Why Being Poor Is like Being Fat (And What to Do about It)

Being broke is a lot like being fat (I’ve been both).

If you’re 50 pounds overweight, you know you have a problem. Chances are, you also have plenty of ideas about how to do better, such as exercising more, going on a diet, or reducing your stress.

Yet you don’t do anything about it. Why? Because it’s easier to go on eating, pretending you don’t have a problem and comforting yourself with the food.

You might even shy away from anything that would remind you. For instance, you might start avoiding looking at yourself in the mirror, or put your scale in the closet so you don’t have to look at it every day.

It’s not because you’re in denial, necessarily. You’re just ashamed. You know you should be doing better, but you can’t bring yourself to face the situation. You’re just too weak.

Do you recognize the thought process?

It’s exactly the same for being broke or in debt. It can cause you to spend the rest of your life going through the same old pattern, never making the kind of money you deserve to make.

The good news is you can break it. Let me show you how.

1. Force Yourself to Get on the Scale

Before you start losing weight, you need to know exactly how much you need to lose, and the only way to find out is to get on the scale. Muster your courage, step on the scale, write down your weight, subtract your ideal weight, and that’s how much you have to lose.

How do you get on a “scale” for your finances?

Write up a financial statement. Take inventory of all your debts, assets, and sources of income. Deduct your total liabilities from your total assets, and that’s your net worth — the monetary equivalent of your weight.

Next, write down your ideal net worth and income. Subtract your present net worth and income, and you have the total amount of money you need to start saving and earning to feel financially healthy.

This is an exercise you should repeat over and over again. Every month, update your financial statement to reflect your progress (or lack thereof). It will keep you responsible and moving in the right direction.

2. Eliminate Comfort Foods from Your Diet

Everyone has comfort foods — treats that are bad for you but make you feel better. If you’re stressed out, these are your worst enemy, as you’ll eat them over and over to improve your state of mind. When you’re losing weight, one of the first steps you’ll take is eliminating comfort foods from your diet. It’s painful, but you’ve got to do it.

What are your “comfort foods” in personal finance?

The most obvious ones are the things you spend money on (clothes, restaurants, movies, sports) to make yourself feel better, but since frugal living is not the focus of this blog, we’ll talk about the other type — “comfort foods” that keep you from making more money.

Here, I’m referring to things like a low-paying job, low interest bearing investments, and time traps like television. I’ll eventually dedicate an entire series of posts to this, but in the meantime, let me give you an example.

Many people stay in a low-paying job because it’s at least marginally comfortable. Let’s say you’re working as a waiter. You’ve learned the menu, know the kitchen staff, and can finesse the customers to get nice tips. You might really want to be a realtor, but the thought of going to all those classes, learning a whole new business, and getting to know a new group of people… it would require you to move out of your comfort zone. As a result, it’s frequently easier to stay in your current, low-paying job.

If you want to make more money though, you’ll have to quit, sooner or later. Yes, it will be scary. Yes, you are going to worry about paying your bills. Yes, you are going to be confused and lonely for the next few months or years. But if you don’t do it, you’ll never make it.

The real moneymakers out there eliminate these “comfort foods” as soon as possible. They quit their job, sell all of their bonds, stop watching television, and otherwise get rid of anything that’s in their way. If you’re really committed to making more money, you should too.

3. Add Healthier Food into Your Diet

For some people, dieting is synonymous with starvation. They eliminate all of their favorite foods and then try to starve themselves so that they’ll lose weight. What happens though, is they end up malnourished and miserable.

A better approach is to substitute healthy foods for the comfort foods you eliminated. Instead of eating hamburgers and salads, you might increase your intake of fish and salads. By supplying your body with healthy food, you’ll not only lose weight, you’ll become healthier as well.

Similarly, some people quit their jobs, sell their low-interest securities, and stop watching television, but they fail to replace them with more financially healthy activities. This is dumb. When you eliminate a “comfort food” like television, you need to replace it with a more healthy diversion, such as reading books or going seminars.

Thinking that you can survive without any entertainment is a recipe for failure. You just need to replace it with a more healthy form of entertainment that benefits your finances over the long term.

4. Exercise

The basic formula for losing weight is to eat healthier and exercise more. It doesn’t matter what diet you’re following; if you do those two things, you’ll almost certainly shed pounds over time. You’ll also build a body you can be proud of, which is just as important as losing the weight.

So why don’t more people do it?

Once again, it’s all about comfort levels. When you’re overweight, exercising is anything but fun. You can expect considerable physical and emotional discomfort as your body adjusts. Eventually it gets easier, but you have to will your way through the first few months.

The financial equivalent to exercise is action. To dramatically increase your income over time, you have to continually push yourself beyond your current comfort level.

For instance, let’s say you double your income over a two-year period. You’re feeling pretty good about yourself, so you stop taking actions to continue increasing your income. Big mistake. Not only will your income plateau, but you become financially “flabby.” It becomes harder to continue your present level of activity.

Just like with your body, it’s very hard to maintain a certain financial fitness. Usually, you’re either getting wealthier or poorer. The only way to stay financially healthy is to continue exercising or taking action to improve your finances. Otherwise, you’ll fall backward very quickly.

5. Reward Yourself for Progress

What’s the use of losing weight if you can’t enjoy your new, healthier body? Now, by “enjoy,” I’m not talking about turning back to comfort foods again. That would only push you back. Instead, you should choose healthy rewards.

If you’re a woman, you might buy that brand-new bikini and enjoy the stares from passersby. Or, if you’re a man, you might take up playing football and pound your chubby buddies into the ground. Of course, I’m exploiting stereotypes, but you get the point: enjoy yourself.

Otherwise, you may eventually decide that it’s not worth it. If you’re eating only healthy foods and exercising all the time, but you’re not getting any enjoyment out of it, then why do it? To keep going, you’ll need to give yourself a constant stream of small rewards.

The same goes for making more money. Sometimes, when people increase their income, they are tempted to push it all into savings in order to maximize their net worth. In my opinion, that’s self-destructive. You should take some of that money and buy a little something for yourself.

The key is to be proportionate. If you raise your income by 10%, then you should only increase spending by 2-5%. For instance, if you go from making $80,000 to $88,000 one year, then you might take $2000 of it and buy a new home entertainment system or a new wardrobe.

This gives you an incentive to keep increasing your income. The more you make, the more money you can spend on yourself.

Finally, an Income That You Can Be Proud of

The further you progress through the steps, the better you’ll see your finances become. You might actually start enjoying updating your financial statement every month because you’ll be able to see how far you’ve come. It’s another type of (healthy) reward.

The point is though, you have to break the patterns that prevent you from increasing your income and replace them with patterns that help you continually increase your income. Making that change is an essential part of moneymaking, and that’s why I included it in this series.

To continue the metaphor, the next post is dedicated to figuring out your ideal weight or income. Once we are finished with this series, I’ll also give you a mountain of tips and advice on how to go about achieving it.

Make sure you’re subscribed. You won’t want to miss it.

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