Like many recent college grads, Seth Snyder was juggling the demands of paying off student debt and saving for retirement. But he was doing it all wrong — at least according to some unsolicited advice.
After graduating in 2014, Snyder found himself in a discussion with colleagues about debt, he recalls. Someone asked Snyder whether he had student debt.
Indeed, Snyder was making regular student loan payments while simultaneously contributing to his company's 401(k) plan, which he considered to have a "very generous" match. "This person advised me that, right after tax season, I should liquidate my 401(k) to pay off student loans," says Snyder, who now works for a start-up in Austin.
Snyder had done his research. An early withdrawal from his 401(k) would incur a penalty (10 percent for people under the age of 59½). "I knew it was a terrible idea," he says.
Even as Snyder told the group why he wouldn't follow that advice — the penalty would outweigh the interest on the loan — one person was unrelenting. "He had this old-school mentality that you should never owe debt to anyone," Snyder says. "He was sticking to his guns that one should get rid of debts at all costs."
Lessons learned: "That was my first introduction in the real world that most people aren't financially literate," says Snyder, who had the benefit of two accountants as parents.
Now he tells that story to friends to illustrate that bad advice can come from well-intentioned people — and the importance of doing research. "Some people might have rolled with it."
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This article originally appeared on NerdWallet.