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I am knew to Dave Ramsey and I have a question about contributing to my 401k. Step 4 is fully fund pretex retirement savings. Does that mean I shouldn't contribute to my 401k until after I have completed steps 1-3? I actuall had 3 months salary saved up when I started, so I am doing the debt snowball and skipping steps 1 and 3. However, my work matches the first 6% of what I contribute to my 401k, so if DR suggests not contributing at all until debt is paid off then I will be missing out on that FREE matching $! Seems crazy to not contribute and get the 6% match. I was investing 12% of my income and have moved it down to 6%.
 

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I started the course a few yrs ago but quit after a month or so when my mom was really sick. I'm starting a new group this Sunday. My personal opinion is that I'd continue to get the match- I even kept mine at 15% which is the maximum I can put in but I also didn't have any debt other than a car loan and mortgage. I've always done the minimum to get the company match - partly because I was afraid if I didn't do that with money before I saw it I might never start my 401k...I had lowered mine then realized I wasn't disciplined enough to pay off debt so I started saving in the 401k again.
 

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Actually no, you should temporarily pause your 401k contributions just until you get out of debt.

Ofcourse IMO depending on how long you expect your debt snowball to take you may want to only cut it down to say 2 or 3%.... If your expecting your snowball to take 5 years then you don't want to wait that long... but if this is only a year or 2 then stop the 401k and pay off the debt... then you will be able to make up for that when you contribute 15%

This is what Dave tells you to do.

The reason being is that otherwise you are dividing efforts. You need complete focus to pay off your debt. So while your paying off debt you aren't saving for anything - including retirement.
 

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Still pay to get the match. You can get it up with the 15% after worths, but it will mean this is all your own money. You have to have some pretty high interest cards to makes this worthwhile.
 
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The Dave Ramsey answer is no. No contributions.

The reasons why: If you stop the contributions, you are that much more motivated to pay back the debt faster because you want that contribution match. It's more about the psycholgical than the numbers. It also gives you a bigger check to snowball the debt with.

Yes, the numbers would be on the side of keeping the contributions, IF you get a higher return than the debt interest. Chances are on the side of keeping them.

It's *your choice* how closely to follow Dave's plan. I never reduced below the maximum match, personally. But it's a decision that you need to make for you.
 
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