Asking for advice for a 37 year old with 60000 worth of debt and no 401k

[mssonya84]

I’m 37 and haven’t stated retirement. I am terrified. I have a car that is 20k under water but at 4% interest (thanks Elon)(I’ve paid off 15000 but owe 50,000 with 5 years remaining). A personal loan at 10% with 11 thousand remaining.

House payment of 1250 a month for 15 years (currently in year 4 with about 110,000 worth of equity.)

Bills, student loans, car, utilities etc cost us 4500 a month. Groceries 1200 a month (with two kids.) general expenses, about another 2000 (medical expenses, subscriptions, etc). My wife teacher retirement through the state, but I have nothing. So roughly 8000 rounded up a month in expenses.

We pull in after taxes 8500 a month after taxes and I have about 18000 in the bank.

I am so terrified that I’m sick to my stomach. Am I completely screwed? What can I do? My company has a 3 percent match in 401k that I hadn’t taken advantage of.

They recently just made our bonus’s unattainable to save on money, cutting my pay by about 30 percent, so I’m shopping for other sales jobs.

I am so nervous and sick to my stomach thinking I am totally lost. Any help or insight would be appreciated.

 

[bargeld]

@mssonya84 Can’t blame Elon for buying a car you really can’t afford. If you have only debt, and no savings….its your spending that’s the issue. Cut back. Sell the car you can’t afford. Pay off that 10% loan. $18k will get you as far as 2.5 months.

 

[cdjeffery]

@bargeld Sounds like you need to start aggressively cutting expenses and eliminating your debt. First sell your car even if it’s at a loss and get a beater than you can buy for cash. Then with rest of your cash pay off your 10% loan. It doesn’t make sense to save for retirement with these high interest loans.

Cut your spending aggressively and you will be able to be debt free. Once that happens just pour every resource into saving up at least 3 months income to have in your savings. Then you can aggressively fund your retirement

 

[karenb53]

@cdjeffery Thanks Dave Ramsey. Great Advice

 

[saskia]

@cdjeffery Problem may not only be OP. He’s got kids and I’m assuming wife in the house. He can cut his spending but wife may not and the kids cost what they cost.

 

[dufania]

@saskia If the spouse refuses to cut spending, that’s a separate issue. Kids are expensive, yes, but the parents should be on the same page about finances. If not, counseling is probably in order.

 

[meganbaker1984]

@bargeld Investing in overpriced EV that no one wants is not Elon’s fault.

 

[resjudicata]

@meganbaker1984 Anyone who thinks a car is an “investment” better be dealing with an extremely rare car.

 

[saskia]

@resjudicata I had to explain to my wife that her car being paid off did not mean start shopping for a new one. God I had new cars but my wife is obsessed with it.

 

[ez_fx]

@saskia I buy new, but keep for an average of 10 years and pay off as soon as possible. This one is 36 mos at 1.9%. No Starbucks for me, either. Guess I'm a rare one

 

[puddleglum3]

@saskia Are we married to the same lady?

 

[saskia]

@puddleglum3 I’d say over 50% of men have a wife like ours. We just got the generic type.

 

[lzz]

@saskia My wife isn’t, both of our cars and trucks are paid off. This is how you get ahead

 

[ligaciputralinkalternatif]

@puddleglum3 Does she call getting Starbucks or ice cream a “little treat”

 

[jfhodge852]

@mssonya84 What exactly are you asking here? You take home 8500 and spend 8000. So you can save that extra $500 for retirement. Take advantage of your company match and start with a 3% contribution to your 401k to get the match. If you want more breathing room reduce your spending.

House payment of only $1250 makes me think this is a LCOL area with lower incomes but decided to buy a $60k(?) car seems like a mistake.

 

[golgothaghostwriter]

@jessy200 After getting the company match. That’s a better return than any of his debt’s rates.

 

[jessy200]

@golgothaghostwriter Investing in yourself and not paying back your debt is a bad idea. Focus on debt first, then invest aggressively. Holding off 1-2 years does not make a huge difference

 

[mkelly1075]

@jessy200 The 3% match is a 100% return on your money.

100% is greater than 10% so basic math says take the 3% match then pay off the 10% debt.

Now if you want to be a Dave Ramsey disciple and argue psychology over math, then that's a fair debate, but from a pure numbers perspective, the answer is obviously take the 401k match before everything else.

 

[silvernights]

@mkelly1075 Well, yes and no. It’s free money and the stock markets annual returns average at around 9% in something like sandp500, but always chance of a downturn. I think OP should tackle both at once even if it’s depleting 10 of his 15 in savings, but choosing the match while then waiting to tackle to the debt - while mathematically likely to be better - has more risk when weighing possible downturns/corrections

 

[mkelly1075]

@silvernights The stock market return shouldn't really be considered since it is almost certainly an option for the OP to take the match but leave the money un-invested or in a very low risk asset. Not suggesting he should do this, just saying it's an option, which makes the stock market risk a non-issue for this determination.

Also, OP says he has about $500 left over at the end of the month and his wife and him make about $8500 after taxes combined. That should be around $120k-$130k together before tax. If OP makes around half of that or about 65k per year, then it will only take him about 4 months to hit that 3% match. Then the rest of the year can go towards paying down that 10% loan.