I am 39F and am a single parent to a 16 year old boy. His dad and I recently split and he gives me MAYBE $50 a month (so basically nothing). I had a very traumatic childhood and was never taught to go to college and ZERO about finances.
I did go back to school & got my engineering degree and graduated 3 months before lockdown, so didnt start working a real job until 2023. I love in the midwest so cost of living is lower, however with inflation everything is going up in price REAL FAST
Take home is about $4600/month
I have $50k in student loans which stresses me out every second of everyday. I pay $450/month on these
$25k in emergency fund
$25k in checking
ZERO credit card debt
$6k left on car with 3% interest rate
approx $1500/month on rent & all utilities
$400/month on food
$400/month health insurance for my son & I
$83k in IRA from previous job
$20k in current 401K – 10% contributed to 401k & 7% to Roth
$8k in Acorns around and I have rollovers on
I am worried about where I am at due to not starting my career until my 30s. i have been trying to learn more about investing/finances, but it is a bit overwhelming and am not sure what to do. Open to any suggestions on how to invest differently. My student loans worry me the most, should i be putting more money towards those? Also, with the price of everything going up so fast I worry I will be increasing my spending but not my salary
Single parent, never taught about finances
byu/IntelligentFan5409 inpersonalfinance
Posted by IntelligentFan5409
11 Comments
You seem to have the cash to knock down those loans heavily. I would keep some buffer in the emergency fund but likewise freeing up that cash flow from lack of loan debt will allow you to replenish that fund relatively quickly and to add to your investments.
You also have a decent amount in your IRA/Acorns/401K. I think you’re doing better than you think.
First since you are a single parent, are you entitled to alimony or child support or is that already factored into your take home?
Are you on an income based payment plan or a traditional 10 year plan for the student loans? Also what are the rates?
How long is left on the car?
Why so much cash, 50k in cash is a lot to have sitting around?
Your emergency fund + extra in your checking account feel high compared to your monthly expenses. Using some of that to pay off debts could free up cash flow and help with the emotional drain.
What’s the interest rate on the student loans, and is the $450/month you’re paying the minimum, or are you paying extra?
The reason I ask is this…suppose you used $25k of your extra cash to pay off some debt. Paying off the car loan completely would free up cash flow (the payment would be gone) but 3% is pretty low, and if the student loan interest rate is higher, that might be a better thing to tackle first.
Also, whatever cash you do choose to keep around would do well in a High Yield Savings Account or something like that, so that you can at least get some returns.
You’re doing great, single parent to single parent. Why don’t you throw $10k from checking toward the student loans?
First, know that you’re doing far, FAR better than you think. Whether or not the numbers are still fully true, we often read how a majority of households in the US (50% to as much as 65%) could not scrape together $500 for an emergency without having to borrow money from somewhere or someone. With a $25k emergency fund, you’re well ahead of all of those people.
Second, if you don’t have a system yet, you need to find a way to track ALL your money. Your income, your day to day bills, your casual spending (i.e. the proverbial cup of coffee on the way to work), but also your short term and long term savings. After all, if you don’t know where your money is and how it’s moving, it’s that much harder to safely redirect it.
Once you have tracking in place (or even as you’re starting to set it up), check out the Prime Directive from the Wiki. It should be a big help:
[https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/)
[https://imgur.com/personal-income-spending-flowchart-united-states-lSoUQr2](https://imgur.com/personal-income-spending-flowchart-united-states-lSoUQr2)
Pro tip: Have your child read it too and talk to him about finances from a general viewpoint so that he has a head start over you when he starts getting into being an adult. As a father of two now adults, I’ve come to the understanding that we’re not raising children, we’re training future adults. The more we can teach them about age appropriate adult concepts, the greater their chance of success when they end up out in the world on their own.
You’re doing great, single parent to single parent. Why don’t you throw $10k from checking toward the student loans?
You take 10 from checking, put it toward student loans (or car). Take another 5 from checking and put it in high yield savings along with the emergency fund which should be earning 3-4%. Then put some funds into your Roth IRA (not the 401k IRA) and then a bit in your kids 529 if they don’t have a college fund.
Put your 401k and IRA in an index fund like the S&P 500. Can you contribute the max to your 401k?
That’s too much in a checking account. You only need enough for the current month of expenses, plus an adequate buffer against overdraft, and maybe some for a small emergency if you don’t have credit cards.
If the IRA is from a previous job, I’m assuming it is a rolled-over 401k. In that case, is there a reason that you don’t combine it into your current 401k?
You’ll likely get a lot more than you seem to indicate for child support.
Lawyer up! You may think you don’t want to spend or waste money on a lawyer, but if your ex is anything like what you indicate, it will be worthwhile.
Considering you’ve only had a “real job” for 3 years, you are doing amazing!
I would not pay a penny more on the car, you can get more than 3% in a HYSA, let alone the stock market – which can go down, I realize, but over a decade usually does not.
What is the student loan interest and is $450 the normal payment or are you paying extra?
I know $50k sounds and feels like a ton of debt, but is is the reality for a lot of people. Maybe if you pay it down a bit as others have said it can stop the constant stress.
And do what you can legally if anything to get your ex to pay his share.
If your son is 16, your this year and next years income tax will be used on his FAFSA. For this, it would help him get more need based aid for college if you contributed more pretax to retirement and reduced your AGI for the next 2 years. There’s lots of info online about this. Just something to keep in mind.