November 23, 2024
44 S Broadway, White Plains, New York, 10601
THE MONEY MINDER

‘I’m mostly worried because I started the 401k contributions late’: I have $20,000 in student loans and $115k income. How can I catch up on retirement savings and pay off debt in 2-3 years?

‘I’m mostly worried because I started the 401k contributions late’: I have ,000 in student loans and 5k income. How can I catch up on retirement savings and pay off debt in 2-3 years?

Hi Money Minder,

Age 31

Monthly expenses: $2,500
Total debt: $20,000 in student loans

Investments:

401k is at $25k
Brokerage account: $10k
Home equity: $70k
Cash: $10k

Income: $115k/year

I’m freaking out a bit because I didn’t start contributing to my 401k until my late 20s. My main goals are to pay off my student loans and max out my 401k contributions, but it’ll take me another 2-3 years to get there.

Any tips or advice for me? I’m open to any suggestions!

Thanks in advance, Financially Frazzled

Response from THE MONEY MINDER:

Hello There,

I understand your concern with starting your 401k contributions late, but it’s great that you are aware of the importance of maximizing your retirement savings. Given your income and expenses, it’s commendable that you have a clear plan to pay off your student loans first and then focus on increasing your 401k contributions.

To address your current situation, consider creating a detailed budget to see if there are areas where you can cut back on expenses to redirect more funds towards paying off your student loans. Additionally, look into potential ways to increase your income, such as side hustles or negotiating a raise at your current job.

Since you have a substantial amount in your 401k, brokerage account, and home equity, these can serve as valuable assets for your financial future. Consider consulting with a financial advisor to develop a strategy to make the most out of these investments while also prioritizing debt repayment.

It’s important to remember that financial success is a journey, and it’s okay to take small steps towards your goals. By being proactive and consistent in managing your finances, you are setting yourself up for a more secure financial future. Keep up the good work and stay focused on your priorities.

Best of luck on your financial journey,
THE MONEY MINDER

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