Quote:
Originally Posted by disneysteve
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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I would have to disagree that "time line doesn't matter." My wife started contributing to her 401k plan 1.5 years after I did, she puts slightly more in her 401k each year than I do, but because I started contributing earlier than she did, I'll have almost $100,000 more (assuming out contributions stay the same) when we retire!
Time does matter and I agree that raiding retirement funds should be an absolute last resort.