8 Reasons You're Still Stuck in a Financial Hole

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Being broke sucks. There are a million reasons why you might end up in a financial hole, and it always feels awful. The good news is you can often pull yourself out of these bad situations, especially if you make wise decisions with your money.

On the other hand, there are also some really poor money decisions that can set you back even further. Avoid these bad calls when you're broke, and you'll stop digging yourself even deeper into debt.

1. Thinking nothing has to change

The minute you realize you're broke, your mindset has to change. How did you get here? What led to being broke? Think long and hard about these things, and understand that something has to give. Telling yourself you can continue your everyday spending habits as if nothing is wrong is only going to dig yourself deeper into a financial hole. And ignoring the problem altogether certainly won't help, either; it'll just make things much, much worse. As unpleasant as it might be to face reality and change the way you spend, it will be much more unpleasant to stay broke. (See also: 7 Biggest Ways Procrastination Hurts Your Finances)

2. Emptying the emergency fund

Realizing you're broke can lead to feelings of panic — being broke is an emergency, right?! Hold on. The last thing you should be doing is raiding your emergency fund to pay everyday expenses, or to continue funding the frivolous spending that landed you here. The truth is, when you're broke, you need a sound emergency fund more than ever. What happens if you lose your job, or your hot water heater dies? Without that money put away, you'll have nothing to help you get by. So, leave your emergency fund right where it is and make other changes in your budget.

4. Taking out a loan

You don't need the financial burden of new debt when you're already broke. Assuming you get approved for a loan, there's no guarantee that you'll even be able to pay it back. That puts your credit score at risk of a critical hit, and can ruin your chances of getting approved for financing in the future.

In the same vein, never fall for a payday loan, either. Predatory lenders often target people in times of financial trouble, and are experts at marketing an attractive offer that sounds like the answer to your money troubles. In reality, the obscene interest charges and terms and conditions will leave you way worse off. (See also: How to Protect Yourself From Predatory Lending)

5. Getting buried in overdraft fees

When there's less money in your checking account than you're used to, take extra caution to avoid overdrawing. Overdraft fees can quickly multiply, shooting up to hundreds of dollars and putting you in an even worse financial situation. Your bank may be willing to waive some of the fees if you ask, but it's not a guarantee and certainly not a regular courtesy. If you're not sure how much money you have in your account, check it daily. With technology, there is no excuse. You can either log on to your bank's website every morning, or download your bank's app. (See also: 9 Ways to Avoid Overdraft Charges)

6. Lying about your financial state

Don't lie to yourself and don't lie to other people. It's hard to admit when you're in a bad money spot. But the truth is that you are broke, and lying will only cause more problems. Take a deep breath and be honest. Politely turn down your friends' invites to go shopping or out to dinner, and explain that you simply don't have the cash right now. They won't hold it against you. You will respect yourself more for being straightforward, and you might even pave the way for someone else to feel comfortable admitting their hardships, too.

7. Gambling

It's easy to think that one big win could solve all of your financial difficulties. But the fact of the matter is that hitting the jackpot in a casino or by playing the lotto is unlikely — very unlikely. More often than not, people lose tons of money gambling, sometimes in the blink of an eye. This certainly won't make your money troubles any easier. Think of it this way: gambling is for people who can afford to lose money. You can't, so stay away.

8. Refusing to give up luxuries

Maybe you have a maid service clean your house once per week, or you like to have your car professionally detailed. Maybe you love grabbing takeout for lunch, or eating at that great Italian place for dinner every Friday night. Maybe you love your premium cable package, and all your fun monthly subscription boxes.

Guess what? All of these luxuries cost money you don't have, and you can go without. Clean your home and car yourself. Clip coupons and use cash back apps at the grocery store, and meal prep all your food at home. Get rid of monthly subscriptions and memberships you aren't using, and think long and hard about cable — do you really need it?

None of these have to be permanent changes. By giving yourself a financial buffer for even a few months, you'll get back on your feet much faster.

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