Help! I am Broke!

by Neal Frankle, CFP ®

Yesterday I wrote about what to do when you are out of money. And I explained that being out of money is very subjective. It’s important to pause and determine exactly what your financial situation truly is. If this is a temporary set back you might turn to friends and family for a loan. If that isn’t available, you could turn to a social lending company like Lending Club. But sometimes, neither of these possible solutions are realistic. If that describes you it’s important to ask yourself three questions:

    1. Do you have a roof over your head?
    2. Do you have food on the table?
    3. If the situation continues as is, how long will conditions 1 and 2 persist?

Let’s assume a worst case scenario. You face losing your home and you have no resources. This is truly a financial nightmare and crisis. It doesn’t get much worse than this. I know because I was in that situation as a kid. If (G-d forbid) you find yourself in these dire straits, here is your action plan:

1. Shelter

Make a list of friends and relatives who will put you up. If you know this is temporary, explain to these people when and how things are going to change. (If you aren’t sure how temporary this is, you have to figure out your game plan to get back on your feet. More on that shortly.)

If there are no friends or family who are in a position to help, approach religious institutions like churches and synagogues in your area. It doesn’t matter if you are part of the faith or not. Typically religious organizations try to help everyone they can.

Whoever you turn to, don’t give in to shaming yourself. You are going to get out of this situation. You just need some help right now. And you are giving another human being the opportunity to rise to a very high level. Put yourself in the shoes of the person you are talking to. If you were in a position to help someone, would you do it? How would it make you feel if you could really come through for that person? You’d probably feel pretty good about it. Don’t beat yourself up – you don’t have time for that.

If you think your housing problem is going to persist for an extended period, consider applying for Section 8 housing. This is a program administered by HUD which will subsidize your housing if you meet the qualifications. Basically your income must be less than 50% of the median income in your area in order to qualify.

2. Food

If you solve the shelter issue you probably solve the food issue as well. Again if you think that you will find it challenging to earn enough to feed your family for some extended period of time, consider applying for food assistance. The steps to accomplish this goal vary from state to state and county to county. It may take time to qualify for food (or housing) assistance. Prepare yourself for that.

3. Game Plan

You’ve hit rock bottom financially. But you can and will lift yourself out of this situation. Your problem may have been a result of circumstances beyond your control like widespread unemployment or a health issue. But now is the time to focus on those things that you can control to change your current situation pronto.

It’s time to focus your energy on the positives and formulate a game plan to earn income quickly. Your attack plan should consist of two strategies. The first is to network with people who can help. Make a list of all the people who are successful. These aren’t necessarily rich people but those who have demonstrated an ability to make things happen.

These are successful small business owners or highly paid employees who have advanced quickly in their careers. Meet with these people. Ask them for ideas and other contacts. They’ll be happy to assist – that is what made them successful in the first place.

Give them an honest assessment of your situation. Tell these people about your strengths and weaknesses. If they know you well, ask them what they think your strengths and weaknesses are. Finally, ask them two questions:

  1. “What would you do if you were me?”
  2. “Who else should I speak with?”

Your objective is to gather ideas and make connections. You aren’t looking for job offers or handouts. Make that very clear before you meet. I am a firm believer that networking is the best way to land a job these days. It does take time but it is extremely effective.

If you are in a dire financial situation, you must be extremely practical. Do whatever you must do to put provide food and shelter for you and your family. There are many people around you who are happy to help. Once your immediate needs are met, move heaven and earth to start earning and get back on your feet.

Don’t waste time or energy feeling sorry for yourself or beating yourself up. That just saps your strength and makes your job more difficult.

Have you ever faced these kinds of situations? What did you do? How did it work out?


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{ 4 comments… read them below or add one }

R Genevieve September 27, 2012 at 6:02 AM

Neal, Funny I should receive this right now – I am at that place where finances are difficult. But, circumstances being beyond my control which got me here, I am managing to keep the roof over mine and my kids’ heads for now. The only issue I have is to decide if filing ch. 7 bankruptcy is better so I can get my credit back (in case i have to sell) and not have the nightly phone calls or keeping the seed money for backup costs like fuel and other necessities? Suggestions?


Neal Frankle September 28, 2012 at 1:52 AM

“R” – I am in your corner. I am happy that you seem to have a great attitude and are managing despite these challenges. Do you have equity in your home? Tell me more about your situation please….. Also, try or this . Keep me posted.


Ashley September 25, 2012 at 7:58 AM

It’s worth noting that most people will never be ‘broke’ if they budget appropriately, build a emergency fund and live below their means.

Sadly, 99% of people don’t follow this simple advice.


Neal Frankle September 27, 2012 at 2:54 AM

I don’t know if it’s as high as 99% but I do agree that if people do budget, track and set up an emergency fund, the odds of going broke are really low. Nice point Thanks!


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