very specific question re: 401(k) vs. paying off debt

[tishters]

hi all. i've been going over and over this one in my head for weeks now, and still can't figure it out, so i would appreciate any and all thoughts/opinions...

some pertinent facts:
- finished grad school & started my job 6 mos. ago.
- i currently earn $82k, which will become $85k w/in the next 2 mos.
- i lived on cc during my last (unfunded) semester in grad school, and am currently carrying almost exactly $15k (i've paid down ~$8k so far).
- due to a few missed payments last fall the interest rate on all 3 of my cc is 29-30% (yes, it's true). i've tried getting the rates reduced, and have been told by each company that i must pay on time for a full year before they'll consider it. so i'm stuck with the rates.
- my company has an outstanding 401(k) match: 100% on the first 7% of my salary.
- i have a $70k student loan (consolidated a couple of years back at ~4%).
- i have a mortgage that is currently at $102k (6.25% 30-yr fixed), and my renters essentially cover that.
- i don't have a car loan or other debt, but my rent *is* sky high (~$1700...can't be helped, unfortunately )

...now...
i'm not at all concerned about the latter two debts (but in the interest of full disclosure i listed them); payments are low, rates are decent, and they're good debt anyway.

what i can't figure out is whether or not i should elect to enroll in my
401(k) this go-round - which will be in a couple of weeks, and after that i'll be eligible every 6 mos. thereafter. my current rate for full company match is ~$6k for 6 mos., meaning my options are these:

1) contribute $6k over the next 6 mos., which my company will match 100%.
2) wait to enroll for the next election period (which will be Aug '08) and instead use the entire $6k i'm NOT putting into 401(k) to pay off that ^%&*#! credit card debt. essentially, give or take a month or two, that would allow me to completely erase that $15k by this fall (whereas i'm looking at something more like next spring with 401(k) contributions).

i am certainly no financial guru, but i am intelligent enough to know that i should probably know which scenerio to choose based upon simple gain vs. loss...
...i guess my confusion/indecision derives from the fact that i can't really figure out how much that extra $12k ($6k of which is of course *free* money) in 401(k) now will benefit me in the long run.
i.e., if it ultimately means the difference between retiring in 21 vs. 20 yrs. i'd consider that a good trade-off for not having to pay this horrific interest any longer than necessary. if, OTOH, it could be worth much more than that 20-some yrs. from now i'd rather enroll now.

oh yeah, FYI, i guess the majority of my investments, at least in the near future, will be relatively high risk stocks. i know there's no simple formula for determining these figures - which is why i need some more experienced & knowledgeable folks to offer their thoughts.

any input would be most appreciated!

[illinigamer]

Put it in the 401k.

A company match is free money. You can think of it as a 100% immediate return; much more than the 30% you are paying on your credit cards.

If you really do need the money before retirement, you can take a hardship withdrawal which results in taxes + 10% penalty. However, with a 100% match, this is still better than not having contributed that money to your 401k in the first place.

[jIM_Ohio]

You are not in a bad spot. Go with a broad plan implemented over time and the 15k of cc debt will be gone within 12-18 months.

Take the 401k match. 7% should go in.

Refinance mortgage down to a better interest rate. 5.75% rate will free up some cash flow (maybe $80/month) to pay down the debt. This is $1000 more to bottom line per year at $80/month.

I would budget and look for ways to cut costs. What is your monthly budget?

I would apply for a new CC, around a 30k limit, and transfer the 15k balance to this card at a lower rate. If the cc companies do not work with you, you don't need to work with them. Apply for the 30k card, get it, and call the original CC company and give them one more chance.

[disneysteve]

I agree with everything Jim said. Do the 401K. Refi the mortgage. Transfer the CC balances to lower rate cards.

Live lean and pay off the CCs as soon as possible.

[texastek76]

The 7% match is free money. Your CC interest over that same period will not equal the total $$$'s. Put in your 7% and keep paying what you can on the CC's.

[mbarriere]

Absolutely, start contributing 7% to your 401k.

1. The 100% matching is outstanding.
2. The extra six months will add up well over time.
3. This is pre-tax dollars, so you'll also have a tax advantage for the year.
4. Instead of contributing $6k, you were thinking of paying off your debt, but since the $6k is pre-tax - you really don't have an extra $6k to put towards your debt.

Of course, this only really works, if and only if, you are dedicated to paying off your cc as soon as possible. If you end up taking years to pay it off, you will lose alot of the advantages of contributing to the 401k.

Pay off those BAD debt ASAP.