A 50-year-old Ohio woman wants to make a change. And a recent hospital stay that led to lost wages prompted her change of heart.

Ann from Cincinnati called into The Ramsey Show because she is living paycheck-to-paycheck and has no retirement savings.

Willing to admit she wasn’t good with money, she said she didn’t have a relationship with her family growing up to learn how to budget (1). Ann added that she was overwhelmed about where to start.

Ramsey Show co-host Ken Coleman offered some optimism for Ann: “It’s possible.”

While George Kamel added his own encouragement.

“The fact that you even decided this at 50 is amazing, because I know you think it’s too late for you, but there’s someone who’s going to call in, probably today, who goes, ‘Hey, I’m 62 and I got nothing saved,’” he said. “So, Ann’s doing great. She’s got a 12-year head start. And so, it very much is possible.”

To start Ann off, Kamel and Coleman broke down her income, debt and expenses.

She brings home $2,800 a month working as a receptionist and patient advocate in a medical office. Her rent is $1,500 for a three-bedroom, one-bath house.

“Flag number one, over half of your income is going towards rent,” Kamel said.

Ann also has a $450 a month car payment on a 2022 vehicle with a $16,000 balance. She owes $10,000 payday loans at high interest rates and $15,000 in medical debt. On top of that are bills for utilities, internet, cable and car insurance. She has no savings or retirement investments.

Coleman said her first move should be lowering transportation costs.

“If we can get out of this car, we just gave you over a $5,000 raise,” he said, adding that selling the vehicle, if possible, and using any remaining cash to buy a less expensive car would help.

Next, they urged her to address housing. Since she lives alone in a three-bedroom home, they suggested finding roommates or moving to a cheaper place.

Kamel said housing costs should generally stay around a quarter of take-home pay. For Ann, that would be about $750 a month. As long as her rent and car payment stay this high, he added, she will struggle to create breathing room in her budget.

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Some costs, such as housing and transportation, can feel like “immovable objects.” But lowering those big expenses can free up cash to pay bills, attack debt and start saving.

There are several ways to estimate how much you will need in retirement. One common approach is to project your annual living expenses and multiply that number by the number of years you expect to be retired.

Read More: The average net worth of Americans is a surprising $620,654. But it almost means nothing. Here’s the number that counts (and how to make it skyrocket)

Another way is to use age-based savings benchmarks. Investment firm T. Rowe Price suggests a 35-year-old could aim to have 1.5 times their annual salary saved and by age 50 have three-and-a-half to five-and-a-half times their income saved (2). Online retirement calculators can also help you run the numbers.

Starting early gives investments time to grow. Still, as Kamel and Coleman advised Ann, it is better to start late than not at all.

Ann’s story highlights the impact of financial literacy. Without guidance early on, it can be difficult to build savings. With a modest income and mounting debt, saving may feel out of reach.

But Kamel estimated that if Ann eliminated her car payment and lowered her rent by $1,000 a month by adding roommates, she could free up about $1,500 a month. At that rate, she could pay off her debt in roughly 27 months. After that, the same $1,500 could go toward building savings.

If you are starting to save for later in life, it is normal to feel behind. Taking action now will still put you in a stronger position than doing nothing.

Start by reviewing your expenses to see where you can cut back. Even small reductions can create momentum. Kamel closed the call with a practical suggestion: cancel cable.

“I would cut cable yesterday, because we’re not going to be watching the latest season of Survivor,” he said.

Building a budget that prioritizes savings can help you stay on track. There are many budgeting methods, but the key is to set aside as much as you reasonably can, especially if you are playing catch-up.

Some experts recommend saving about 15% of your income a year, including employer match (2). If you are starting late, you may aim for that level or higher if possible. If 15% feels unrealistic, begin with what you can and increase it over time.

Kamel and Coleman also encouraged Ann to look for ways to boost her income. If your workplace offers a retirement plan with matching contributions, supplying enough to get the full match can significantly increase your savings. Workers age 50 and older can also make catch-up contributions to workplace plans and individual retirement accounts.

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The Ramsey Show (1); T. Rowe Price (2).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.