What I Learned After Going Broke
The past few years have been a serious struggle for many people, including myself. Going from one bad situation to another takes its toll on you after a while. These are some of the lessons I’ve learned along the way.
1. Pay Back Loans as Soon as Possible
I feel like this is pretty obvious, but it had to be mentioned. Two years ago I had $20k saved up and could have easily paid off my auto loan, which I owed about $2500 on at the time. I now realize that if you don’t pay off a loan when you do have money, you might be struggling to pay it off when you don’t have money.
2. Never Rely on Only One Source of Income
It’s become a popular topic online in recent years to discuss the importance of multiple income streams, and I’ll have to echo that sentiment. I spent over a year trying to rely solely on day trading, even though I clearly wasn’t ready to take that step. I was able to do this because I had a decent amount of savings, and it wasn’t until recently that I started to also freelance and look at as many new avenues as possible to make some extra cash.
3. Prioritize Your Income Streams
A search on Google and YouTube about how to make money online is likely to leave your head spinning. There are so many options, and you can’t be sure that all of them are even legitimate. I’m trying my best to sift through all of them and decide which ones are worthwhile and which ones are simply wasting my time. There are only twenty-four hours in a day, so I don’t have time to be a freelance writer, day trader, YouTube creator, audiobook voice actor, English teacher, and a transcriptionist.
4. Be Careful Which Loans You Take Out
Not all loans are bad. When I took out my first loan my credit was still good, so the terms of the loan weren’t unreasonable. I believed at the time that that loan would be enough to help me get back on my feet. I was still only relying on day trading at that time. Needless to say, it didn’t work out. A little later when my credit wasn’t so good, I made one of the dumbest mistakes of my life: I took out a Pay Day Loan! The principal amount of the loan was only $300 with an APR in the hundreds! I now know that no matter how bad things get, Pay Day Loans will almost always screw you over in the long term.
5. Your Credit Score Falls Faster Than It Rises
I, like most people, spent years building up my credit. My score was ultimately up to 750, but then within a matter of six months my score fell by hundreds of points! Years of work down the drain. With a score so low there’s no chance of getting a decent loan or credit card, so at this point I only see one clear option: increase your income. Increase it enough so that you can start making payments on time and get one of the few credit cards you’re actually qualified for to start rebuilding credit. In tandem with that point is to keep credit card utilization as low as possible.
6. Get a Bank Account Without Overdraft Fees
If you’re tight on cash, it’s clear that at some point you’ll end up overdrawing your account. When you do there’s nothing worse than seeing that you’re $30 further in the red than you should be, and they’ll keep charging you until you make a large enough deposit to put yourself back in the green. Doing business with banks that don’t charge these fees is essential, in my opinion.
These are only the lessons I’ve learned from my experiences. If you would like to share yours, feel free to in the comments below!
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