Quote:
Originally Posted by cooliemae
I know this is going against the grain, but I would pay-off the 401k first and here's why
Assuming modest gains (6% per year) on the 401k over the next 25 years the $8000 would turn into $34000.
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If you are going to assume a 6% return for the 401k, then you should absolutely pay the credit card first since that has a guaranteed "return" of 12%. There is no way mathematically for the 401k to outperform paying off the credit card unless it earns more than 12% which is pretty unlikely. The time line doesn't matter.
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