Should those of us on step 2 REALLY not contribute ANYTHING to retirement right now?

**khaski** · 09-03-2008, 12:50 PM

I know without a doubt I'm the nerd, and I KNOW DR says no investing/saving while on step #2- but it literally is KILLING me to not be investing when the stock market is 'on sale' right now- having another 30+ years to retirement, I know this volatile, down-in-the-dumps market is a GREAT time to be buying some mutual funds or stocks here and there. Is/has anyone ignored his advice about NO investing and done some? Part of our step #2 was taking the $ we routinely put away every month towards retirement and college funds and putting this $ into the snowball instead- but I have to admit, it's REALLY bothering me. I know 'fudging' the steps draws the whole thing out more, but wouldn't it be worth it, to get such great deals in the market now? Yay or nay from your standpoint?

**Greebo** · 09-03-2008, 01:59 PM

There are differences of opinion on this. Many people say to contribute only up to any employer match, if any. DR's point is that focused intensity, and the fact that, as you say, this is KILLING YOU, will drive you to get out of debt that much faster.

Otherwise its too easy just to slack off and drag it out.

The downside? Potentially significant lost gains in the future. But the future is unknown - the debt you have now is known and real.

So we stopped my contributions.

**Russ** · 09-03-2008, 02:07 PM

I'm on the fence on this as well. I contribute 8% and I know damn well if I stop, that money will most likely not be applied to debt.
When I see us as being more intense with debt reduction I may stop to the match point.

**Greebo** · 09-03-2008, 02:42 PM

Originally Posted by rcannon

I'm on the fence on this as well. I contribute 8% and I know damn well if I stop, that money will most likely not be applied to debt.
When I see us as being more intense with debt reduction I may stop to the match point.

You and DW need to be on the same page before you make any radical changes, IMNSHO.

**Samigirl** · 09-03-2008, 03:33 PM

We're in Baby Step 2, but we're still contributing around 10% to DH's 401K. I would like to stop contributing for a year and add that money to our debt snowball, but DH is not yet convinced. So, we will keep doing what we're doing.

**nodmicks** · 09-03-2008, 04:21 PM

We kept the 401K all the way through. Too us it just made sense

**dcompton** · 09-03-2008, 05:22 PM

It's your money, not DR's. Weigh the pros and cons and then do what seems best to you.

**LexTysMommy** · 09-03-2008, 06:46 PM

Honestly if you think that you will put every cent you wouldve put in 401K into debt, then I say maybe put off for a bit. I dont know how much debt you have, but even a year break with 30+ years to go until retirement might help you in long run.

Again this is my opinion as I do not know your whole situation. As for me I am building up my EF then will start on retirement and keep saving as i do it. Good luck!

**Greebo** · 09-03-2008, 08:29 PM

Originally Posted by dcompton

It's your money, not DR's. Weigh the pros and cons and then do what seems best to you.

As a counter point - Dave's plan works if followed. Being in debt up to ones eyeballs (as I am) is a sure sign that my brilliant plans weren't working. Have we modded DR's plan somewhat? Yes - but very slightly indeed, and only on the side of even less risk (larger BEF).

**Denvergirlie** · 09-04-2008, 11:32 AM

I kept my 401K contributions, but only 6% of my salary for a company match of 3%.

I was still able to pay off all my debt ($29K) in 18 months.

How long will you be in debt? How long will it take you to get your debts paid off if you keep investing? How long would it take you to get out of debt if you stop retirement contributions?

I myself am still doing 6% into a 401K while I work on the other steps of building a FFEF and then step 3b of house/ land downpayment.

**TanyaMT** · 09-04-2008, 12:04 PM

We have kept DH's 401k, but a lower level. We have about a year of BS2 left.

**Momof4cats** · 09-05-2008, 08:50 AM

Hmmmm.......potential 10% earned in investment vs. 18-30% interest paid off.......hmmmm

**Greebo** · 09-05-2008, 09:06 AM

Originally Posted by Momof4cats

Hmmmm.......potential 10% earned in investment vs. 18-30% interest paid off.......hmmmm

Very important point there.

**nuisance26** · 09-05-2008, 09:26 AM

~I think it depends on how long it will take you to pay off your debt and what the interest rates on them are. We continued to fund DH's 401K while we paid our debt but we only had a car payment at 6%. If we were paying over 15% interest I'd discontinue funding retirement to get those debts paid off.~

**tervsforme** · 09-05-2008, 09:37 AM

I was putting 10% into my 401k, but reduced it to 4%. We get an employer match, dollar for dollar up to 4%. I figure I'm getting a 100% return on my money this way. Also, I consolidated all of my debt to one credit card with 4.9% interest till the balance is paid off, so I'm happy with my trade off. You have to be happy with your decisions. Just my 2 cents worth...