you should avoid if you want to become wealthy some day:

1. They surround themselves with other broke people

If you want to stop being broke then you need to start hanging around people who are successful. People that don’t have any money tend to not give the best advice. Why?  Because the choices that they have made are why they are broke. The same is true for successful people. The reason why they are successful is because they have made decisions that helped them spend less, save more, invest wisely, etc. 

2. They play the lottery

I’ll be the first to admit that I played the lottery in 2012. We had a company pool and everyone was throwing in money for a chance to win half of a BILLION dollars. I didn’t want to be the one guy in the office who didn’t play with the off-chance that we might actually win.  However, there are people that play the lottery on a weekly basis. In fact, an article by PBS mentioned that people making $13,000 or less spend 9% of their income on lottery tickets.

That  comes out to roughly $1,170 per year. What would happen if they decided to invest that money instead of buying lottery tickets and they were able to get 9% annualized return for 50 years?

They would have $1,146,271.65! I think most people could live off of that in retirement and it is a lot more likely to happen than winning the lottery.

3. They rent as a way of life

Just to be clear, renting is not bad…for a season. As a way of life it will definitely stunt your ability to become wealthy. Let’s say that you rent a place for $1,000 per month for the rest of your life starting at 20.

With the average life expectancy being 78, this would be 58 years. You would end up paying $696,000 to rent some place and that is not even taking into account inflation.

Let’s say that instead of renting that you buy a house for $150,000 with a 15 year mortgage at 3.5% and put 10% down; your payment would be $965 per month. You pay the place off in 15 years and at that point you have an extra grand per month to do whatever you want with.

On top of that you paid $38,716 in interest with a total expense of $188,716. This is a difference of over $507,000!

You better like the place that you’re renting to pay that much more.

4. They spend money on things they can’t afford

My wife worked at a title one public school which means that there is a large portion of  the students that come from low-income households. 

She has mentioned to me on multiple occasions how even the kids that come from poor backgrounds have expensive smart phones or wear sneakers that cost over $100.

If you want to avoid being broke then you need to live below your means.

5. They get payday loans

This is one of the biggest disservices to the poor. With over 22,000 payday lending stores and close to $40 billion dollars in loans being given each year, it is no wonder that people aren’t able to get ahead.

In 2012  a study by Pew Charitable Trusts’ Safe Small-Dollar Loans Research Project, it revealed that over 12 million Americans took out payday loans and paid an average annual interest rate of 391%. If you want to stop being broke then STOP borrowing money from these companies.

Summary

As you can see, there are certain habits that can lead to being broke or keep you broke. By avoiding these habits, you can potentially change your trajectory forever. Only you are responsible for the habits that you choose.

Choose wisely.

Interested in more tips on how to become wealthy? Check out 7 Habits of Wealthy People.


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82 COMMENTS

82 responses to “5 Habits of Broke People (And How to Be Different)”

  1. Canadian Budget Binder says:

    We spend $3 a week playing the lottery and yeah, maybe it is a waste to some, but for us it’s not a big deal. We don’t go out and spend money on a myriad of other things so $3 is no big deal. I think when people are spending the big bucks every week on the lottery it’s another thing unless they are already loaded and really don’t care…

    • WellKeptWallet says:

      It’s true that if you are loaded and have a bunch of money (like Mr. and Mrs. CBB:), playing a few bucks a week on the lottery won’t kill your pocket book. However, it is those people that have no savings or investments and are living paycheck to paycheck who really would benefit from not playing the lottery. It would give them extra money to establish an emergency, pay for their kids college, invest for retirement, etc.

    • trisha says:

      My boyfriend spends 5 bucks a week. He doesn’t grab it every Friday, sometimes he forgets. He also plays one with his work. I think if you can afford it and you like it, do it. 🙂

      • Chris says:

        You have a much better chance of dying on the way to buy a lottery ticket than you do to win the lottery. The lottery is a tax on the poor and ignorant. No smart, wealthy person plays the lottery.

        • Slavica Krekic says:

          It is better than buying drugs or booze. People who win get money that others paid into it. I am always happy when I see the winner’s smiling faces.

          • Deacon says:

            Yes, drugs or booze could be considered a much worse way to spend your money. But some people do spend more than they should or can really afford on lottery tickets, so I understand where Chris is coming from too. You both have good points.

    • Slavica Krekic says:

      I grow my own food and can afford to play a little lottery and buy a few scratchies. To me, people who are so cheap that they are scared to play it, are pathetic. I am so happy when I hear that someone won big. I know my money is in it too. I am never jealous or resentful, it just make me happy that someone won. Next time it could be me. Other than that, I don’t spend for anything much that is not food or housekeeping stuff. We have no mortgage.

      • Deacon says:

        Of course, not everyone falls into the trap of losing so much money by playing the lottery. It’s good that you don’t. It sounds like you are being frugal with your money. Good for you!

  2. Michelle says:

    This is a great list! And it’s very true. Spend less than you earn, live responsibly, and think about retirement and your end goals.

    • WellKeptWallet says:

      Thanks Michelle! It is amazing how simple it is to manage money well, it’s just that it is not easy to do.

      • FrugalChic says:

        I would add one more to the list: always buy quality. It’s tempting to buy a t shirt for $5 at Wal-mart, but if it starts falling apart after a few washe,s you’ve wasted your money. I would rather have a few quality items than 50 cheaply made ones.

        • Lauren says:

          I agree, FrugalChic. Many people fall into the trap of buying clothes just because they are only $1 – $5. They end up overspending on clothing in general because they aren’t buying when they really need it and they are having to replace those items more frequently (such as they shrink and don’t fit right after washing/drying). I am always very conscious of quality when I buy clothes, especially for my kids. If the price is $20, and it looks cheaply made, I don’t care what “brand” name it is. I’m not buying.

  3. Yep! This is all so true! I have seen the exact same things!

  4. JC @ Passive-Income-Pursuit says:

    I also have to admit that I played the lottery a few times last year. Of course it was only when it was for an absolutely ridiculous amount of money and I never bought many tickets.

    My wife also teaches at a title one school and some of the things I hear of her kids having is ridiculous. Some have better things that I get myself which is pretty amazing when something like 90% of the students at her school are on free lunch. I remember a few years back one of her kids was given 2 tickets to a Miley Cyrus concert that were about $100 each. That blew my mind.

    • WellKeptWallet says:

      That is crazy, $100 each for Miley Cyrus tickets! What is this world coming to? I remember going to big name concerts back in the 90’s and tickets were $15 – $20. It is amazing what kids value and how much money they are willing to spend to have those things.

      • JC @ Passive-Income-Pursuit says:

        This goes back to education on personal finance, but how do the parents, when they’re struggling to put food on the table, go and buy $100 tickets or $200 shoes? I understand wanting to spoil your kids, but the stuff won’t keep their bellies full.

        • Deacon says:

          JC, I agree. I was once broke and I spent money on things that I couldn’t afford. That is how I racked up so much debt before we got married. It wasn’t until I realized the concept of opportunity cost that things began to change. For every ‘Yes’ that I say to something I am saying ‘No’ to something else. For instance, If I paid $100 on lottery tickets I am saying ‘No’ to investing for the future. That was a key turning point in how I viewed money and I think that way of thinking can be useful for anyone who is broke as well.

          • John says:

            Good point!

          • Rachel says:

            Deacon
            can you give any advice to a family of seven on less than 40k a year? We just bought a house on a Land Contract for 95k at 6% with 13k down. Our grocery spending is terrible with five kids, ages 15 to 6. The fridge is emptied as soon as we fill it. We do shop at Goodwill for our clothes, which is a good choice I believe. We have two vehicles, one paid for, the other has 9k left on it and is only Bluebooking at 4k – that one’s tough.
            We are starting fresh – new house, new town, new lives – as one big family, so we’d like to get it right this time around. I should also mention that I am 38 with a full time office job and my husband just got laid off from his plastics job. He is 48. I currently hold the insurance for us, but with this “new town, new house”, we will both be out of work and without insurance until new work can be found. I agree with your pizza job. I’ve always worked any job. Any could get, sometimes three at a time, since i was 14, so i’m not afraid of getting my hands dirty and neither is my husband.
            advice would be much appreciated for the road ahead. Thank you so much!!

          • WellKeptWallet says:

            I just sent you an email. 🙂

        • Nona says:

          The government buys these kids $200 shoes and rewards their parents for not working by giving them free housing, hundreds of dollars in food stamps, and free money and insurance.

  5. PK says:

    No argument on 4/5, but rent comes with a caveat – sometimes renting does outpace owning. (I say that as a happy homeowner). Personally, I’d still sacrifice a little bit to not have to deal with a landlord, but there are times and locations where you’d be better off renting.

    • WellKeptWallet says:

      I do agree that there are times and places where renting may make the most sense. But I will tell you this, I have yet to meet a wealthy person that rents as a way of life.

    • Elizabeth says:

      I agree! I’m really glad i don’t own a condo in Toronto right about now. Someone recommended Garth Turner’s blog to me — it’s been a bit of an eye opener.

  6. Brian @ Luke1428 says:

    What a great list! I would also think that broke people don’t learn from their mistakes. They keep repeating the same bad habits over and over and can’t figure out why they can’t get ahead.

    • Deacon says:

      That is a great point Brian. I have found that to be true as well. I was broke for a number of years until I realized that I was the problem. If people want different results, they have to try something different than what they have been doing.

  7. The First Million is the Hardest says:

    Great point on playing the lottery. So many people are completely addicted to playing, hoping for a miracle to make them rich. I think most of them never even stop to consider how much they spend on tickets each week!

    • Deacon says:

      It is amazing how many people play the lottery because they believe that it is their best chance to become wealthy. Hopefully PF bloggers like you and I can help them see that there are better ways.

  8. Grayson @ Debt Roundup says:

    These are the issues with society. They fall for these things. I draw the line on the lottery because I do it when the lack pot is large.

    • Deacon says:

      Grayson, I know what you mean. Like I said in the post, I played the lottery last year when the jack pot was $500 million. I think the issue is when people play on a regular basis while they neglect having savings, investments, etc.

  9. Katrina says:

    I have to admit to being guilty of all of these habits at some point. BUT I have broken all of these habits now and because of breaking habit #1. I’ve never spent an excessive amount on lottery but more than I should have! Online financial blogs have been my saving grace! Surrounding yourself with people who are doing what you’re trying to do makes it a lot easier to stay focused.

  10. Elizabeth says:

    Good points,

    But I’m not sure I agree with #3 after seeing so many Americans get creamed when the housing bubble burst. Comparing rent versus mortgage needs to take total cost of ownership into consideration. For instance, closing costs, taxes, insurance, renovations, maintenance, decor, etc. Some families I know are already on their second or third homes, so add moving costs and real estate commission to the list.

    i do agree that you won’t get rich renting your entire life– even if you are diligently investing the money you are saving. However, I would add that buying more house than you can afford and buying when the market is inflated would make a good #6 🙂

    • Deacon says:

      Elizabeth, you make a valid point. I bought properties at the height of the market and I felt the burn from how much money I have lost from that decision. That is one of the biggest reasons of why I have this site today. I have had a lot of experience of what NOT to do and I want to help people avoid some of the mistakes that I have made. Buying a house that you can afford is huge and a topic that I will be writing about soon. Thanks!

  11. Broke people get in the cycle of making the payment rather than paying it off. I lived in that cycle for years. You can actually be broke with a big salary – just spend your whole salary, or use it making payments for more and more stuff. I think surrounding yourself with the right people is a huge step in the right direction.

    • Deacon says:

      I couldn’t agree more, Kim. I had been broke for years as well and found that no matter how much money I made, I would spend it. Once I started hanging around people who thought differently than me and that were successful, I began to act differently. That is one of the best things I ever did.

  12. Mark Herdman says:

    What gets me is your advice is almost common sense but as people say, “common sense is not common.” PS. The only time I played the lottery was when the jackpot was $80 million.

    • Deacon says:

      Thanks, Mark. It is common sense, but I think we often lose sight of that when it comes to things we really want like a house, cars, money, etc.

  13. Savvy Scot says:

    I am counting down the days until Payday loans are made illegal…

  14. Glen @ Monster Piggy Bank says:

    What a great post Deacon! I know so many people that fit multiple instances of the above and they all have little to no money.

  15. DC @ Young Adult Money says:

    Renting can definitley make sense for a season, as you said. We had a renter move in yesterday – a single girl who is about the same age as us. She was previously renting a tiny room, but only paying a couple hundred a month. She has been able to pay down a lot of student debt that way. While her rent doubled by moving into our rental apartment, it’s still relatively low and she is able to continue to save and pay down debt. I’m sure she’ll buy eventually, but it’s a great example of when renting makes sense.

    I also will admit to playing the lottery, as many of the other posters have. I don’t do it often, maybe one ticket/month on average. I don’t expect to win but I like to have my name in the hat. 😉

    • Deacon says:

      I’m glad to hear your tenant has a plan to pay off her debt. That is awesome. Yeah, it sounds like renting is the best option for her at this point. I usually suggest people pay off their consumer debt first before buying a home, so that would line up with her situation. It is when people rent their entire lives and have nothing to show for it in 50 years; those are the people who I would consider “Rent as a way of life”.

  16. Dan says:

    You are partially right about renting. I am 29 and have been renting rooms for 5 years, never paying more then $500/month. Right now I pay $395. For most homeowners this would barely cover insurance/utilities and upkeep. Because of this I have saved well over 100K on 60K of income per year. Now that is how you save money.

    FYI: my actual savings rate is around 66% of take home pay.

    • Deacon says:

      Dan, I agree. For a season, renting can be a great way to save money. In fact, it is the best way to buy a house for cash. I actually wrote an article called “How to Buy a Home WITHOUT a Mortgage” where renting is the key to making it happen. Chances are you will get married one day and I am not sure your future spouse will want to rent a place for $500/month forever.

  17. Solomon says:

    Rent vs Buy

    This is one of the topics that always bugs me. In your analysis, your figures include life expectancy of 58 years, (renting or owning). You concluded with $507,000 as savings for owning and $188,716 as total paid mortgage. I think these figures are misleading. It will be nice if you will include all the upkeep expenses for the same period of time so that your readers will get a real picture.

    There are so many unknowns for people who never own a house. When they read an article like this, some may come up with the same conclusion you have laid out in your article.

    I am waiting for a part two with a more detailed figures.
    Thanks.

    • Deacon says:

      Solomon, you bring up a valid point. I will write the article that you suggested and let you know when it is live. Thanks!

    • CorinaT says:

      We were renting for years and finally bought a fixer – upper as it was all we could get a loan for. Almost 10 years later and we have so much put into the renovations (not counting labor as my husband does all the work) that we could have bought a newer house. The problem was that we couldn’t get a mortgage so we had to go with this. What’s my point? I’m wondering now if we should have kept renting until we could have afforded a better house. AND…the reno’s are not nearly done (sigh).

      • Deacon says:

        Hey Corina! Yeah, you bring up a great point. Buying a Fixer Upper can be a money pit. While some people can make it work, in general I suggest staying away from them as a primary residence. Renting for a season in order to save up to buy a nicer home with little to no repairs is a great idea.

  18. Caesar F says:

    Another thing is just plain old frequent spending. I see people who get paid really well but still stay in that constant state of being broke because of their lifestyle (particularly partying.)

  19. Chris @ Stumble Forward says:

    I totally agree with you on these 5 points, Deacon. I work with guys who tell me all day long that they are on a shoe string budget but yet they can throw away $50 bucks just like that on the lottery. My opinion on the lottery is that it is a tax for the mathematically impaired. However the only time I will ever play is like you did when the office is putting money in. Even at that, it’s only a few bucks at best.

  20. CorinaT says:

    I just found your site via Yahoo. There’s loads of good information (I’m not done looking yet…..). I don’t normally post comments to stuff I read on the internet, but one of your points kinda hit me a little wrong. You commented on children of low-income families using smartphones and having expensive shoes. I’m not sure if you have kids in school but the peer pressure and bullying is so much worse now than even a few years ago. My husband and I continue to do without (or buy less expensive things for ourselves) so our kids can feel equal to those around them. I’m in no way saying that “keeping up with the Jones’ is the right attitude, but I would rather send my child to school in a pair of Puma sneakers that all her friends are wearing and wear the Wal-Mart special myself. So…before you judge the parents of those children your wife teaches, please take that into consideration. Maybe those parents are doing what I’m doing – sacrificing so my kids can have more. Maybe that smartphone was bought used (as my 16 year old daughter’s blackberry was). And maybe those expensive shoes were bought online at a discount.

    So, now I’m going to see what other tidbits of information I can gather from your blog. And by the way, we never buy lottery tickets…our money is too hard to come by.

  21. Ms.Thriving says:

    Wow, I never knew this was out there… I am so disorganized and do not know where to even start.

    • Deacon says:

      Hi, April. I know how you feel as I have felt the same way when we got started. I will send you an email with the steps to get started. I hope that you will find it helpful.

      • Ms.Thriving says:

        It’s a start I think I am ready for. Thank you both.

      • Just John says:

        Hi Deacon. I think and hope you can help me as well. I’m not broke, not rich, just getting by. I have been surfing for budget programs just this week and when I saw your story on the front page of Yahoo, I had to look.
        Can you PLEASE send me any helpful directions as well. I’m willing to do it myself or take direction. Thank You in advance. John

  22. Sarah Park says:

    These are absolutely all true. Some people don’t realize these mistakes – especially playing the lottery and relying their future on pure luck.

  23. Michelle says:

    Like others above, I do disagree with #3. If you live somewhere with overvalued property, renting can make much better financial sense. You can use the difference that you save to pay down debts if you have them, and once you you are debt free, you can use the difference that you save to invest. Also, it’s often possible to rent in a location that you can’t afford to buy, taking advantage of better schools, more walkability (also saves on gas or transit fare), and shorter commute times. For instance, I live in Toronto, Canada in a good central neighborhood. The homes in our area cost from $645,000 (for a tear down or if you’re lucky a fixer-upper) to 2.3 million. We can rent a very nice place for min $1500 less per month than owning would cost. My family and I can enjoy all the advantages of living in a decent and safe area with short commutes and walkable errands in a good school district and we can put that saved $1500 towards other productive uses. Here’s a recent article about the advantages of renting in Toronto (the same advantages obviously apply to other in demand cities).

    It all depends on where you live (and often depends on where jobs are). If we lived in a small town, obviously the same logic would no longer apply. There’s a reason many Europeans are lifelong renters. It can make perfectly sound financial sense.

  24. Kyle says:

    You’re missing some points to habit #3, like property tax, insurance, and PMI. Add a $6,000 a year property tax, a $1500 a year insurance bill, and a %0.5 PMI to your old math and now the total expense for the mortgage is $287,737.46. $152,737.46 in additional expenses to the original $135,000 mortgage. Not to mention the fact that interest rates will not stay low forever. When they finally rise, and they will rise, everybody owning a home will lose equity as home prices adjust lower to the higher cost of borrowing money.

    • Deacon says:

      You do bring up a valid point that another person brought up in an earlier comment. I have it on my “to-do” list to write a post about the true cost of home ownership. However, even in your example it proves the point that it is still cheaper to own then to rent, long term. Thanks for taking the time to comment Kyle.

      • Heather says:

        I think, Deacon, that for some states, it actually is cheaper to rent. Example: I’m in Florida. With the mortgage, property taxes, HOA fees (cause most of the housing down here in Fl are with HOA’s), hurricane insurance, flood insurance (both of which for the past few years have continued to go up), it actually is cheaper to rent and just have renters insurance.

        While I agree in most places there’s an economic difference and savings one can garner from owning vs renting. But there are a few exceptions to those rules.

        • Deacon says:

          Hey Heather, there are definitely exceptions. This is meant to be a list of common habits of people that are broke. It doesn’t mean that everyone who rents is broke. Thanks for the additional info!

      • EJ says:

        I owned a house once…then my identity was stolen and by the time I got things straightened out, the housing crisis hit and I lost it. My family bounced from one rental to another. The awful truth I discovered is that landlords take advantage of tenants. Before I could get back on my feet and buy another home for my family, I lost the job I had for 12 years. I was having no luck finding a job once prospective employers saw that I am an older American. I finally got hired on the basis of my experience and resume rather than my age, but I still have the bad credit that I’ve been trying to come out from under. Just this week I found out that someone had stolen my debit card information yet again. I have been living in a motel for 16+ months now and I am grateful for the roof over the heads of my family. But, I am finding it difficult to put any money aside to save for a rental of any kind as I am the only person working since my husband decided he was done with the struggle and asked for a divorce. Most of my investments have bombed and I’m worth more dead than alive. So in essence, I can’t avoid broke people as all the other families living in the motel are broke. But I’m still smiling and ever hopeful. 🙂

        • Deacon says:

          Hi, EJ. I am sorry to hear about some of the major challenges that you have faced. I am going to send you an email on some tips that may help turn things around for you. Talk to you soon.

          • Kaye says:

            Wow. I been in this same situation. One thing that disgusts me about people telling you stuff is that they never say, how to do it. I’m 40 and need a turn around immediately. I have no savings, no 401k, and just started a job. What habits do I need? What do I do to turn this around? How should I do my budget? When should I do this or that? How do I come out of poverty? I’ve lived in hotels, cars – Lexus – LOL, and am just a mess. So, how should my thinking be? When I get paid, what’s the first thing I should do? My bring home pay is $2200 bills, and all bills are $1300? So, really, help me.

      • Kyle says:

        You are right. long term, if you never plan on moving out of the neighborhood you buy in, you will make out over renting. You would have nothing to lose to the fact of possibly losing equity, since you would never sell.

    • Russ Beaugureau says:

      If you bring up those points, then bring up the points of inflation and the percentage of equity grown over 58 years. Then, what about the tax benefits? Approximately 95% of your first 5 years of payments is interest, and that’s a tax write-off on your annual income. Looking back through my family tree, as far as it goes, everyone in my family has not just saved from owning, but in most situations, their real estate ownership and investments have outweighed their retirement and income from their employment. I haven’t calculated what the difference would have been between renting and owning on a personal level, but I’m sure it would be along the same lines as the article. Even if I was to have rented a room for $500 a month, like one of the gentleman that replied to the article said, and saved the difference between what a homeowners expenses are, I would have never been able to purchase, and now own, as many homes and investments as I do today without that initial investment of home ownership. With that being said, I probably also would have not gotten married living in a room for rent at $500 a month, which in turn turned into the divorce which cost me approximately $1,000,000. Maybe it’s not all about money, it’s about what’s best for you. I’m about what makes you feel most comfortable. Happiness is success, and both are priceless.

  25. Eliza @ Happy Simple Living says:

    Thanks for a great article and I totally agree with the behaviors you pointed out and your advice for living financially strong and sound. Another habit I think broke people have is making buying decisions based on trying to impress others. Whether it’s a designer purse, a fancy car, a trip, a suit or any other purchase, status is rarely a good reason to spend. If I ever catch myself thinking about a purchase in terms of what someone else will think, it’s a sign for me to step back and re-evaluate.

  26. dante says:

    I guess I can say we’re broke. My wife an I have jobs. We raise 3 children. But we never have extra money. I go to school part time and I work a full time job and a part time job. My wife works part time. She also just started a business, Gracefully Designed. We don’t rent. We’re paying on our home. It will be paid off next year. We finance a car, but that’s it. I don’t play lotto. I don’t hang with broke folks – none of that. What am I doing wrong based on all this? I also spend dollars and save change. Please help.

    • Deacon Hayes says:

      Dante, if your home is going to be paid off next year, then I don’t think you fall in the “Broke” category. The reason why is that although cash is tight right now, whatever you were throwing at your mortgage you can start throwing at your car loan next year and be completely debt free in no time. My best recommendation is to go through my free course “Debt Free in 18 Months” where I address not only the debt aspect of your finances but also the cash flow side of things. I hope that helps.

  27. Adriana @MoneyJourney says:

    Spending money on what you can’t afford is probably the most common bad money habit of all!

    I don’t come from a rich family, but the 12 years of school were very tough on us, financially. My parents didn’t have a lot of money, so I had to wear hand me downs, while my class mates had the latest fashion pants, t-shirts, and whatever kids were wearing back then.

    Also, in high school, I was the only student in my class without a cell phone. My parents couldn’t afford one, so they chose to feed the family instead. 😀

    Nowadays, I see so many people buying so much stuff they don’t even need and then complain about their lack of money. Well, that’s just backwards.

  28. Rob says:

    Get a house for $150,000? LOL, I wish.

    • Deacon Hayes says:

      Haha. Yeah, it depends on where you live. If you are in NYC then $150k won’t buy you anything. However, if you are in Indiana you could buy a 2000 square foot house for $150,000.

  29. suzie says:

    These are great points. I agree with you on all of them. Like you, I play the lottery when it gets to be a really big jackpot, but I only buy one ticket. I also agree with you on renting vs. owning. However, I do agree with those that say it really can depend on what state you live in. It makes perfect sense for us (plus tax breaks on interest and breaks on insurance when bundled). What you didn’t mention, something I found to be true, is that broke people rent stuff. I know of someone who was renting a bed (yes, a bed) and a big screen TV. Places that rent stuff are like pay-day loans in my opinion.

  30. Trekkoid says:

    I’m financially independent. I have a high net worth (7 figure!), but a low (passive!) income. I don’t work anymore. Take my word for it: STUDY THIS ARTICLE AND TAKE IT TO HEART. It’s quite true, and the direction to take if you want to retire comfortably some day. I’m only in my early 50s. I could, in fact, elaborate on all of the above as I’ve practically written a book on such matters. But, few people over the years give a damn about what I have to say.

    I will say this much… It’s all about self-discipline and not being one of the sheeple. Be frugal, be cheap, and treat money like it’s your life-blood (for it IS in a Capitalist society!). Live below your means, invest your money (at least in an account where you’ll get some form of interest back), and above all else, don’t live to impress others. Don’t follow trends, fashions, fads, or upgrades. In fact, embrace stealth and wealth and people will leave you alone. Nobody mugs a bum or steals a 20 year old car…But the joke is on them.

  31. Alison says:

    The problem with playing the lottery is not the amount of money spent, it’s the mindset that goes with it. It subconsciously tells your brain that the way to get the life you want is by a game of chance—or some lucky break. Playing the lottery takes the responsibility for your future out of your hands and gives it to someone else. People who want to be rich and don’t play the lottery often feel that they can make their own opportunities to have the life they want.

    Also, it’s a myth that buying is always better than renting. This is an oversimplified example. Suppose you buy and the job market in your area is bad and you want to move for a better job. Good luck doing that easily if you’re a homeowner. Renting gives you flexibility. Owning a home is more expensive than just the mortgage payment and is not always a good investment.

  32. Tracy says:

    I think the common thread through these 5 points is that they almost all seem to evolve around instant gratification. But, it’s hard to think about the future when you have limited funds and are living day to day. So, in some respect, the focus on instant gratification is understandable. Your points on renting as a way of life and payday loans are so true of lower income households. Heck, I think they are true of many middle class households too.

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