Most broke people  don’t know how broke(n) they are.

Michael Lisman



If relationships with money and relationships with others are not inseparable then at least they converge frequently. People with poor money skills can be poor at relationships (notwithstanding people with good money skills can be poor at relationships). Rich or poor, removing money as a faltering concern can strengthen your relationship with others allow you to focus on yourself and others.


Recently I was asked (as I am often asked), how can I get to a place of financial well-being? Answer: Create healthy relationships. Create healthy relationships with family, co-workers and new people who potentially may come into your life. Start now!!! With the person you are standing or sitting next to. Start now with your neighbor who you may or may not know. Start now with your spouse, siblings, children, mom, dad, uncle, etc. Categorize existing and future relationships as “enhancing,” “neutral” or ‘negative.” Separate yourself from those relationships that threaten you and/or your ability to achieve that which you know you were destined to achieve and to become who you were destined to be. Create healthy relationships with financial service providers, your employer, your grocer and your products and services providers.


Look back. Are there broken or under-developed relationships that you should mend? People are always more important than things. Being well is better than being right. Wisdom is better than strength. Look forward. Who are the people that should you seek to know? Broken people more often seek out other broken people than they do healthy people. Broken people are rarely able to help other broken people while healthy people often have a surplus of encouragement. Broken people commiserate and languish in “how bad things are” and healthy people look to “how things are going to get better”.


Who is broke(n)?

Don’t have emergency money set aside? Don’t have 6 months of income in savings outside of retirement accounts?

An emergency fund is a cash account that will cover most unforeseeable contingencies such as loss of income for short period, an unexpected repair or medical expense. Bad things happen to both the great and small. The wise consumer lays up reserves to answer bad things when (not if) that inevitably happen. The not-so-wise only hope that nothing bad will ever happen and learn to live with fear.


  1. Do you need to borrow to make your budget sometimes?

Debt is cumulative. Credit is necessary in a modern capitalistic society; debt is not. There is a difference and success if ever fleeting until one learns to differential between credit and debt. Credit it enabling and debt is debilitating. Borrow to build engines to create income; never borrow out of basic need. Basic needs are to be answered with hard work; how work does not necessarily lead to financial success but it should suffice for your basic needs in a modern democracy.


  1. Are you making minimum payments on credit accounts?

If you make the minimum payment, you are losing ground. Many minimum payments are based on as little as 2% of the outstanding balance. Against a 18-28% interest rate and future charges, you will never pay the bill off. Offers to skip a payment are financial quagmires. Skipped payments are added to the end of the bill which accumulate interest for the life of the debt. Mortgage – debt means death.


  1. Do you have one or more credit cards that are using 70% of the limit? Do you have several low limit credit cards ($1,000 or less)?

Do not accept credit simply because it is offered. Do not make debt simply because the opportunity presents itself. Credit is “capacity” and debt is “capacity used”. Seek to increase capacity and decrease capacity used (debt). The lower percentage of your capacity used will be directly reflected in your credit score which will dictate how much you pay for debt.


  1. Do you live in fear of losing your job?

“If I lose this job, I’m sunk”. Roughly three-quarters of Americans are living “paycheck to paycheck”, with little to no emergency savings, according to a survey released by Bankrate dot com. Who thrives with this type of gun to their head? “Just getting by” was something that my parents would say but their hope for me was that I would thrive! “Just getting by” is a far cry and the antithesis of “the pursuit of happiness”.

     6.   Is your credit scores is below 660?

Do you wish you had better finances but that’s not happening right now. How do you attack debt? How do you stop a rhino from charging? You cut up his credit cards. You attack debt first by stop making any new debt and assessing the debt that you currently have. Current debt can be daunting but when you make up your mind that you are going to conquer debt you will have taken the first steps financial well-being. (2) Assess your income. Income can be the problem but most often not; spending is always the problem. Spending reflects your behavior as a consumer. The key is to stop behaving in the manner that created the debt. (When my bride and I returned from our honeymoon, we went to the grocery store to stock our shelves. She put things in the basket and I took things in the basket. This was an indication of behaviors that would define our approach to spending money over next forty plus years. My mother had taught me on the farm to not to mix “wants” with “needs” and “edible” and “non-edibles” when shopping. We needed toothpaste and toilet paper; we wanted facial tissue and paper towels. We needed bath soap, bleach and washing detergent; we wanted dish detergent and facial soap. More importantly, we needed food. Our marriage survived and was probably strengthened by discussions about the need for fabric softener and towelettes and such.)

     7.  Have you said, “I you won't ever be able to retire.”

You are not alone. According to a recent survey by the Federal Reserve, 55 percent (55%) of lower-income respondents whose household income is less than $40,000 per year, plan to keep working as long as possible or never plan to retire. 31 percent (31%) of non-retirees have no retirement savings or pension, including nearly a quarter of those older than 45. The median balance of retirement accounts held by Americans, who are saving for retirement, is less than $60,000.


  1. Are you broke after (or sometimes before) all of your bills are paid?

Do you feel relieved that you’re going to make it through another billing cycle? Do you hope that nothing happens that requires money before your next pay check?


  1. Have you borrowed money from family or friends?

Do you owe relatives or friends for a loan made a long time ago? Nobody mentions it. You hope that maybe they have forgotten or have forgiven the debt. You plan to make good on it one day when you can.


  1. Are you considering bankruptcy or debt management?

Have your considered just wiping the slate clean and starting all over. “They can have all this stuff.” You were never meant to live in despair. “Give me grace to accept with serenity the things that cannot be changed, courage to change the things which should be changed and the Wisdom to distinguish the one from the other. Living one day at a time, enjoying one moment at a time, accepting hardship as a pathway to peace…” Reinhold Niebuhr (1892–1971).


  1. Were you recently been denied credit?

“I just wanted to know if they would give me credit.” Wishful thinking will not change your financial situation but action will. Nobody can change the past but most everyone can change their future actions. You are not your credit score.


  1. Do you discuss or seek advice about your finances with others? Do you lose sleep over finances sometimes? “This is on me.” “They don't know what it takes to make end meet.” Are you in a mess by yourself? You should talk to someone who can help. You don’t have to go it alone.


  1. Do you buy stuff on an impulse? Do you buy stuff that you really don’t want after you get it? Do you feel bad about your spending? There is a vacuum that spending temporarily fills.


  1. Are you not sure that you'll be able to make next month's house or rent payment?

Housing insecurity if far more common than one might expect in America. 40 million U.S. households pay more than 30% of their pre-tax income for housing. The day-to-day and month-to-month risk of losing a place to stay is associated with delaying or deferring other vital expenditures including healthy food and doctor visits for potentially serious illnesses. Have you had to delay or eliminate getting a tooth fixed (or had it pulled rather than the added cost of saving it)? Have you skipped taking a prescribe medication because the costs are too high?


  1. Do you pay late fees? Do you rotate paying bills to make ends meet?

Some consumers pay late fees as a regular course of doing business. Vulnerable consumers accept fees on everyday transactions such as cashing a payroll check, non-sufficient funds to their bank; to pay a utility bill; late credit card payments and mortgages.


  1. Does your roof has leaks; your brakes are worn. Is your car is making a funny sound. Do you let your insurance lapse sometimes?

Do you drive without auto insurance? Do you roll the dice and hope that nothing bad happens? Things and relationships that are in disrepair rarely fix themselves and time tend to make them worst, more costly and can cause irreparable damage.


  1. Are you continuing to rely upon something that is on its last legs (car, appliance, a house)?

Unreliable things and unreliable relationships often cost more than they are worth. We may not always choose who we fall in love with but we can choose to not fall in love with things.


How do you mend that which is broke(n)? Start by doing these things


  • Seek healthy relationships. Some relationships enhance your well-being and some relationships threaten your well-being. You don’t have be in this alone. Two is better than one if one is strong.


  • Identify spending “needs” from “wants”. Remind yourself that is a “want” not a “need” and it’s OK when you are spending money. Make spending money a cognitive experience rather than an impulse.


  • Follow a written budget (daily, weekly, monthly, annual and 3-5 year over year comparison) Always get your money’s worth: comparison shop & buy off season

Annual and multi- year budgets allow you to identify needs ahead of time and to take advantage of low seasons. (i.e. Will the children need new winter coats next year – buy them in the spring at 85% off and keep them tagged with the receipts in the pockets. Will you need to replace a car within two years? Watch which brands are best and worst sellers and you can save thousands on untitled new cars.)


  • Set financial (and personal) goals. You should know when you get there. Identify the signs that you expect to see along the way. (i.e. kids finish college; no credit card debt; retirement is fully funded; house paid off; there is money for vacations, etc.)


  • Know your net worth. What are your assets worth in real money? Are your liabilities decreasing as your assets grow? Are your assets and liabilities moving the direction of your financial and personal goals? Where will you be in 5 five years?


  • Have a financial plan & timeline (in writing)
  • By age 30 -
  • Before age 40 -
  • By age 50 -
  • Before age 60 -
  • At age 70 -


  • Reward yourself for hard work and smart choices. “Frugality” is to deny yourself and others; “thriftiness” allows for rewards for smart choices. Frugality is often bitter while thriftiness can be sweet. Life is hard and then you die; but there is nothing better for man or woman than to enjoy the work of their hands.