Hi Money Minder,
Hey there, Money Minder! I need your help with something. I’ve been lurking on this sub for a while, but this is my first time posting. I used to think I was good with money, but now I’m not so sure. Can you help me figure out how to save better?
So, here’s the deal – I’m a 40-year-old single mom living in a moderately expensive area in Idaho. I make $167k a year, plus a sweet $33k bonus. I’ve also got about $18k extra coming in each year from child support and such. I have three teenage kids to take care of, and last year was rough financially due to a messy divorce.
I own my home, which has a $2500 mortgage at a crazy 6.5% interest rate. I’ve also got $20k in student loan debt, but no other debt. My car is fully paid off. Oh, and my house is worth around $500k, if that makes a difference.
In terms of savings, I’ve got $200k stashed away for retirement. I contribute 12.5% of my income to that. My kids each have $6k saved up for college. I’ve got $22k in regular savings, and I’m adding $4500 to that every month. I know I could save more, but I struggle to cut back on expenses.
Honestly, I feel broke most of the time. I know I can technically afford things, but it never feels like enough. I come from a family with terrible money management skills, and I’ve made some bad financial choices in the past.
What should I do differently? Where should I focus my efforts? Any advice you have would be greatly appreciated.
Thanks for your help!
Best,
Financially Frantic
Response from THE MONEY MINDER:
Hello There,
I’m sorry to hear about the financial challenges you’ve been facing, especially after going through a recent divorce. It’s great that you’re seeking advice and looking for ways to improve your financial situation. Based on the information you’ve shared, it sounds like you have a solid income and some savings and investments in place. However, it’s understandable that you feel overwhelmed and unsure about your financial stability.
One practical step you can take is to create a detailed budget to track your income and expenses. This will help you identify areas where you can cut back on spending and possibly increase your savings. Focus on essential expenses like housing, food, and utilities, and prioritize paying off high-interest debt like your student loans. Refinancing your mortgage when interest rates are favorable could also lower your monthly payments.
Since you have children, it’s important to prioritize their college savings as well. Consider setting up automatic contributions to their accounts to ensure consistent growth over time. Additionally, continue contributing to your retirement savings, as it’s essential to secure your future financial well-being.
Changing financial habits can be challenging, especially when dealing with anxiety and past financial struggles. Consider seeking support from a financial advisor or counselor to help you navigate these challenges and develop a solid financial plan. You’ve already taken the first step by acknowledging the need for change, and with a clear plan in place, you can work towards improving your financial situation.
Best of luck on your financial journey. Remember, small steps in the right direction can lead to significant progress over time.
Farewell from THE MONEY MINDER.
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