'Where did the last 50 years go?': This 67-year-old told Romain Faure she collects $1,800 in Social Security — and has $295 in savings with maxed credit cards. Here's the plan for her

From hard knocks to hard truths

Catherine’s life hasn’t been easy. A mother at 21, she found herself a single mom just two years later. By 26, she’d had a second son but received no child support. In her own words, she’s made the lifelong mistake of “not being focused enough on my future.”

Faure lays out her income, which includes about $30 a month as an online reseller. “This would be OK if you had some strong retirement funds on the side,” he says. As Catherine doesn’t, it’s time to explore the specifics of digging out.

With expenses, Catherine pays just $400 in monthly rent as she lives with a relative for now. As she spends just an additional $75 for her car’s gas and insurance, Faure praises her for being frugal.

Then he assesses her credit card debt: “Ladies and gentlemen, this is where the pain comes in.” Catherine owes more than $20,000. That means minimum payments of $800 to cover everything.

At this point Catherine reveals a stunner: She has an economics degree.

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A three-step plan

Faure’s assessment points to steps viewers can follow, whether they face modest money challenges or happen to be in Catherine’s state — which he describes as “MAYDAY,” all caps.

Focus your retirement funds on the future, not big-ticket items. Though she had a modest account in her 40s, Catherine used it to buy her first house and then upgrade to a bigger one. Yet she couldn’t foresee a market crash that put her underwater and left her account dry. Saving those funds means “safety and financial strength,” Faure stresses, while touching them before age 59½ means penalties of 10%, according to IRS guidelines.

Make a spending plan, then eliminate waste. Though Catherine comes prepared with an Excel sheet of expenses, she treats it almost as an afterthought that she spends $450 a month on food — 12.5% more than her rent. Though she blames this on soaring food costs, the question is whether she can find sensible substitutions. These might include buying store brands over national ones or switching from Trader Joe’s (her current grocery store) to Aldi, a much cheaper alternative that shares corporate roots. This article can help you find foods at Aldi that the author claims are “even better” than at TJ’s.

Increase income and pay off high-interest debt. Catherine’s credit score plummeted from 710 in just eight months, and once credit card payments are factored in, she’s in the red by $481 per month. But she’s only making minimum payments, which can spell big trouble. And she’s hardly alone: The average credit card debt per household as of July 1 is $7,226, according to the St. Louis Fed. Trying to pay off $20,000 on $800 a month with the average new card APR — a sky-high 27.62%, according to Forbes — will take more than three years and cost you more than $9,700 in interest, an Experian calculator shows.

As Catherine has about $1,600 worth of inventory she can offer on Poshmark, Faure urges her to sell it immediately. As for why she hasn’t done this already, Catherine admits that she faces no obstacles, including time: “I just need to do it.”