Quote:
Originally Posted by disneysteve
The exception to this is a 401k match, since that amounts to 50% earnings. I'm sure nobody has a CC charging 50% interest. So I would go along with dropping contributions beyond what is needed to get the maximum match and putting all other available funds toward debt.
Something else to think about, though, is the tax issue. If you are in the 25% bracket, what you lose to taxes might outweigh what you save in interest depending on the rate on your debt.
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Then the market goes south and one loses 50% value in their 401k, and thier massive consumer debt is no less decreased. Or worse, the market goes south, AND they get downsized out into the street...401k half gone, no job, and consumer debt is no less decreased.
I think getting to zero debt is a huge value even in it's concept, and getting there means one is less vulnerable to being downsized or fired..to me that is more valuable then the employer's contributions even if they're 50%.
I think sometimes one has to leave $$ on the table in the short run to get security for the long haul.
Of course I would not turn off 401k contributions for longer then 12-18 months, and for the reasons you stated.