How to Go Broke in Under a Year

It’s important to look at what you yourself can afford. While a neighbor could be driving the latest luxury car and wearing expensive jewelry, their budget can look a lot different than yours for numerous reasons. Buying big ticket items that won’t hold much value down the line like flashy cars and designer clothes could land you in a world of debt, so it’s important to live within your means. 

Tip: New cars will depreciate in value as soon as the car leaves the lot and will continue to lose value as time goes by. Consider buying a used vehicle to get the most out of your money. If designer clothes are a must, try shopping at a local thrift store for some great finds or browse an online community like Facebook Marketplace. 

Multi-level marketing (MLM) involves selling products directly to customers, usually family and friends, through either your home or online. You essentially become a “contractor” and salesperson for the MLM business, investing in the products with hopes to gain profit through sales or through commissions by recruiting others to the same MLM business. 

Be sure to do your research before joining an MLM, because while some MLMs are legal, some are illegal pyramid schemes. “If the MLM is not a pyramid scheme, it will pay you based on your sales to retail customers, without having to recruit new distributors,” states Federal Trade Commission Consumer Information. 

Tip: Even though some multilevel marketing businesses may be legal, they might not be worth the investment. There’s plenty of factors to consider like start-up and promotional costs and other business related expenses. In order to maintain profit, you’d need to continually sell and that can be a difficult feat. Most MLM participants usually don’t see much profit and actually experience losses. 

Filling up your closet with fast fashion items that will deteriorate within a few wears means you’ll need to buy more, creating an unnecessary continuous expense. 

Tip: Instead of focusing on buying many outfits, try investing in higher quality clothing items that will last longer. While higher quality items may cost more up front, the lifetime of the item will outlast the cheaper item, which in turn will end up saving you more.

The unexpected happens and sometimes it can be pricey which usually leads people to place those costs on high-interest credit cards. To avoid having to borrow for costly surprises like a job loss, car and home repairs or medical costs, open up a savings account dedicated for emergencies and make it a habit to deposit what you can to build your fund. 

Need help with creating a comprehensive financial plan for your future? Explore HFCU Financial Services’ wealth management solutions.