Do you ever check your bank account or your credit card and feel so broke you wonder how you got there? You start backtracking. You wonder what you bought and how many times you swiped that card.
I’m sure we’ve all felt that at some point, and I know from my own experiences, I felt that more times than I can remember.
But what I found was surprising is that most people don’t go broke overnight. They drift into it, paycheck to paycheck, making decisions without knowing their personal finances.
And the worst thing? It’s subtle decisions, ones that go unnoticed until it’s too late. Before you know it, you’re deep in debt.
So, if you feel that money has been going through your fingers, if you feel you can’t get ahead no matter how hard you try, then this blogpost could be the wake-up call you’ve been waiting for. Let’s get straight into it.
7 Signs You’re About to Be Broke And How to Stop It
Sign 1: You Don’t Know How Much Money You Spend
Now, this may seem a little obvious, but it’s where most people go wrong. The thing is, if you’re not tracking your expenses. It’s like you’re flying blind.
You go out thinking you’ll spend $200, and it ends up being $500. You forget about the Uber, the treats, the food, and everything else that piles onto your credit card.
And it’s not just that weekend of overspending that piles up—it’s the other three weekends on top. It’s going out with your friends for a drink after work. It’s going to the movies midweek as a special treat.
And here’s the kicker: the average American underestimates expenditure by 30%. So, if you think you’re spending $3,000 over the course of the month, you’re actually spending $900 more than that.
This missing accounting—that we have no idea about—is slowly draining your account, and it’s a dangerous position to be in.
Think of it this way: if you don’t know where your money is going, you can’t control it. And if you can’t control it, guess what? It’s controlling you.
But you can fix this. You can fix this today. It’s so simple: just track every dollar. Pull up your bank account and your credit card, find out where your money is going, and track it.
Track it for one month and see what difference that makes. I promise you, you’re going to find a lot of money that’s going missing, and you can pull it back. If you’re tech-savvy, you can use a spreadsheet—there are hundreds on the internet. Me? I use pen and paper, but I’m old-fashioned.
Awareness of your finances and how you spend your money is the first step to control. Once you take that first step, other steps will follow. You can absolutely do this.
Maybe the first time it might feel a bit daunting, but after that, it’s easy. And more importantly, you’ll start getting control.
Sign 2: You’re Relying On Your Credit Card To Survive The Month
This is a huge red flag. If you’re relying on your credit card for a car repair, for your food shopping, or even your rent, then this is something we need to fix.
This isn’t a one-time emergency; this is recurring survival on borrowed money. Quite simply, it’s not what credit cards are for—unless you’re paying off that balance in full by the end of the month.
The problem here is you’re not spending your future money; you’re spending future expensive money.
The minimum credit card APR is 18%, and most of them are over 25% interest. It’s hugely damaging if you’re not paying that off in full every month. It’s putting you in a financial hole, and it’s going to be very hard to get out.
That $500 expense, if not paid off in full, will drag on for months, maybe years, costing you $700, $800, or $900 in the end. It becomes a never-ending treadmill. And I know exactly how that feels because I was there in the past.
So, how did I fix it and get off the treadmill? I took that credit card, I put it away, and I focused on paying that debt off.
Was it easy? No. It was one of the hardest things I had to do. It took sacrifice and it took time, but it was so worth it.
Pro tip here: once you pay back your consumer debt, live under your means. You’ll never put yourself in that position again, and who would want to?
Sign 3: You Get A Pay Raise At Work, But You Still Feel Broke
This is all down to lifestyle creep and lifestyle inflation (how more money means you’ve got more expenses).
Now, this is something very common. The majority of Americans suffer from lifestyle inflation, and I know exactly how it feels.
It’s very simple, and it goes something like this: you get a pay raise at work, maybe $300 to $500 a month, and you decide to upgrade your stuff—maybe your phone, maybe a car, maybe even your house.
After all, you’re earning more. You’re feeling successful. You deserve it. It feels like progression, but it’s actually regression. Let me explain: you’re spending money you don’t have.
In this expensive world you live in, you’re earning more money than ever before, but you’re saving less money than ever before—and it’s the expensive stuff that you’re buying that gets you caught in that consumer trap. Then we start leaning on the credit cards.
Do yourself a favor: if you get a pay raise at work, take half of that money and put it into your savings or investment account.
Don’t do what I did. Be smart with your money. Enjoy half of it, but take the other half and invest it. Future you will be very happy.
Sign 4: You’re Living Month-To-Month With No Financial Buffer
This is a huge sign that you’re going broke, and one you need to tackle.
If you miss one paycheck, or you get a huge unexpected bill that sends you into a financial tailspin, then you’re not stable. You’re just surviving.
The more fragile your finances are, the easier it is to fall into poverty—no matter how hard you work or what you’re earning.
But we can be prepared. Start building an emergency fund. Start it on your next paycheck. Even if it’s just $25, it will add up and it will be a safety net.
Having that emergency fund growing on the sidelines will be your financial best friend. You can lean on it when you need to.
A great second benefit of this is you’re developing a new habit—a new financial habit. You’re learning to put money aside for future use.
Sign 5: Your Debt Mountain Is Getting Bigger
Even though you’re making payments, if you’re making minimum payments on your credit cards or your consumer debt, it’s going to take you forever to clear it. You’re not managing your debt; the debt is sinking you, and we need to sort this out.
You see, credit cards have created a game, and they’ve set a trap for all of us. When they ask you to pay the minimum balance, a small fraction will go to the principal. The vast majority will be the interest payment.
This means your consumer debt will continue to grow. The credit card companies will continue to get rich, and that item you bought for $300 is now costing $1,000.
The absolute worst thing about minimum payments is that we feel we’re doing something, but actually, it’s not very much at all—and it can lead to bankruptcy.
But fear not, there are solid ways of getting out of this trap. Two strategies in particular I love:
One is called the snowball strategy, where you start paying off the smallest debt first and get a psychological win.
The other one is the avalanche strategy, where you tackle the highest interest rate first and save more money.
My personal favorite is the latter, but they are both excellent. Use these strategies to pay down your debt. It’s going to take time. It’s going to take a bit of sacrifice.
And please, put away the credit cards until you get control. Again, as somebody that had tens of thousands of dollars of consumer debt, it is so worth doing.
Sign 6: You Can’t Handle Small Emergencies Without Borrowing
This is similar to not having an emergency fund, but on a smaller scale, and it’s a surefire way of showing that you’re going broke.
If you’re reaching for the credit card for the small daily expenses when you know you can’t pay it off. At this point, using your credit card when you know you can’t pay it off—for a small expense—is a bad habit you need to change.
Now, I know this may be difficult. Using your credit card for a small expense you can’t afford to pay will induce that suffocating feeling of financial debt.
These small little payments will snowball by the end of the month, and it has to be a habit that we stop.
A great way I found of tackling this in the past is to use cash envelopes—actually putting the money in an envelope and taking that with me when I need to use it, putting the credit card away.
And how I got the cash? I sold stuff on eBay. Now, selling on eBay may not be your thing, but if you can find a way of generating $200 to $400 each month and having that cash on hand, you can stop using your credit card.
Sign 7: You Avoid Looking At Your Bank Account
This may be the most subtle but the most deadly sign of all that you’re going broke. And the reason is, you know it’s going to be bad news. You don’t want to deal with the stress—and I totally understand.
If checking your bank account or your credit card statement fills you with dread, you’re already in that cycle of avoidance.
And the thing I found out when I was under a mountain of consumer debt is that avoidance is where finances go to die.
As I said before, what we avoid controls us, and we simply can’t fix what we don’t face.
This avoidance behavior just makes things worse. We get missed bills, late fees, overdraft fees. It becomes a self-feeding loop of anxiety and stress, and it’s no wonder that we suffer.
There is only one solution here, and you have to instigate it as soon as possible: face your circumstances head-on.
Now, that sounds a bit scary, and perhaps the first step is, but once you take that first step, it becomes much less scary. I promise.
Check your bank account once a week—maybe on a Sunday morning with a cup of coffee—and see where you stand.
Now, the tough thing about this is you have to face your fears, and it’s a new habit to develop. But the absolutely great thing about it is you’re taking a step in the right direction.
You’re getting some control back. And by checking in every week, you’ve got four check-ins by the end of the month to see if you’re on the right track.
This is an absolutely fantastic strategy to get off that “broke train” and get control of your finances.
You’re going to feel empowered. You’re going to feel more in control, and you’re definitely going to be on the right track. You can absolutely do it.
Final Word
So, here’s the truth that most people don’t hear—and what I learned from my own experience—is that going broke isn’t dramatic. It feels like nothing. It’s a swipe here, a bill there. It’s that little treat you get at the end of the day, until one day you realize you’re buried under a mountain of consumer debt, not knowing which way to go, feeling anxious and stressed.
But if you recognize these signs early enough—if you can stop the slide before you get there—you can turn it around. You can gain momentum and go straight back the other way.
Get off the path to consumer debt by doing it the exact same way you got there: turn around and take small steps in the other direction.
Reverse your course one step at a time, and get yourself some new habits to make you feel more in control. Go for it. It’s like grabbing a bull by its horns and taking control.
Even facing your account once a week is a big step in the right direction.
And even if you’ve felt you’ve suffered this way for years but have the desire to change, you can change.
You just need to make that decision. And I absolutely know you can do it, because I did it. It changed my life, and it will change your life, too.
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