'I started late in the game, unfortunately': I have low retirement savings and debt. How can I catch up and invest wisely?

Hi Money Minder,

I really dig this community and everyone’s advice is spot on. I’m looking for some tips from those who know about saving and investing.

My current salary is $96,000 annually with a 15% bonus.

I have student loans of $30,000 and a credit card debt of $4,000.

My rent and utilities add up to $750.

My car was paid off in 2017 and still runs like a champ.

In my Roth account, I have $10,000 saved up with a 10% contribution rate and 6% company matching.

I have $4,000 in liquid funds.

Any suggestions on how I can do better or what else I should be doing? I’m keen on diving into investments but my retirement savings are looking a bit low. I joined the game late, unfortunately.

See ya,

Smart Saver

Response from THE MONEY MINDER:

Hello There,

Hello,

Firstly, I want to commend you for reaching out and taking steps towards improving your financial situation. It’s great to see your commitment to saving and investing despite starting a bit late in the game.

Given your current financial standing, one of the most practical and realistic steps you can take is to prioritize paying off your credit card and student loan debt. Credit card debt typically carries high-interest rates, which can eat into your savings potential. Redirecting the money you currently allocate towards these debts can free up additional funds for investing in your future.

Since you already have a Roth account and are contributing a respectable 10% with a 6% company match, you are on the right track towards building your retirement savings. To boost your retirement account further, consider increasing your contribution rate gradually as you pay off your debts. Every bit you put towards your retirement now will make a significant difference in the long run.

In terms of additional steps, I would suggest building up your emergency fund with your liquid assets to cover at least 3-6 months’ worth of expenses. This safety net will provide you with financial security in case of unforeseen circumstances.

Lastly, consider creating a detailed budget to track your expenses and identify potential areas where you can cut back or save more. Small changes in your spending habits can lead to significant savings over time.

Taking these steps will help you make the most of your current financial situation and set you on the path towards a more secure financial future. Remember, progress is key, and every step you take now will benefit you in the long term. All the best from THE MONEY MINDER.