Debt reduction and 401K question

**Buckeye5** · 08-11-2006, 11:50 PM

After trying to implement new things to our budget, I have a question., I have read the tmm BY Dave Ramsey, and while trying to snowball how many of you drop out of a 401K, (we just started a year or so ago) to reduce your debt?? We put in 6% which is the company match. DH is 44 yrs old, and I think this has given him some confidence and security. What do you do??

**SHOPGIRL** · 08-12-2006, 12:37 AM

If your company matches your 40lK, then I'd keep putting money into it. I still have debt, but I contribute monthly to my retirement account. I look at it as paying myself first.

**Jenna** · 08-12-2006, 01:09 AM

I'd say it depends upon your situation.

If you're late on payments, having a hard time & accumulating late fees - then temporarily stop 401k contributions.

If you have a decent sized snowball & a $1k efund, then continue to contribute to 401k. Time and the power of compounded interest are your friends when it comes to retirement.

**frugalfarmwife** · 08-12-2006, 07:05 AM

I agree with Jenna, as long as you're not behind on bills and have a bit of an EF keep contributing to the 401k. Hubbies company matches up to 4% and we're still contributing to it.

kj

**nodmicks** · 08-12-2006, 07:57 AM

We kept contributing. We had a lower income(around 30 k for family of 4) the first few years we were paying off debt) and then higher for the last 2 of doing debt pay off.

For the lower income end having that 401 K taken pretax made our income look lower for taxes giving us and eic credit and there is a tax credit for having a lower income and saving for retirement.
For the higher income part it rediced taxable income yet again. Looked like a win win to me. It also since it is taken pretax~ therefore reducing the taxes they take from dh's checks seemed to make hardly any difference it what he actually brought home.

**PrairieRose** · 08-12-2006, 11:31 AM

Oh I would definitely not stop the 401k since the company is matching the 6%. I mean where else are you going to get that much out of them? Just concentrate on the rest of your money, be creative in ways in coming up with ways to free up money to pay off debt with. You can still do it

**ewokgirl** · 08-12-2006, 12:21 PM

We, also, have debt we're trying to get rid of. There is no way, unless we just couldn't make payments or something, that we would stop contributing to the 401k. DH also has the company making contributions (although I don't think his are evenly matched). That's like free retirement money! It just seems too easy to stop making contributions then forget to start making them again. That' just my opinion, though. We want that money to sit for a LONG time and gain interest! We're only in our early 30s.

**tlenad** · 08-12-2006, 12:52 PM

I agree with everyone else. My company matches up to 5% dollar for dollar. There is no way I would stop contributing to it unless it was a true emergency. I'm okay with it slowly down my debt pay back mainly because I believe I will come out further ahead in the future by contributing.

**Buckeye5** · 08-12-2006, 03:25 PM

Thanks for all of the replies. We will continue to contribute to the 401k. We are not behind on any bills. DH will feel better about this, and I really don't blame him. Thanks to all of you, you all have helped me so much.

**banana** · 08-12-2006, 04:41 PM

dh contributes 8% to his thrift savings plan. Equivalent to a 401k I think. I think it is necessary to contribute to some sort of retirement account especially with the way the govt is talking about SS when we are ready to retire in 25 or so years.