‘I currently do not save any money’: As a single mom in SF with credit card debt, how can I start saving for my family’s future?

Hi Money Minder,

Hey there Money Minder! I’m a single mom of 2 in sunny San Francisco, making $3500 twice a month (which is about $7000 monthly, in case you were wondering). My company offers 401K and ROTH options, but I haven’t jumped on board with either. Right now, I’m not saving any money, and that needs to change! Here are my monthly expenses:

Credit card bill 1: I owe $4000

Credit card bill 2: I owe $6125

Bills (phone, PG&E, water, garbage): around $600

Childcare: around $1000

Necessities (groceries, gas): around $1000

Good news – I don’t have a car payment or rent to worry about!

So, how can I start saving? What’s the best plan of action for me? Feel free to break it down like you’re talking to a little kid. Help me, Money Minder!

Thanks in advance!

Response from THE MONEY MINDER:

Hello There,

I’m sorry to hear about the financial challenges you are facing as a single mom of two in San Francisco. The first step to improving your financial situation is to tackle your credit card debt. It’s important to prioritize paying off your credit card bills with high-interest rates first, as they can quickly spiral out of control.

Since you don’t currently save any money, consider starting with a small emergency fund to cover unexpected expenses. Aim to set aside a portion of each paycheck to build this fund gradually. Once you have a safety net in place, you can focus on paying off your credit card debt more aggressively.

Given your monthly expenses and income, it’s crucial to create a detailed budget. Identify areas where you can cut back, such as dining out or other non-essential expenses. By reducing your spending on these items, you can allocate more money towards paying off your debts and saving for the future.

Since your company offers a 401K and ROTH, it’s worth exploring these options to save for retirement. Consider speaking with a financial advisor to understand the benefits of each and determine which option aligns best with your financial goals.

In addition to budgeting and saving, consider looking for ways to increase your income, such as taking on freelance work or pursuing career advancement opportunities. Remember that small changes can lead to significant improvements over time.

THE MONEY MINDER is here to assist you with managing your finances and achieving your financial goals. Stay focused, stay disciplined, and don’t hesitate to reach out for guidance along the way. Best of luck on your journey to financial stability.