Stopping retirement contributions

[ceejay74]

Wow, Jim, that's really interesting. So if interest paid and interest earned canceled each other out, investing some while paying off some debt would be better than just paying off debt in some scenarios. Thanks for this idea; I'll have to play around with it.

[jIM_Ohio]

Wow, Jim, that's really interesting. So if interest paid and interest earned canceled each other out, investing some while paying off some debt would be better than just paying off debt in some scenarios. Thanks for this idea; I'll have to play around with it.

Ceejay- Its always relative to your goals. Meaning what I do does mean its best "all the time for all people" and if you do something different, it does not make you wrong, me wrong or either of us both wrong.

A few points-
very few decisions will come down to a simple decision of "if interest earned equals interest paid, consider investing". This is because interest earned is seldom guaranteed.

If a person puts money on a timeline, they can often use the timeline to make their decisions for them... helps take some of the emotion out of the decision making process. Here is what I mean:

In my situation, my goal is very clear- I want to retire the year after my 18 month old kids graduate HS (that is in 16 years). 2027 is the year I target for this.

There is a long line of financial checkpoints and goals which are "mid term" goals or steps along the way. For example, paying off 1st and 2nd mortgages, removing car payments from the budget, having enough money in retirement accounts, probably having money in a taxable account I can access during early retirement. And that list is much longer, but those are good enough for this discussion.

I obviously cannot do "all" those goals at once. And I need time to achieve lots of them- like having retirement accounts provide enough money, and also paying off a mortgage. Few people could create either as a goal, then solve them in 5 years... time is needed to solve the goals.

We have a 2nd mortgage which is 7.5% interest (fixed) and many people here would suggest "pay that off fast". The issue is "at the expense of what goal" and that is where "financial planning" is custom to each person. The debt is 50k, we set aside 20k+ to retirement accounts annually, and if you did the math, stopping retirement contributions for 2.5 years, or cutting them for 5 would solve the debt, but when I use the 16 year time horizon I know investing more now, and waiting until a car is paid off is a better solution than stopping or slowing investments down- relative to goal #1.

My point is focus on the real goal, not on a "step" towards achieving that goal. Because so so many things will always appear "more important" short term than retirement savings, but once you lose time, saving for retirement will be quite difficult.

If you are familiar with my "doubles" method for checking retirement savings progress, I know I am REAL CLOSE to hitting a key double, and I know once I hit that, that what I already contributed should be enough to retire on, given enough time to let that money double (2 more times).