Pay Dirt

I Never Saved for My Retirement and Now I Think I’ve Ruined My Life

I’m 40, and I think I’m screwed.

Person holding their head in worry while they look at a sheet of paper.
Photo illustration by Slate. Photo by Getty Images Plus and Spoon Graphics.

Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here(It’s anonymous!)

Dear Pay Dirt,

I will be 40 this year, and hate to admit, behind on finances. I still owe about $40,000 in student loan debt, have $14,000 in credit card debt, and nothing in savings or anything in a 401(k). I just haven’t had luck in the past with an income that could help me pay things off, while also saving.

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Fortunately, I have a great job, with great pay, bonuses, and matching 401(k) contributions, along with a budget that I stick to. My initial thought has been to immediately pay off my credit card debt as those interest rates are the highest (in the high 20s), then tackle my student loan debt (interest rate is 2.5%) while saving to eventually buy a house, build up a rainy day fund, and catch up on my lack of retirement funds (I figure I’ll work for the next 30-35 years unless something changes). Does this make sense, or am I missing something?

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—Behind With Money

Dear Behind With Money,

It sounds like you’re making great progress and have a plan that can actually work. I would advise you to save an emergency fund, or rainy day as you called, first before putting any additional funds toward your debt. You should also start making those retirement contributions if you haven’t already. You can start small with 1% and then move it up to 2% in six months. Every six months you can up the percentage so it’s gradual instead of a big chunk all at once.

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Paying off your credit cards before your student loans is the perfect next step for you. You should try to see if you can consolidate your loans to lower the interest rate you are currently paying. For your credit card debt, you can try for a personal loan through a credit union or just take advantage of a card with a low introductory period on balance transfers. For your student loans, you can try to consolidate them with a platform like SoFi. The lower the interest rate, the lower your payment, and the more money you’re paying long term—so getting it lowered is crucial in your debt repayment journey. Good luck!

Dear Pay Dirt,

Capitalism is slowly killing me and my hope for the future, especially the punitive nature of capitalism, credit, credit cards, etc. in the U.S. My wife and I have a significant amount of credit card debt (about $30,000) from a combination of spending habits, a lack of financial education and literacy, and living in an expensive city. Together we make about $105,000 annually before taxes.

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But I’m a dreamer and I love having ambitions and hope. We’re trying to save for the wedding we never got to have. We want to potentially move to another country one day because there’s so much of the world to see and adventures to be had. We want to foster queer youth. I don’t dream of luxury, just not living paycheck-to-paycheck anymore and being able to give back to my community.

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We’ve tried numerous times to get a loan to consolidate our debt, but we keep getting rejected (namely for lack of income and too large of balances). What are our next steps? We’ve started strictly budgeting this year, although it’s definitely an imperfect process, and we’re trying out the snowball method with our debts. We’ve looked into debt management and credit counselors, but I’m wary of those because I know that creditors don’t have to accept such terms and could keep demanding we pay them directly rather than going through the credit counselor.

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And my second question is: How do we continue to survive under capitalism and not feel like we’re being punished for not making enough money, for making mistakes that no one prepared us for? I know the obvious answer is therapy. But I’m wondering if you have any advice from your financial perspective? How do we know the light is at the end of the tunnel, even if we can’t see it yet? Financial struggles are so demoralizing.

—Drowning in Capitalism

Dear Drowning in Capitalism,

Being in debt while trying to save for the future is definitely overwhelming. I’m not sure if capitalism is the whole problem, however. The key point of capitalism is to make the private sector money but where do you draw the line between the rich making money off of the poor versus your own free will and poor financial choices? Capitalism can certainly drive up affordable living when living in an expensive city as well as healthcare costs and food. Gentrification is a great example. Capitalism may also play a role in life lessons we learn the hard way. But sometimes, the hard truth is, it is also us.

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If personal loans aren’t an option through a traditional bank, you have other options. You can try to see if you can get picked up at a credit union or community bank. Both credit unions and community banks are more relationship-focused when it comes to customer lending. You can also look into secured loans versus unsecured. With a secured loan you need capital, such as a car or house but they can be a great way to pay off your debt while working on your credit. I know you did mention you had tried a few different lenders but wanted to share that just in case. I do NOT recommend debt consolidation programs because they can actually hurt your credit. So, continue on your current path if you can by practicing the debt snowball method.

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You’re doing great with your budgeting and debt repayment. Don’t be afraid to experiment with different methods though. I myself love zero-based budgeting since it leaves nothing unaccounted for but for those that find budgeting restrictive, the 50-30-20 method might be better. I also love writing my budget out on paper but even keeping track in a Google spreadsheet can work. The important thing is to stick to your budget as much as possible so that you can make progress on your debt and goals.

As for surviving capitalism? Therapy can help you rewire your thought patterns, instead of being depressed about making mistakes and reliving the past. We all make mistakes, it’s what we choose to do next that matters. I advise you to play the game to your advantage. Learn as much as you can about personal finance so you can start taking advantage of tax breaks and investing. Try not to live in areas that are monopolized by utility corporations. Network and build your social capital so you can advance in your career. Start a side business so that you have the freedom to walk away from your day job if you need to. Even small steps can have big results so pick one thing and start from there.

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Dear Pay Dirt,

I’m hoping you can help: My husband and I live overseas in a small country, often considered a tax haven, although it isn’t—technically. We’re both from other countries (not the U.S.) and have compromised on staying here for the short to mid-term as we’re making more money than we otherwise would in our fields—about $200,000 to $250,000 combined.

We are trying to maximize our savings during this time and have invested in a 30-year plan for our retirement and are moving forward with another more short-term investment plan. But we’d really like to diversify further and set ourselves up for buying property and creating income. What we need, I think, is someone to basically take stock of our entire financial picture, but unfortunately there are no fee based financial planners here. Do you know if there are any resources or companies that might be able to help with our transatlantic finances?

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—Grey Area

Dear Grey Area,

Thanks for writing us from across the pond! I found a few resources that I think might help and if not, at least point you in the right direction.

Reilly Financial Advisors offers services for those that are expats in various parts of the world. They hold various certifications and specialize in helping expats navigate various financial situations, such as sending money to their home country, real estate, and taxes. This sounds like it would align with what you and your husband are looking to do wealth-wise. If they don’t seem to be a good fit, I am almost certain they can refer you to someone who is.

Dear Pay Dirt,

My sister is in her early 60s and is almost completely disabled due to various chronic ailments. She’s living in a house in our Southern home state that was damaged by last year’s storms. Her insurance company, for reasons that may or may not be legitimate, are low-balling her on the amount of money they’re willing to pay to fix her house. The length of time that’s passed has exacerbated the poor condition of the house, making it difficult or impossible to refinance or take advantage of any of the equity she has in the property.

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Since her husband passed her only meaningful source of income has been disability, but that’s no longer sufficient to cover the mortgage and her bills. We suspect she may be experiencing some of the early signs of dementia, but it’s hard to tell since our other brother and me live more than a thousand miles away and we don’t see her face-to-face or screen-to-screen very often.

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I want to get her plugged into whatever support we can find for her, but I’m not sure where to start. She needs a therapist and perhaps a psychiatric eval, a financial advisor to walk her through her options with the house, and someone to assess whether she belongs somewhere that can provide more comprehensive care than she gets at home. She doesn’t live in a state known for having a robust social safety net. What do you suggest as a starting point?

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—Where to Start

Dear Where to Start,

Becoming a caregiver and an advocate for a sibling can be really hard so kudos to you for stepping up to get her the help she needs. I reached out to Rae Hartley Beck, a freelance finance writer, and former award-winning Social Security Claims Specialist, who has a few ideas to help get your sister on the right track.

“A single purpose reverse mortgage (really more of a grant through the county or a local nonprofit) might be an option to get her house fixed up,” Beck said. Payments for single reverse mortgages are not due until the house is sold or the homeowner is deceased. Those with low to moderate income can usually qualify and enjoy stable housing again.

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If she’s set up with Medicare, she can find a therapist that will take her insurance, which will help her further stabilize and come up with a self-sufficiency plan. She may not be able to take on a lot due to her health issues but the therapist can always refer her to other outpatient services she may benefit from.

Beck also noted that your sister can “almost certainly qualify for a program called extra help that helps cover prescription drug costs.” Another additional step that you and your brother can take is asking your sister to set up an SSA account online. Then, you’ll be able to access her benefits to help her plan her budget better. Good luck!

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—Athena

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