How to plan for retirement when you're living in the red and have debt
Carrying debt on a tight income leaves people trapped in a constant state of financial fight or flight while trying to figure out retirement. This overwhelming big-picture stress often leads to considering high-risk moves like 401(k) loans just to manage immediate cash flow gaps.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
How to plan for retirement when you're living in the red and have debt
- 1planning to work massive amounts of overtime and 14-hour daysDid this help you?
- 2planning to pick up dozens of extra shifts to aggressively build savings and pay off debtDid this help you?
- 3planning to consult a financial expert later to handle investingDid this help you?
- 4Stopping or reducing 401k contributions temporarily beyond the company matchDid this help you?
- 5Building an emergency fund instead of using retirement fundsDid this help you?
- 6Shopping around for a regular vehicle refinanceDid this help you?
- 7Trying to set aside a fixed percentage of income immediately when money comes inDid this help you?
- 8Following online budgeting guides and community wikisDid this help you?
- 9Attempting debt snowball or debt avalanche repayment methodsDid this help you?
- 10Trying to cut discretionary spending like eating out or tripsDid this help you?
- 11Focusing on aggressively paying off debt instead of saving for retirementDid this help you?
- 12Considering rolling personal debt into a parents' home equity line of credit (HELOC)Did this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“I spent all my money going out to eat and buying people gifts and helping other irresponsible people.”source ↗
“It’s just discouraging sometimes because I am self employed and it seems like every time I get motivated to make some changes and start paying down debt, it’s a slow period or I have 500 things come up that cost money.”source ↗
“35m 0 retirement. Family of 5. 110 income ( was 65 last year) total comp 130. Covid closed my business and put us in a ton of debt.”source ↗
“With my new income we have been focusing on aggressively paying off the debt instead of retirement.”source ↗
“Last debt is this 90k from the business ( it’s personal debt though)”source ↗
“Ok, thank you, definitely keep reminding myself to take it a step at a time but I get overwhelmed by the big picture often”source ↗
“I have 3 months in savings, but more curious about the loan rather than a full withdrawal. Is it still penalized the same?”source ↗
“Every time I try to save I end up having to use it. I’m a bad budgeter/planner. I really have a hard time sticking to it.”source ↗
“I think I meant that more as “is there hope for me this late in the game with zero planning for my life to become financially free with lots of debt and back taxes.””source ↗
“im a household of 3 single income unit. I make 33.95/hr... Yes I have debt and currently live in the red (ive never been good at or learned about finances.)”source ↗
“How realistic is any of this? Im looking for advice because right now being in the red i tend to be in a constant state of fight or flight”source ↗
“I also have a 401k with enough withdrawable funds to take a loan to pay off that loan and put a little back in my pocket for the same money I’m paying now.”source ↗
“It seems like a good idea, but I’m curious if I’m overlooking something other than just the lost investment for a few years.”source ↗
Where this came up
People with this problem also raised
- 3How to handle sudden unexpected debt and a drained emergency fund
- 6Should I use my savings to pay off my partner's student loans?
- 6Why does high income still leave me buried in debt payments?
- 2How to handle massive debt while still in school
- 11How to pay urgent bills and debt when unemployed
- 3Will it be too late to start investing once I’m debt-free?