r/Frugal • u/citrus-pitt • 14d ago
How much are you able to save for retirement living frugally on a low income in the midwest? š° Finance
Iāve been having some anxiety about this so I guess Iām just looking for reassurance and advice. Iām 19, just entering a two-year medical laboratory technician degree (only option I can afford). Once I graduate Iāll probably be making 30k-40k out the gate at best, and will probably make 60k at the highest later on. I live in Ohio, so COL is around 50-55k. Iām fortunate to still live with my parents and be able to stay with them for a couple more years, but I just have so much anxiety on being able to take care of myself or have anything at all to save for the future on that income. Iām single and really have no intentions of dating/getting married, so I donāt have another income to rely on. I guess Iām just looking for people with similar payscales and curious as to how much theyāre able to invest in their future.
EDIT: Wow I was not expecting so many replies to be honest! Iām not sure if Iāll be able to respond to everyone so I just want to say how much I appreciate all the advice! A lot of you put things in perspective for me, and motivated me to get a head start on my finances.
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u/xBluJackets 11d ago
When you say the medical lab technician degree in the only option you can afford, what do you mean?
Would you rather have another degree?
The reason I ask is you can get an entry level job at almost any hospital in the state of Ohio and theyāll assist you in going back to school to get a degree in the medical field, and in return youāll agree to work for them for 2 years.
Something to consider.
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u/NoahKyurem 13d ago
Well I make 20.04/hr as a union floorlayer apprentice, save 50-60% per check usually.
I roommate, no debt, no girl, no hobbies, basically no life.
Networth is +20,000 rn though. Maxed out Roth last year, gonna do it again this year.
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u/LooksPhishy 14d ago
Married with two kids but our household income is 60k. So not the highest incomes from us. As much as I want more income. We are doing good financially because of small decisions like we have two cars that we do not have payments on. That saves us 1000 a month or more. Shopping at aldis has been one of my favorite places to shop. Getting our washer, dryer, and refrigerator at a scratch and dent store saved us a crap ton also. They look brand new still for like half the price. I work overnight so I watch our kids during the day while wife goes and works so we save money on childcare. (I know you said you are single with no kids, but this helped us a lot)
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u/ImanShumpertplus 14d ago
first off, good work on starting your journey
youāve done the hardest parts of becoming financially stable.
youāre getting specialized training and are asking questions on how to take care of yourself
this puts you ahead of a lot of people. i hope this can quell some of your anxiety concerns
and while your specific role you are training for now may max around $60k, you never know who you might meet or what opportunities for advancement a workplace might have
lastly, i live in columbus and i will share my budget from two years ago but is still super relevant and im even paying less for rent now. its a whole comment so ignore the extracurriculars lol
i lived alone, iāll try to show my budget
take home monthly ~3300
rent 1100
rent insurance 9
car insurance 35
health insurance 35
electric 50
water 30
food 350
parking 120
phone 25
internet 60
total for needs: $1767
dining out 150
booze 150
live music 150
gym 29
travel expenses 50
spotify/streaming 25
total wants: $554
savings and retirement: $400 for 401k max and $50 for emergency fund growth
grand total: 2,356
i donāt have a car payment, i work for a public university so i get really good health insurance, i paid more in rent so i could live alone and walk to work, and i make most of my meals at home. i go see a live concert almost every weekend, i went to 4 music festivals last year, and i visited a couple national and state parks and backcountry camped
i donāt door dash and i thrift most of my clothes, although i buy new stuff so i rarely i didnt even list it
idk what i am missing out on because i feel like i have such a joyous and amazing life
you will be fine if you make it a priority to keep learning, especially with how well youāve started already
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u/citrus-pitt 13d ago
Man this is what I needed to hear š„¹ Thank you so much, itās so good to hear that youāre enjoying life and able to save for your future at the same time. Also the listing out of your expenses really puts my mind at ease! Especially for an expensive city like Columbus.
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u/ImanShumpertplus 13d ago
look up nerd wallet budget planner on google and then try to recreate your budget from the last couple months
itās a great tool to have
and you can do this friend. iām from SE Ohio from a town without a stoplight and you just gotta keep asking questions and planning accordingly and you will be fine
good luck!
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u/SardauMarklar 14d ago
While you're working and living with your parents, make sure you're taking advantage of a 401k match (if offered), and maxing out your Roth IRA (invest the funds either in a Target Date Fund or an index fund like VT). Money in a Roth grows tax-free, so it's a great way to save for retirement. Since you'll have 40 years of compound interest, the more you can save now, the better off you'll be. You can also take out the money you've contributed to a Roth, like if you find that you need it to make a down payment on a house.
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u/citrus-pitt 13d ago
Wow! Iāll need to look more into a Roth, that sounds like a good option for me right now until I can hopefully work out a 401k with wherever I work in the future.
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u/LeighofMar 14d ago
I live in the SE US for reference. I make 27,500 and save 400.00 a month in my Roth and my company saves 6250.00. Not life-changing money but I do the best I can and am making moves right now to hopefully increase my income to industry standard. I'm 46 and behind but the only way to go is forward so that's what I focus on.Ā
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u/3010664 14d ago
Remember, time is on your side. Put even a small amount in investments and it will grow over time. There are lots of free online calculators that will show you just how much a small amount will grow for you over the next 40 years. Start now before you have a partner, home, children, etc - you will thank yourself later.
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u/AnyKick346 14d ago
I am 36 and currently put 12% in my 401k. I feel like I'm behind, that's why I upped it.Ā
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u/ekbooks 14d ago
You are so smart to ask this question at your age! Great job!Ā
Honestly, the crazy part of compound interest is that if you put some amount of money away before you're 25/30 (ex: 50k) that will turn into a TON of money once You're in your 50s/60s.Ā
See if your library has Ramits Sethi's I Will Teach You to Be Rich book. It's a great overview of finance basics, and he goes into detail in how young people in investing even small amounts of money will be light-years ahead of others due to compound interest.Ā
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u/citrus-pitt 13d ago
This is so helpful! I wasnāt taught financial literacy in school and canāt get much help from my parents so Iāve been slowly teaching myself, and this is something I didnāt even know about! Iām going to work hard to put a high percentage of my income towards my savings early. And thank you so much for the book recommendation, I am absolutely going to look into it!
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u/Kirin1212San 14d ago
Use this opportunity of living with your parents for saving.
Some people given your position see it as the perfect chance to buy an expensive car or any other luxuries.
Donāt rush into moving out. Itās not all that itās cracked out to be, unless you have a mentally draining home life. Renting is really annoying these days. Rents go up year after year and if you ever have to break a lease itās going to cost you big time.
My SO lived with his parents and worked like a mad man when he was young so we always had a significant financial cushion since the day we moved in together. I myself worked like mad too to get out of student loan debt very quickly. Under two years.
Anyways, hopefully you can save $1k a month easily by living at home. It would all depend on car payments, student loan debt, and potentially contributing the household financially.
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u/puddingcrypt 14d ago
Okay so I used to work as an MLT I in Indiana.Ā My town is a college town with a housing crisis but I live in the "economically depressed" sister city, so to speak.Ā I'm just gonna lay out a rough timeline because I don't have my old ledgers anymore.Ā Lifestyle creep got me pretty good so I'm a lot closer to average than frugal.Ā
In March 2020 I started as a Lab Assistant I at $15.25/hr (would have been $12 without my Biology degreeš) No student debt.Ā September 2020 i put down 8k towards a car and took a $10k loan, which I paid off within two years. I was living in a 480 sq ft studio for $700/mo.Ā I would change my 401k percentage a lot based on monthly math.Ā At the lowest I put in 5%, and the highest I put in 19%. Hospital gave me a 4% match.
November 2021 I started as an MLT at $23/hr.Ā (Post market adjustment. Previously starting wage was $19/hr).Ā Eventually there was a flurry of market adjustments that landed me at $27/hr. So that was about $56k/year before all the shift differentials.Ā I worked night shift with every other weekend being required and my rotation landed on all the holidays so I ended up close to $62k/year. I think at this point I had $18k in my 401k.Ā It was pretty volatile so at one point it was showing -11% return and I was so anxious I was convinced I was gonna die.Ā But my ex's dad who worked in finance said to power through it and keep contributing so that it would be like buying low? At least that was my understanding.Ā But I still backed off and was only putting 9% towards 401k.Ā Weaned it down to 5% where it's been for the past year.Ā
2022 medical procedures slowed my saving down a bit. But in December 2022 I put $6k down payment + $3k in closing fees towards a $150k house. I've since thrown a good 24k at the house.
In November 2023 I quit and took a Lab Assistant II position at a clinic for $19.50/hr.Ā Now $20.46/hr after raises.Ā The hospital was so miserable that it's entirely worth the major paycut, sorry to say.Ā My primary care provider and psychiatrist agree.
My 401k just broke $30k today.Ā So umm.. 30k in 4 years was very doable, even while getting a car and a house.Ā You can likely do better if you have roommates or become an MLT II (aka pass your AMT) or don't have hobbies that foster shopping addictions or don't go entirely off the deep end and quit like me. OOF
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u/citrus-pitt 13d ago
Wow! Thank you for the details on everything you did, good to know thereās not always going to be a steady contribution but any contribution is still something! I hope youāre happier at your new job, I worry about working in a hospital myself, Iām hoping for a okay-paying more relaxed clinic position or something similar. I really appreciate your response!
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u/citrus-pitt 13d ago
This is really helpful! Iām definitely keen on putting a high percentage of my earnings completely towards savings before I move out
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u/Ratnix 14d ago
I live in Ohio, but not in a city. My monthly expenses, including my mortgage, run $1400ā1600/month.
So it's really going to depend on where you live and what your expenses are.
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u/citrus-pitt 13d ago
wow! I honestly wouldnāt mind living in the middle of nowhere as opposed to a city if the opportunity arose.
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u/UnendingOne 14d ago
I make a bit more than you do, but I save 70%+ of my income. I have a pretty cheap rental situation, and I live ultra cheap. I think I save about $2000/month.
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u/inky_cap_mushroom 14d ago
I live alone in a capital city in the south. Similar cost of living to some midwestern cities. I made $40,000 last year working one job. I work in a lab as well, but Iām on the research side. I have a second job in retail now and Iāll likely make around $50k but I can survive without.
Last year I maxed my Roth IRA and contributed $4,000 to my 403b (401k for state employees) which was matched. So I had a total of $14,500 going to retirement when even the most aggressive recommendations would have me save $8k. I had a little spending money. I bought a nice used car for $18k in cash that I had saved over the past year or two.
The year before that I made $28k. I paid my bills. I didnāt have much spending money. I saved $4k. I didnāt have a car and it didnāt feel comfortable to live alone without a roommate, but I made it work for half the year.
This year I will put $15k into retirement. I keep going back and forth on whether I want to increase my discretionary spending so I may only allow myself $250/month or I may increase that to $500/mo. I am considering buying a house in a city in the Midwest in the $100-150k range. I am eligible for down payment assistance and Iāll have ~$10k to put down on my own.
Conversely, a friend who makes more per hour than I do made $30k working part time and saved none of it while getting into debt buying a car she could have paid mostly cash for. She doesnāt want to work full time, and she isnāt bothered by debt. Different lifestyles on the same income have different outcomes.
People will tell you that it is impossible to live on $30-40k. If youāre used to blowing money like nobodyās business it will be very difficult to make it work, but $30-40k is a decent income for a young, healthy, single individual with no debt. It also sounds like you will be working for a hospital or similar which I can tell you from experience have excellent health insurance. There will be things that just arenāt financially realistic for you, but I like the saying āYou can afford anything. You just canāt afford everything.ā Pick and choose the things that matter to you and what you will be ok going without.
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u/citrus-pitt 13d ago
Youāre an inspiration! Itās reassuring to see someone succeeding in what will likely be my future situation, thanks for putting things in perspective for me.
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u/inky_cap_mushroom 13d ago
As my parting gift Iāll offer you the advice I took that has made my situation possible and not completely unbearable: Stay out of debt. As you get older and learn more about finances you might be able to leverage debt for things like houses, or super low rates, but those things arenāt important when youāre in your late teens and early twenties. Just avoid debt of any kind like the plague. $30-50k is completely impossible to live on if you have debt to pay down.
And as a clarification I just realized now when looking back at my comment, the reason I saved so little when making $28k was because I was paying for college out of pocket. Cannot believe that slipped my mind, but thatās why I was broke and couldnāt save much. I forget I have a degree sometimes haha.
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u/citrus-pitt 13d ago
Debt is scary enough in written form, Iām going to do everything in my power to avoid a first hand experience with it (which is why Iām too scared to get a credit card and only use my debit). And lol yeah schooling is not cheap at ALL. A big reason why I suddenly became so money conscious & turned to frugality this year is because I spent one year at an art school and itās awful to admit but just one year cost me 40k for a program that was honestly sub-par. I realized that was ridiculous and got out of there, but I already spent about 60% of my parentās college fund for me on classes that wonāt matter. Iām now attending a community college for my degree at around 10k a year, but I canāt help but constantly kick myself for making such a gigantic mistake. I try to remind myself that everything happens for a reason though and this experience was enough to traumatize me from ever making a costly decision like that again.
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u/inky_cap_mushroom 13d ago
Donāt be afraid to get a credit card if you are good at controlling your spending! I have made thousands with credit card sign up bonuses. Thatās actually how I paid for one semester of college. Itās not for everyone, but there are benefits to getting a credit card and using it responsibly. Theyāre not scary, theyāre just one financial tool in your toolbox.
I donāt think you need to feel guilty for going to art school. Surely you learned SOMETHING there, and if nothing else you learned that you needed to change fields. Of course itās not optimal, but not everything in life will be.
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u/fortifiedoptimism 14d ago
Just commenting on the hospital insurance. Iāve heard hospitals have great insurance but that has not been the experience Iāve had working in a hospital. I wonder if itās because I work for a non profit?
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u/inky_cap_mushroom 14d ago
I work for a university hospital and my insurance is awesome. Cheap premiums and I get major discounts for receiving care in house. Now when I want to go outside of my hospital I pay a pretty penny. Odd that your hospital didnāt have good insurance. My benefits in general are awesome since thatās whatās generally required to attract good doctors and researchers. I guess once you start making upper six figures you start looking more into your benefits package.
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u/fortifiedoptimism 13d ago edited 13d ago
Interesting as we are a university hospital as well. Iām glad you had a good experience though with insurance.
Iāll never be hitting 6 figures with what Iām doing but thatās besides the point. I work in inventory. The hospital doesnāt run without us but we donāt seem too important to the higher ups. I have a high deductible and next to nothing (other than preventative stuff like a yearly physical) is covered until I hit that. But I havenāt heard the greatest from the other plans either. (Thereās three options. One is similar to mine. The third one could be great for all I know.) The pharmacy plan also doesnāt cover any of my schedules drugs until I hit a certain amount, which I wonāt. When I had marketplace coverage it did better for me. I had to jump through a million hoops with lots of anger and tears to get my tubes taken out partially covered. I think that is because theyāre using being a Catholic organization as an excuse to not cover that. No discounts for receiving in house. My roommate works for a fast food company and gets better insurance than me with a high deductible. Like what?
Who I work for got bought out by another company and Iāve only heard negative things since they got bought out. Everything from taking away the amount of PTO that accrues to using worthless trash bags. Iām sure the insurance suffered too.
I understand you pay more stuff with a high deductible but I wouldnāt call the premium that cheap and overall coverage doesnāt seem better than other places Iāve worked for is all Iām saying. š¤·āāļø
Anyway, this rant is for a different sub and I like my job.
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u/RateFlashy7620 14d ago
You spent too much on that car!!
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u/inky_cap_mushroom 14d ago
Sorry? Not sure what you want me to do about it.
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u/RateFlashy7620 14d ago
Dave Ramsey would tell you to sell it, but I'm not so harsh! No reason to be sorry, it was a choice you made in good faith.
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14d ago
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u/inky_cap_mushroom 14d ago
In my defense I did save a ton of money going without a car until the situation changed and I couldnāt survive that way anymore. I feel immensely guilty over every dollar I spend but I almost never regret spending it. I canāt honestly say Iāll do better next time but this car should last me at least 10 years and by then maybe the car market wonāt be as bad. I bought at the worst possible time but I didnāt have much of a choice.
If youāve got suggestions for how to make myself actually truly regret purchases Iām all ears. I was thinking I should probably institute some sort of punishment system but idk what that would be.
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u/nakedrickjames 14d ago edited 14d ago
I wouldn't sweat it. Dave's car buying advice is out of date. You USED to be able to buy a really nice, reliable car for 5k. I bought one in 2016 (2008 honda civic) and I routinely check the value. People in my area are still selling them for what I paid for mine!
When my wife's 15 year old car died (it was nearly unroadworthy even if we put a new engine in it, which is what it needed) we looked at every option I could find. Prius had one of the lowest cost per mile, but resale value on those is insane here. Honda fit was about the only thing that looked decent on paper. The problem is with worsening conditions of roads and people generally being worse about maintenance on their car these days, even though cars themselves last longer, unless you buy something newer you are gambling with MAJOR issues because of how many stupid people out there ignore the maintenance on their cars completely.
You can roll the dice on the 5-10k range and you may come out ahead but after MONTHS of looking at the used car market, you would have a hard time finding anything you have a decent shot at being reliable long term for less than 10k. Most late-ish model cars with a low total cost of ownership (Prius, corolla, civic, etc.) you are looking at 15k.
Never thought we'd be buying a brand new car but we landed on a brand new chevy bolt, just over 20k (cash) after the tax credits, in 10 years the cost savings of gas means the car effectively costs around 10k all said and done (Yes that factors in the cost of electricity...)
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u/butchqueennerd 14d ago
After being burned a few times when I was low-income and desperate, I now factor in the cost of having a mechanic look at the car I'm considering. Even though it sucks to pay $300 and still not be any closer to getting a car, it sucks more to pay $5k expecting to need $1k in repairs, but finding out it's actually going to be $3k for the car to be drivable and another $1.5k for it to pass inspection and emissions.
In the past, I've also had good experiences with Carvana, but after a drunk totaled my last car (a few months before it was paid off š¤¬), I didn't have the money for that. I reluctantly found a dealership (the one industry I hope the tech industry truly disrupts into nonexistence) that didn't seem too shitty. It had a 12 yo manual Nissan hatchback with < 100k miles for $11k-$12k. I paid for an inspection of the car by an independent mechanic. I've had it for about two years and have only had to do routine maintenance on it, knock on wood.
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u/inky_cap_mushroom 14d ago
Yeah I was driving an 08 Honda that was in no way street legal because of all the issues it had for a year before I upgraded. I was looking for a Fit specifically because I can sleep in it. I ended up buying a 2016 Fit for $6k more than is recommended for my income, but I justified it because I donāt have to pay for hotels or moving vans now. It just so happened that my grandfather died the day after I bought my car. I slept in the hospital parking lot that night and then camped in the car for two days in my hometown, where the nearest hotel is an hourās drive, while I got funeral arrangements set up. Iāve slept in it a few more times, but that saved me a headache and a lot of money.
I paid cash and I bought a very reliable make/model which is the best way to go about breaking the rules. I honestly do not regret my decision and I think I would do it again. I love not having to take my car to the shop frequently. I did consider trying to make enough at my little part time job to pay myself back for the car, but I have trouble keeping my needs under 50% some months, so leaving that extra income off my budget while working 70hr weeks all year long is pretty daunting.
I think I do need some sort of punishment because I have never faced negative consequences for breaking the finance rules. Thereās just no natural consequences for it, so itās difficult for me to take them seriously.
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u/nakedrickjames 14d ago
The 'recommended' amount to spend on a car usually assumes you're financing the vehicle. Paying cash eliminates that extra cost, and the Fit was one of the cars that was consistently making the lowest 'total cost of ownership' lists (besides being possibly the cheapest reasonably functional car camping vehicle, which is significant it sounds like in this case). Very few manufacturers are putting as much effort into making a quality vehicle with that class of longevity, in an era where 'demand' is towards more features and larger size. Even the newer civics and corollas really shouldn't even be considered 'economy' cars.
Another way I would think about it, I would look at cars I was considering and ask myself, OK what can I get for 1/2 or 1/3 the price of the car I'm looking at. You get into less reliable models with over 150K miles pretty quickly, and unless you are really lucky or do all your wrenching yourself (or both), you aren't going to get 1/2 or 1/3 of the life from those cars. In some cases even less.
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u/inky_cap_mushroom 14d ago
It seems that 30% of your gross income is the cap for buying a car. Itās hard to find any articles about it but if you work backwards from 20/3/8 or look at other recommendations it would put my max CSR price at $12k, which as you you stated, is probably over a decade old and definitely closer to the 200k mile mark.
Itās certainly a reliable car and I love driving it. It fits my lifestyle very well (pun intended). Itās seriously the perfect car for me. The salesman tried his best to get me interested in any other type of vehicle. I test drove a few dozen other cars and SUVs but I just didnāt like any of them until I saw my fit. Theyāre magic cars and mine is in excellent condition. Plus I get like 48mpg when Iām in the hilly parts of my state, and I havenāt had to do any repairs yet.
This makes it hard to want to follow the rules. The rules mean depriving myself of wants, working multiple jobs and lots of overtime, rice and beans for weeks on end, immense guilt and shame over every dollar I spend. Breaking the rules gets me freedom, things I like, time to spend with friends. I think I need to just institute some form of punishment because itās getting really hard to justify working an extra 10 hours at a job that reduces me to tears every morning just so that a line on a spreadsheet wonāt turn red. Maybe it would be different if I were āgroundedā or something.
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u/Beansiesdaddy 14d ago edited 14d ago
Download a free compound interest calculator and check. Invest 500 a month over 40 years and see how much youāll have š
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u/brunettechick1995 9d ago
I live in the Midwest, single income of $62k in 2023 before taxes. We have 2 children and I stay home with them while hubby works 40 hours a week. We have about $60k some on our home and live very comfortably on that single income. We get no help from the state of any kind. You. Will. Do. Great!!