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Ep 142: Recognize when you're "going BROKE"



Would you be able to answer the question, "Am I spending more than I make every month?" Please, say...Yes! But, if the answer is No, you could be going broke, and not really realizing it. If the answer is yes, great...let's keep it that way. After watching a new show the hubby found, it made me reflect on the intricacy around what we pay for things, and if we're not watching it closely, it may be easily taking us in the opposite direction of financial freedom.

In this episode, you'll learn...

  • The CEO of your life approach applied to your personal finance

  • How to create a profit and loss statement for you

  • How to avoid the "stupid tax"

Darick my husband and I were looking for something to watch one night on TV and I told him that I wanted to watch this movie called "Under Suspicion". And so he went to go look for it on the TV and look through everything. Netflix, Prime, Hulu, you name it, and couldn't find it. And so one of the suggestions that came up on the Roku is a look on the Sony Crackle app. Pretty much had said that the movie is available on the Sony Crackle app. So we went forward and loaded in that app, found the movie, and that app had the whole bunch of content in it that we hadn't seen before. And one of the shows was called "Going from broke." So we thought, "Oh, that looks interesting, let's watch it."

And so as we watch it, essentially the show Chronicles all these different people. We didn't really get past the first episode, but it Chronicles all these different people having struggles. I don't know if they are all business owners, but the one that we watched in particular, the guy was a business owner, but he was struggling with not only his business aspect but his personal aspect as well with his finances. And so as we watched the episode, just some amazing things were happening in this guy's life. He talked about the business that he was building, and I don't recall the exact business, but he talked about how he was making a good amount of money in his business. And then in his personal life, he lied to make sure that he looked the part for all the clients that he dealt with or all the people that he was networking with. And I remember as he was sitting across the table from some of the financial experts, he said to them, "So the last big thing I bought was I bought an $800 pair of shoes." And they kind of looked at him with his finances in hand, cause they've seen all his numbers and he said, "Well I've got to keep up. Like, I've gotta make sure that I fit in with this crowd" and the lady across the table says, "And you needed an $800 pair of shoes to do that? like just a regular pair of shoes wouldn't do it?"

So what it made me think about is all the different little nuances and times that we sometimes allow ourselves to get tripped up with that can lead us into a going broke situation. And so for this guy, he's keeping up with the Joneses. He's got this business that apparently is a successful business, but when he looked at all his numbers, he actually was losing $700 a month. And guess what? That was a shock to him. He didn't even realize he was sinking himself in the hole every month by like $700. And that just made me think it is so easy these days with the fact that we have access to our debit cards or we're doing electronic payments and we're buying things for our business. We're buying things for ourselves all under the guise of either "I'm making this investment" or "I have to do this because I need to fit in with a certain group." Whatever it is. It's so easy to lose track of where the money is going. And it's so easy because you're still moving around, you're still able to go out to eat. You're still able to do all these little things to not realize that you may be putting yourself in a broke situation.

We're buying things for ourselves all under the guise of either "I'm making this investment" or "I have to do this because I need to fit in with a certain group." (Click to tweet)

Thinking about that show just made me think about it's so important that we recognize where we are financially. And I say this from a kind of a preachy standpoint only because I believe in it and I believe in it heavily. So one of the things I like, one of the financial experts on the show that he had talked about was the fact that you need to be the CEO of your life. So not only are you the CEO of your business but think about being the CEO of your life. And so when you think about what it means in your business to look at your numbers and have a profit and loss statement, the same thing should be true for you personally. So the first challenge I would say is if you haven't developed a profit and loss statement for yourself that you whip out an Excel sheet and make it happen. When we're talking about a profit and loss statement, you can go super simple here and you're saying, start with all your expenses. What are the expenses? What are you paying out? And take over a period of time. It could be one month. So look over that month and say, "All right, what is everything that is going out of the door?" And so you'll have your expenses that are just from an ongoing monthly recurring basis. List all those out, but then be super diligent and watch everything that you're spending over that one month period. So that's all of your loss, all your stuff that's going out.

So not only are you the CEO of your business but think about being the CEO of your life. (Click to tweet)

Now consider your profit side. Anything that you've got coming in from an income perspective, whether that's from your 9-to-5, from your current business, from other sources, you do the same thing over that same time period that's going to help you see, "All right, where exactly am I from a financial picture?" Now, if you look at everything on the expense side and everything that you had coming in, look at the difference between the two and what you want for you in your life is to be on the positive side of the equation so that the number that you're looking at isn't negative (that would mean you're in a going broke situation) than it is on the positive side. So I love that CEO of your life approach and looking at your own profit and loss statement.

Now there is something from Dave Ramsey who's stuff I love. He is a financial guru. I'd recommend that you check them out, but he always talks about something called the stupid tax. This stupid tax generally refers to the price that you pay for something that was dumb up purchase. A decision that you made that was dumb. So in the case of this one guy in the show, him purchasing an $800 pair of shoes when perhaps a 50 or $60 pair could have done just fine, would have been considered a stupid tax.

So think about some of the decisions that you're making and make sure you're making some smart ones. Avoid the stupid decisions, cause we don't wanna be in a going broke situation. We're out here to make a bigger journey, impact more lives. And part of the way that we do that is having the freedom and the resources to do so. So be smart about it.


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