Should I Contribute to My 401k or Pay Off Debt?
Be Wealthy & Smart
Linda P. Jones
4.8 ā¢ 883 Ratings
šļø 26 June 2019
ā±ļø 8 minutes
šļø Recording | iTunes | RSS
š§¾ļø Download transcript
Summary
Learn the math behind this decision that makes the right answer obvious.
Recently a question was asked on a financial page, "Should I still contribute up to the match to my 401k at work...if I'm in the process of trying to get out of debt?"
I disagreed with an expert, find out why.
The link to the article is here.
Here's what I calculated:
Contributes $5,000 per year for 3 years (age 27 - 30). Gets a 6% match annually, which is $300. $5,300 x 3 years @ 10% interest = $18,656. Compound that for 35 years @10% and it equals $521,721.
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Transcript
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| 0:00.0 | Be wealthy and smart, episode 582. |
| 0:02.8 | I'm gonna live no rich life. |
| 0:06.8 | Rich life. |
| 0:07.8 | If you all know what I mean, put your hands up and declare with me |
| 0:13.6 | yeah I'm full of best I'm gonna live a good life I'm gonna live a good life |
| 0:21.1 | a beautiful and glorious life Step into a world of wealth and wealth and financial freedom without budgets, boredom or bosses on |
| 0:31.0 | be wealthy and Smart. |
| 0:33.9 | And now here's your host, Linda P. Jones. |
| 0:38.0 | Welcome to Be Wealthy and Smart. |
| 0:39.5 | I'm Linda P. Jones, America's Wealth Mentor. |
| 0:41.7 | Empowering women and men worldwide to financial freedom. |
| 0:45.0 | On today's show, we're going to answer the question, should you give up your 401k match to pay down |
| 0:50.6 | debt? |
| 0:51.6 | Now recently I saw this was a question on a financial page and I saw how one expert |
| 0:58.0 | answered this and I have to say I completely |
| 1:05.0 | different opinion on this and I'm gonna give you the math to back it up. |
| 1:11.0 | So here's the thing, I don't have all the details on this person's |
| 1:15.2 | situation. All we know is that it's a young person who says, |
| 1:19.7 | should I still contribute up to the match to my 401k at work if I'm in the process of trying to get out of |
| 1:25.5 | debt. The expert responds that they should give up their 401k match and they should focus all their attention on their debt. Here's why I disagree |
| 1:36.2 | with that. Let's say this person is 27 years old and let's say they have an employer |
| 1:42.3 | match of 6% which is typical of many employers, if employers |
... |
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