Ask The Experts: Stop Contributing to 401(k) to Pay Off Debt?
I am 21 years old and about $45k in debt. About $30k of that is credit card debt. Everything is up to date and I really want to aggressively pay everything off. I am currently contributing 5% of my income to a 401(k) that has a 100% employer match. I am considering stopping my contribution for a short time so that I can put that money towards my debts. If I stop contributing then it will free up an extra $200-$300 per month. Would you recommend doing this? -Adam, VA
Adam: No! Keep contributing that 5% to your 401(k) and keep getting that 100% employer match as long as possible. If you want to pay off your debt faster, get a part-time job or a few part-time jobs and direct that extra money to aggressively eliminate your debts.
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Bill Losey, CFP®, CSA, America's Retirement Strategist®, is the resident retirement planning
expert on CNBC’s “On the Money”. He has been named one of America’s Top Financial Planners and is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional. He also publishes Retirement Intelligence, a free weekly award-winning newsletter. Bill can be reached online at www.MyRetirementSuccess.com.