The Going Broke Blog

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A man’s gotta eat. Women too, I hear, but they don’t like to admit it.

One of the fastest ways to watch what little finds you may have slip from your bank account is to eat out a lot.

Food is a dangerous temptress. It’s immediate, it’s inexpensive on a meal-by-meal basis, and it makes you feel so much better about life when you’re stressed out about your finances.

The irony there is that it’s very easy to eat out once, twice, three times a day, and over the course of a month, flush hundreds of dollars down the toilet – literally.

A five dollar meal seems pretty inexpensive. But add it up – thrice times daily, times 30 days in a month, you’re looking at $450 to chow on food you probably shouldn’t have been eating anyway.

Here are some of my tips for eating right and eating cheap when you’re going broke:

• Visit the grocery store and think vegan. You don’t have to be a vegan to eat like one. For less cost than a grilled chicken salad at Sonic or the least expensive salad at Subway, you can buy a whole bag of salad mix in the produce isle. I like to buy the big four-veggie salad bags, which run around $4. This will last you a week at two meals a day if you like a light salad, or if you like to enjoy a big bowl of salad like me, two bags will get you through a week. Add light salad dressing and some fruit (I love nectarines and plums) and you have a super healthy, low-calorie, $0.50 or $1 meal. [Soup is another option here, but I'll be honest: I hate making soup and I don't like eating it all that much. Your mileage may vary.] Just replacing one $5 meal each day with a $1 salad will save you $120 a month. I don’t know about you, but that’s my family cell phone plan, or two months of Dish Network, or at least a week’s gas to and from work. You’ll feel better and more energetic from avoiding lethargy-inducing heavy meals and you’ll see an improvement at the bathroom scale as well.
• If salad’s not on the plate for my palette on a given day, I try to take aim at Subway next. Can’t beat $5 footlongs for value, and they’re a healthy option. One footlong feeds me for two meals at $2.50 a meal. Or go for a packed veggie delight wrap, easily equivalent to a footlong sub in substance, for $3.50 – split over two meals at $1.75 each. With some chipotle or sweet onion sauce, these are great, inexpensive, healthy meals. Just don’t go overboard and down a whole footlong or wrap in one sitting. Make two meals of it and pass on the chips and drink – you’ll just double your cost per meal, and your calorie intake.
• There’s no shame in hitting your local fast food dollar menu when the need arises. We life fast-paced lives and it’s realistic to admit you’re going to have to get food when and where you can sometimes. But instead of getting the four-piece chicken tender meal at Church’s, go for the strip and a biscuit for $1.29. It’s not much of a meal, but if you use the tricks I outline below for eating light and feeling full, it will satiate you through dinnertime. You can get a junior burger, two-piece chicken strip wrap, or a junior breakfast burrito at Sonic for only a buck. McDoland’s, Wendy’s, Burger King, all have great, robust, filling dollar menu options. They aren’t healthy by any means, but they’re cheap and serve their purpose. Consider it inexpensive and easy portion control.
• Sick of salads and dollar menu options? Upgrade to a nice meal from Chili’s, TGIFriday’s, Red Robin, Applebee’s, or your diner/restaurant of choice. Lower-priced entrees run $6-$8. The secret to eating inexpensively here is splitting that oversized meal into several smaller meals. At most Italian restaurants, one order of spaghetti and breadsticks is enough for four honest, smaller meals. You can break one gluttonous meal into four reasonable ones and end up paying $1.50 or $2 per meal. I for one would rather have Olive Garden leftovers for two days, with salads and fruit mixed in to keep things fresh, at an extra $0.50 per meal than four separate meals off the dollar menu at Sonic. There are some great guides to safely storing and reheating leftovers over at O Chef, eHow, Real Simple, What’s Cooking America, and even Winn Dixie.
• If you have a significant other or kids, these same ideas apply. Reduce portions, replace one or two meals a day with a good meatless salad, split entrees with your mate and/or kids, etc.
• Pay attention to eating a balanced diet. Quite often, people get the nutrients they need to function purely by accident – by sheer influence of the large amount of food they eat. When eating vegan, make sure each meal has balanced contents and a wide variety of colors – carrots, cucumbers, spinach, broccoli, peppers, tomatoes, and so on. If you normally have a Dairy Queen chicken strip basket for lunch every day, don’t worry – you didn’t have many nutrients to lose there.
• Replace expensive, calorie-heavy snacks with healthy, inexpensive ones. You can eat any three pieces of fresh fruit for less cost than one candy bar. String cheese is one of my favorites – it’s easy to peel and eat slowly and has great texture.

Eating less overall and differently than your body is used to will cause some transitional pains – cravings, hunger, maybe even some emotional influence making you tense, easily agitated, or obsessive over wanting certain foods.

Here are my two big tips for beating those demons:

Drink lots of water. People just don’t drink enough of this stuff on a daily basis. Take aim at four pints at least, roughly eight regular glasses of water or eight regular bottles of water. Many, many times, your brain misinterprets a lack of water for a lack of food and you get hungry as a response. Drink a bottle of water before bed so you stay hydrated through the night, drink a bottle in the morning to replenish yourself (go for room temp water instead of cold so you don’t tick off your stomach), and then try to drink a bottle of water with every meal and between each meal. Every time you feel thirsty, you’re already dehydrated, so instead of just taking a sip to wet your lips, drink a lot in that moment. If I don’t pay attention and end up thirsty, I’ll drink a half a bottle of water immediately whether I feel that much need or not. If you stay hydrated, you’ll have far few issues with random hunger pains.

To stretch out those small-portion meals (off the dollar menu or split from a large entree), drink lots of water with your meal and eat s – l – o – w – l – y. Take your time and pay attention to your food, really taste and enjoy it. When you eat, remove all other distractions – no TV, no book, no newspaper. When you take a bite, take a small bite, enough to really taste what you’re eating, and chew it extensively. If you can’t stop yourself, put your fork down, sit on your hands, and count up to 20 as you chew for every grind – 1, 2, 3, 4… You can train yourself to stop shoveling food down your throat. When you take your time and pay attention to your meal, you appreciate it more, you better taste the flavors and textures, and your brain really experiences the act of eating. If you eat while you’re distracted by TV or something else, your brain doesn’t fully appreciate what you’ve consumed and an hour later it will have forgotten that you ate. You’re paying for this meal – and it’s what will give you fuel for the next three or four hours; take the time and attention to enjoy and appreciate it.

If you don’t think you spend all that much on food, do the whole 30 day budgeting program of tracking every penny that comes out of your pocket or bank account to see where it goes. I promise you, you will be surprised. Good advice at Art of Manliness, Mighty Bargain Hunter, About.com, and Medscape.

And for more good reading on the subject of eating cheap (and trying to stay healthy in the process), check out Cheap Healthy Good (which has an awesome logo and site design), Slashfood, Get Rich Slowly, and a funny take on the topic at the Financial Times.

- James

What’s your favorite meal to eat on the cheap? What tricks have you used to control the amount you spend on food and the amount you eat at a meal?

I’ve always been pretty good with numbers, especially ones with dollar signs in front of them. But I read lots of horror stories of consumers who fall into debt problems and end up keeping their cell phones and Dish Network accounts current, at the same time they end up with their homes in foreclosure.

So let’s talk about budgeting and how to prioritize your bills when you’re going broke.

Here’s a rundown of my bills, rated first (must pay) to last (pay if I can, cancel if I must):

1. My home mortgage

2. My car loan

3. Home and car insurance

4. Storage units

5. Cell phone

6. Business-related bills (web hosting, studio rent, e-newsletter service, other services, etc.)

7. Home bills (home phone, home internet, electric bill, propane for heating, etc.)

8. Second home mortgage (the home and debt I inherited from my father)

9. Credit cards and lines of credit

The most important thing is to ensure you keep a roof over your head, food in your belly, and a way to make a living. If you lose your car and can’t get to your job, everything else will fall like dominoes when you get fired. Ensure your ability to earn money; then use that money to pay what you can and enable yourself to climb out of the hole you’re in, either through debt counseling or bankruptcy.

You’ll note my business expenses list highly on my priorities list, but only because I make a good bit more money each month from my small business than I lose to expenses. To cut out these expenses would cut off that income; both revenue and profit. That profit I use to help pay other bills; there’s nothing wrong with leveraging money to make more money if you can. Be realistic with your numbers to ensure you really are profiting, and stick with it if it’s giving you more opportunities to earn money and pay your bills.

My cell phone service also ranks highly on this list for this reason. Unless you make money with your cell phone, then consider it down there with other “comfort luxuries.” Reduce your plan as small as it will go, then control your usage to stay under that number. If you can get out of your contract without a fee, do so; you can always sign up again later when your finances are in better shape. Despite the proliferation of cell phones across the land, being unreachable is probably better for your sanity and mental health than always being accessible.

For most, your standard day job income should be enough to keep your foundational bills paid: mortgage, transportation, home necessities. Everything else can go to collections or be wrapped up in your bankruptcy filing, but these are the things you will need to keep up with to give you a launching pad for your new financial life.

It’s a long-standing business axiom that what isn’t measured isn’t maintained. The best way to tighten your financial belt is to pay strict attention to what you’re really spending money on.

Keep a small notepad with you, or jot notes on your iPhone as I do, and log every single time you spend a dime on anything, from gum at the gas station to making your online mortgage payment. Write everything down, and review it every week, and every month. Tally up your total spending for different purchases (coffee, movies, fast food, etc.) and see where you have room to cut back.

I didn’t realize how much I spent on lunch each day when I ate with my coworkers at the office. Totaled up over a month, this amounted to hundreds of dollars; that’s a family cell phone bill, or a small car payment!

Forcing yourself to write everything down will also make you consciously accountable for what you’re choosing to spend money on. You’re going to feel bad when you realize you’re about to spend $10 on lunch, then tell your kid he can’t have a toy at the grocery store because you can’t afford it; especially when you could have made yourself a $2 meal, or had a cheap microwaveable meal, or even a sub from Subway. You would have had a healthier meal and saved money for more important things.

A good budget, like a good diet, is not built around deprivation, but moderation. I can choose the medium one-topping pizza at Pizza Hut or I can choose the salad bar.  I can choose to make my lunch at home for a couple of dollars, or I can choose to leave my lunch spending up to the whim of my coworker’s appetites.

Use the common sense that the Good Lord gave you, and you’ll find yourself making better decisions in no time.

- James

How do you prioritize your bills in tough times, and what have you had to let slide in the worst times? Where have you cut back on your spending that has made the biggest impact on your financial freedom?

Via my Credit Repair for Dummies book, I learned about the option of credit and debt counseling, a service which can play arbiter between you and your creditors to negotiate interest rates and payments.

The creditors – your credit card companies, loan providers, etc. – want to get money out of you. It’s certainly not in their best interest to force you into declaring bankruptcy, in which case, they may not get a dime out of you. When you take on the services of a debt counseling agency, your creditors will assume you are in pretty dire straits, and would rather throw you a bone and get as much money out of you as they can than be hard-nosed and end up with nothing.

When seeking out a debt counselor, your best bet is to find a non-profit organization with reasonable fees. Do a Google search for your nearest metro area and “debt counseling” to see who pops up. Usually you will find some lists for your city, and the direct sites of counseling services themselves.

For example, I live in a rural area outside of San Antonio, Texas, so I just Googled “San Antonio debt counseling” and was pointed to several web sites, ending up with the Consumer Credit Counseling Service of San Antonio. Their non-profit status, accreditation and professional memberships, and fee structure all fit the ideal description provided by my Dummies book. I’ll reiterate here how empowering that book is when you’re facing debt problems.

I called the service the next day, and was told no appointment was necessary. Their web site clearly outlined all of the paperwork they would need for my counseling session, and it took forever, but I gathered it all up; bank records, loan information, credit card statements, pay stubs, etc. My wife and I also took the time to jot down a list of questions we would want to ensure were answered before our session was through.

I took the day off of work the next Friday and my wife and I dropped off our kids with the grandparents so we could both be in on the session, and both focus on absorbing the information and advice provided.

Upon arrival, in a waiting room resembling a family doctor’s office more than anything, a nice receptionist had us fill out some forms and said she would get the next available counselor for us. This service provided debt counseling at no charge.

After a short wait, a kindly counselor greeted us and took us into his office, as normal as any other. Family photos on the wall, certifications framed, books abound, and a computer gave the counselor access to the web and programs he would need to plug in our information and provide us with a kind of financial status report. I am good with numbers, so this wasn’t anything I didn’t already have in hand, but it provides good perspective to those for whom numbers create confusion and blank stares.

Turns out there wasn’t much to soak up: the counselor agreed we had gone broke. Chapter 7 Bankruptcy was the only option they could foresee as viable. Even if we did attempt to use their debt counseling services to consolidate and reduce our credit payments, my day job income wasn’t even enough to cover our mortgage, car payment, insurance, and other normal bills.

Bankruptcy Certification

After looking at our bills and declaring us prime candidates for bankruptcy, our counselor offered to complete our counseling session as a bankruptcy counseling session, and provide us a certification of having taken the one to two hour course which cost $50. Knowing what we faced, and the inevitability of going broke, we took the course and prepared to declare bankruptcy.

The certification course was simple and easy. The counselor collected some written materials for us, and went page-by-page over the most important parts. We had already covered a great deal of the information in our debt counseling session, so the two overlapped. If you think bankruptcy is in your future, be prepared time- and money-wise to get your certification done with your debt counseling session. It will save you a return trip, and eliminate procrastination.

- James

What was your experience with debt counseling? What was your process for finding a debt counselor and using their services? Were you happy with the experience? Please feel free to comment below.

The media says we’re going through some of the worst economic times since the Great Depression. Many people are losing their jobs, losing their retirement investments, and depleting their savings as they try to wait out the storm.

I’m afraid the storm has caught me, and I am in the process of going broke – my monthly bills are over double my day job income, and income from my second, self-employed job, has dried up.

For the first time in my life, I cannot pay all of my bills. For a goody-two-shoes, want-to-please-everybody worker bee like myself, that’s a hard pill to swallow.

This Is My Story

I am a 27 year old journalist, with my local newspaper since I graduated high school, and run my own photography studio on the side to help make ends meet. I’m married with two sweet kiddos, two and four years old.

I would say that I live a pretty normal American family life on the lower end of the income spectrum; I’m up early and work late, get one real day off a week, and spend what little free time I have with my family. We like to watch Spongebob Squarepants and Young & The Restless, eat out when we have a few extra dollars in the bank, take the kids to the zoo and Seaworld, walk around the outdoor mall in the big city or around our rural community, and mostly just enjoy spending time together.

We aren’t extravagant spenders, but we do live comfortably. I make about $27,000 a year from my job with the newspaper, and another $12,000 to $16,000 annually from my photography studio. We have a big screen TV, Xbox 360 and Nintendo Wii, DishNetwork satellite TV, Netflix and Gamefly accounts, and two cars. Our home is a small but quaint 1,000 square foot historical home in the country, which I inherited from my grandmother. I try to take one week of vacation each year, which we either spend at home with the kids at Nana’s house or down on the beach. Again, we live humbly, but comfortably. About as average a lifestyle as you can have.

So what went wrong?

Why Are We Going Broke?

I’ve made a number of financial mistakes in my lifetime, mostly lifestyle choices inherited from my buy now, pay later father.

My father had retired on disability before I was even born, and my mother was a homemaker, so we never had much money. But my father loved to buy stuff. He was very generous, and enjoyed few things more than watching my mother and I open presents for birthdays and Christmas which were beyond our expectations, and our means.

My father was talented at working the credit scene to “afford” what he wanted; or wanted us to have. He would take out personal loans with his friend at the bank, sign up for any credit card he could get (needless to say, his credit wasn’t the best), and gladly accept in-store financing for large purchases.

Buying televisions and cars were my father’s two favorite consumer acts. He loved going to Wal-Mart, shopping carefully, and buying the biggest TV he could fit on a credit card. My father loved used Cadillacs; the more plush, the better. He had his quirks, and he amazingly was always able keep the bills paid. Payments sometimes slipped a few months, or personal loans had to be refinanced, but he somehow made it work.

So I grew up learning nothing about savings, and all about how to live on the bleeding edge of affordability. And unfortunately, like so many others, I didn’t learn about savings, investing, or the cost of credit until it was too late to do anything about it.

Learning From The Best

When I turned 18, I got my first “on the books” job. I had washed dishes for the nearby cafe since I was 13, but wasn’t officially employed until I turned 18. I didn’t earn much, but my father helped me to buy things like car stereos on a “pay me back later” basis. He provided the funding, and most of the time, eventually “gifted” me the amounts I owed him for this purchase or that.

My father was infinitely generous, and would give the shirt off his back for anyone. But in the same stroke, he was about as bad a teacher of good financial sense and practices as they come. He never purposely taught a moral and mental disregard for the responsibility of debt; it was just the lifestyle he lived, and passed on to me.

I also received my first credit card when I turned 18, before I even had a real job. By the time I graduated high school, I was thousands of dollars in debt. I went to work full-time with the newspaper, and with a boost in income, came a typical immature boost in spending. On girls, on cars, on computers (I am an avid gamer), and of course, on my ever-growing mountain of debt.

My grandmother died while I was still in high school, and I inherited her house, which sits one lot over from my parents’ home. I also inherited the debt on her home, and made the unusually wise move to remain living in my parents’ home while renting out grandma’s house to pay the bills. The experience was a nightmare, with deadbeat renters who paid late, if ever, and bailed out owing rent and having torn up the place, but it did keep the bills paid.

My bills eventually got to the point where I could barely get by on my 40-hour-a-week paycheck. With a talent for photography and the equipment to practice it, I started doing professional portraiture as a side job to help boost my income. By then, I had taken out a home equity loan on my grandmother’s house, and was tens of thousands of dollars in debt.

More income = more spending, and greater debt. I fell into the trap of seeing extra income at the end of each month as an opportunity to rack up more debt. So long as all of my bills and minimum payments were less than my income, I saw it as room to spend until I hit the limit.

And so I became a direct reflection of my father’s financial lifestyle. I rode the bleeding edge of my income until I owed over six figures in debt.

And Then I Got Married

To be perfectly understated, marriage changes things. My wife and I are perfect for each other, and my children are the light of my life; but there is no denying one’s finances are forever altered by adding a family into the mix.

I managed to hustle enough photography work to always keep ahead of the bills and even keep enough money in the bank for those unexpected life happenings – trips to the emergency room, blown water heaters, broken air conditioners, etc.

I was able to ride the edge for another two years before life handed me the financial spanking I deserved years before – my father died.

Financial and Emotional Devastation

My father was my best friend. I am the spitting image of my father’s laid back, happy, confident personality. His loss devastated me far more than I ever could have imagined. I grew depressed, and lacked any motivation to do more than the minimum necessary to get through my days. Along with the emotional crisis of my father’s death, I had to deal with the commensurate financial crises on top of it.

My father’s cremation cost over $1,500, which I had to split over three credit cards to pay for. My lack of motivation kept me out of the photo studio, so while I grieved, my income fell off and we lived on credit cards until they were all maxed out and the minimum payments were beyond what I could possibly afford.

Along with these changes, I inherited my father’s assets and debt; his own home equity loan and credit cards, along with his house and car insurance. A total hit to my monthly income of well over $1,000 per month. When your day job only pays around $1,700 a month, your second job is at the will of the market, and you were already living beyond your means, you are woefully unprepared for the unpredictability of life.

We made the decision, with my father having passed, to go ahead and sell all of my family property, our extra cars (mine and my father’s pickup), and move closer to the city and my work.

Then a global recession hit, brought on by the bursting of the housing market bubble. What a time to try to sell property!

It took every dollar of what little savings I had in the bank, as well as many 80-plus hour work weeks, to hold out as long as I did. I was able to keep the bills paid and family fed for six months, until November 2008. Thanks to the economic fears that struck the nation, my bookings for photography work went flat. While I was normally booked solid two to three months in advance, going into this month, I did not have a single shoot on the books for the first time in years.

It was four months ago today, the day before my second wedding anniversary, when I admitted financial defeat, and recognized that there was no way I could make enough money to pay even half of my bills.

GoingBrokeBlog.com

As fast as you can go broke, hitting the big financial reset button on your life is a long, arduous process.

Four months after making a lot of hard decisions about our lifestyle (Do we declare bankruptcy? Do we keep the house? Do we keep the car? What can we sell? How can we make more money? Where can we cut expenses?…), we are still in the process of hitting rock bottom, so that we have nowhere to go but up.

I consider bankruptcy to be the lowest point, financially, we can reach; not that that is a bad thing. It marks a turning point. Declaring bankruptcy is the act which states to the world and to ourselves, “We have failed financially, and this is where we start our second chance. We accept this blessing, along with its repercussions and responsibilities, with open eyes and open arms.”

Certainly, I could lose my job, we could end up under a bridge; I don’t mean to say this is the worst situation a person can face financially. But taking into account our history, my job security, what we have learned through this experience, and the lifestyle changes we have already made to avoid ever experiencing it again, I believe (and pray) declaring bankruptcy will be the low water mark for our family.

With this blog, I hope to share the stories of my experience with going broke, what I have learned in the process, and what I continue to learn to this day and forward. If I make a few dollars from Google AdSense in the process, I won’t complain; but the true purpose of this blog is to help others deal with the financial realities life can throw at you, or better yet, to avoid them entirely. I am a real person with a real voice and real experience with going broke. Anything you read here is a product of my life.

I hope you will benefit for having discovered this blog, and continue to benefit from the archives and future articles it will hold. You can help support this site through patronizing our advertisers, purchasing products through our affiliates, making a donation via PayPal, participating in the discussions here through commenting on posts, and most importantly, sharing this site with others who could benefit from it.

Thank you for your readership and support.

- James

What are a few of your favorite personal finance blogs? Which have most benefitted your life? Leave your comment below.

Judging from the never-ending negative news coming out of Wall Street, I’d bet I’m not the only one. Which is why I’m here, writing to you guys. I’ve been financially secure for my entire life, and if I can go flat broke, I expect many others are facing the same situation.

My aim with this blog is to chronicle my real-life experience with going broke, where your debt far outpaces your ability to earn income. In the process of “admitting defeat” and recognizing there is just no way to pay all of my bills, much less maintain my perfect credit, I have searched the Internet far and wide for advice and real life examples of what you should do, what you shouldn’t, what the costs and reprocussions are, and so forth. I found a lot of technical and vague advice, but very little anecdotal experience to draw upon.

As an avid writer, journalist, and blogger, I decided to share my experiences here at GoingBrokeBlog.com, and I hope to fill that void of conversational, “advice from a friend who’s been there” information on the experience of going broke. I hope you are as empowered by this blog as I have been in making the decision to chronicle my experiences.

- James

What kinds of first-hand knowledge would most benefit you in your experience with going broke? Leave your comment below.