I'm 34, I have what I think is a decent career and okay income for 2026, but I have some factors really making it feel like minimum wage. Mainly child support and the area in which I live.
State of Residence: MA (Western MA)
Income: $120,000 / year
I am recently divorced, no savings, but I also don't have very much expenses for the time being. I'm currently not paying rent or utilities, but this is a temporary situation and I'd like to take advantage of it while I can.
| Expense | Cost per Month |
|---|---|
| Car | $852 |
| Car Insurance | $111 (see note below) |
| Phone | $92.50 |
| Kids Dental | $30 |
| Kids Music Class/Instrument Rental | $17 |
| Total Monthly Expenses | $992 |
Note — I paid my 6-month insurance premium up front last week, it was $665 so I just divided that by 6, assuming it'll be the same next time around in November.
I typically take my monthly expenses and divided it by 2, set that amount aside each paycheck (which currently is $496). It ensures that I always have what I need in my bank. I know there are two months out of the year where I have a 3rd paycheck, and I ordinarily just bank that "set aside" amount (the $496) on those two extra paychecks
I also pay $580 per week in child support, every Friday. Since it's per week, I set that aside on a bi-weekly basis when I get paid, since some months have a 5th Friday.
I also factor food, gas, and "fun" on a biweekly basis as well (versus weekly) because it makes it easier to manage for me.
So, here's where my paycheck goes:
Bi-Weekly Paycheck After Taxes: $3336
| Expense | Cost per Bi-Week / per Paycheck |
|---|---|
| Monthly Expenses (set aside) | $496 |
| Child Support (two weekly payments, added together) | $1160 |
| Gas | $100 |
| Food | $250 |
| Fun | $150 |
I'm over-estimating the average week for Gas, Food, and Fun, but I'd rather plan for those numbers than to fall short some weeks.
So, this leaves me with $1180 per paycheck (not month) that isn't dedicated to anything else. I need to determine the intelligent moves to make with it while I have it — I won't be living rent & utility free forever. Maybe a few months, maybe a year, I honestly can't say.
Some other notes worth mentioning:
- My employer offers a $0.25 on the $1 match, up to 8% of my paycheck. So if I contribute 8% of my check every bi-week, they'll contribute an additional 2%. I'm assuming maxing that out is going to be the first recommendation, at $4619 pre-tax this would equate to about $369 per paycheck, binging that $1180 down to (roughly) $811 available.
- The next thing is probably going to be to increase my income. I'm doing what I can there, but with the economy in shambles right now I'm not going to count on that happening anytime soon.
- I do not have health insurance, which is why it's not in my budget. I intend to look into it this upcoming open enrollment this year, but it's historically been rather expensive, like $400-500/month for just me.
- I know the first thing a lot of you are going to say is to reduce the car payment, and that's really not an option right now. Don't really feel like getting into the details of that, so please try to just focus on what I have available right now.
Any advice you'd give would be appreciated.
I need some advice so that my retirement plan doesn't have to remain "hopefully die before I can't work anymore"
byu/TheStrangeHand inpersonalfinance
Posted by TheStrangeHand
3 Comments
Where are your housing expenses? Unless you have insanely low rent I am not seeing it.
My personal opinion is that you’re recently divorced and living rent free with someone. Take the time to get back on your feet and worry about your retirement in a couple years. Spend time with your kids, and save money post-tax for when you’ll have to start paying for rent or a mortgage. It’s going to be tight based on the numbers you gave us.
The 2% employer match on 8% is good, and if you can swing it by all means go for it but it’s still only a couple grand per year. For me I’d rather build up an emergency fund first and so if your rent-free situation runs out you won’t have to dip into your 401k.
And yes, your car payment is going to kill you. Judging by your expenses you listed you can probably save money with a prepaid phone service like Mint, but there’s not a whole lot of fat to cut off that bone. If you want to think of it this way, your car payment is probably going to ge the difference between being able to rent an apartment and not…….
Must do immediately:
– increase 401k contributions to 8% ($369/check)
– start saving $250/check in an emergency fund, i would recommend not stopping this until you have a down payment on a condo/home
Must do before open enrollment:
– shop around for long term disability insurance and a reasonable amount (~$300-500k) of term life insurance (if you’re in good health, I’d estimate about $100-150/mo for both of these, you don’t need to go crazy with the life insurance and you don’t need whole life) ($75/check)
Must do at open enrollment:
– get health insurance ($250/check)
– if employer offers a good rate on LTD and term life, then get it through work, otherwise buy it yourself
That’s $944 out of your available $1180. Most of that ($619/check) is going to savings and retirement. Paying yourself first.
The remainder is going to protecting yourself from getting very sick and/or dying ($250/check) and protecting your kid from poverty in case you do ($75/check).