I won't trouble you with the sob story. It's in the past. I'm just trying to figure out how to fix this, and what I can do since I'm starting out so late in life.
I'm a 40 year old woman, I just graduated college with a STEM degree and got a job making about $100k a year. I have no emergency fund, only $40k in my 401k, and about $65k in debt, split between $12k in credit cards at 20% interest, $16k on my car loan at 11%, and the rest in student loans, about 7%.
I split the bills and the household budget with my husband and my share is $4,200 a month, leaving me with about $1,000 per month after contributing 8% to my 401k and health insurance and paying bills.
What should I do? Can I even ever retire or am I screwed? I know there's a lot of things I could have done differently to be in a better position now, I royally screwed up my life and I fully accept responsibility for that but I just want to know if it's as hopeless as it seems or if there's anything I can do to fix this?
EDIT, this is our household budget:
| Expense | Amount |
|---|---|
| Rent | $2,880 |
| Debt | $1,480 |
| Groceries | $1,090 |
| Utilities | $670 |
| Insurance | $610 |
| Automotive | $440 |
| Medical | $580 |
| Subscriptions | $270 |
| Dates / Takeout | $250 |
| Miscellaneous | $150 |
| Pets | $50 |
| Total | $8,470 |
Addenda:
- Rent is very high, though unfortunately pretty normal for our area. We're going to try to move to a cheaper part of town and a smaller place next year when our lease is up for renewal. We have a daughter so we can only downsize so far, but the house is pretty big and we don't really need it.
- Debt payments are super high because we're trying to get rid of the credit card debt and currently paying about $1000 over the minimum payments per month. Once that's paid off in another year or so it'll drop by $1300.
- Our collective food costs are way too high, even considering we have a teenager at home. I already cook at home most of the time, but I never learned to cook cheaply and that's another part of the problem.
- Another big chunk is my ongoing medical issues. I have decent insurance but also several chronic problems that require constant attention to keep me healthy enough to work. Not much I can do there, unfortunately.
I got a late start in life and I'm not sure what to do.
byu/Dionysian-Heretic inpersonalfinance
Posted by Dionysian-Heretic
11 Comments
Which area of US are you. If you save $1000 a month in 401k you can retire at 65 with over million. My question is how much is your husband worth. Why you are accounting your and husband separately. Won’t both of yours be included in your retirement
Also you have potential to make more in STEM. Congrats on your start though let it is great.
I don’t know what your credit score is but if you could at least transfer that CC debt to something with a lower interest rate that would help. See if you can refinance the car and always pay a little bit more per month towards the principal if your lending company allows that. Since you now make more money don’t think that means a you can raise your standard of living right now. Manage the debt and contribute as much as you can to your 401K. You can still afford to invest pretty aggressively. Also set aside some every month to build up the emergency fund. Probably around $15K is a good start for that.
>I split the bills and the household budget with my husband and my share is $4,200 a month
If your husband doesn’t make the exact same amount you do (and have the exact same debt as you), do away with this “roommates splitting expenses” nonsense and work as a team.
>Can I even ever retire or am I screwed?
40yo isn’t too late but it will take more aggressive action than if you had started at 20yo.
>after contributing 8% to my 401k
But you’re not going to do it contributing 8%.
>if there’s anything I can do to fix this?
What’s the full household budget?
_____
eta:
>Groceries $1,090
Reduce
>Subscriptions $270
Cut
>Dates / Takeout $250
Cut
Out of curiousity, if your share of the household expenses is $4200 per month, what is the *total* household expense per month?
You aren’t screwed. Read [the flowchart](https://i.imgur.com/lSoUQr2.png) and that gives you an order of things to do. In short, you need to start an emergency fund, fund your 401K enough to get the most matching (if any), then pay off high interst rate debts (credit card, then car loan, then student loans), then max your 401K, then save more for retirement in a Roth IRA.
Not sharing your finances with your husband is concerning. Not saying to make him pay your debt, but you don’t even know each other’s finances? What are “subscriptions”? Aside from internet, cancel everything else. 11 percent auto loan? Go to a credit union and refinance if it’s still a newer loan or look into a lease. 0 percent balance transfer off that credit card debt. Have a very serious conversation with your “husband’ about your debts and make it clear that you’re willing to cut that grocery bill in half (get a costco membership). Dates/Takeout.. you can’t afford Dates and Takeout.
Get your income, get your husband’s income. Add them together. You guys should be paying bills based on the percentage of your household income.
If he’s making 70% of the money, he pays 70% of the bills.
It’s not hopeless. I second the recommendation for the WIKI flowchart.
You are saving for retirement now in 401K. When you clear the debt, increase your retirement savings instead of increasing lifestyle.
Like many who post here, I am suspicious of “my money/your money” marriages, but realize they might be necessary in some cases.
Just make sure you *really* understand the ownership, claims, and responsibilities of all assets and debts for both of you in light of marriage in your state. Don’t take on joint debt.
Consider that credit card debt an emergency and pay it off as soon as possible.
For what it’s worth, when I got together with my now husband and we started to get serious, we talked about money. I learned he had $30k in high interest credit card debt that was deemed his responsibility in a divorce. We immediately pooled our money and started doing everything we could to pay it down. Because even though it was his/her debt, it was OUR future.
I don’t know how long you’ve been married, but it seems you should be tackling this as a couple.
Separate, secret finances for a married couple…this’ll end well.