Here are the reasons that I am doing it. They might not work for everyone, but they work for me and Pants. I am well aware that many financial gurus say this is not the right move, but here's why it is the right move for us.
- We have no money at the end of the month. Every dollar currently is going to pay off minimum balances and our expenses. We are trying to cut expenses, but we need a little extra to get things moving. I need that money to be able to pay things off. Although I know I am losing money in the long run, I need that extra money each month now.
- I have 30 years of work left. Stopping my contributions for 1 year (while still paying my 401k over $200/month in the form of payments on three loans I have on it) will not kill my retirement plans. Also, when Pants and I didn't have kids, we were both contributing 16% of our income to our retirement from the time we were first eligible (approx. age 23 or so), so we feel we're ahead of where many people our age might be.
- This step represents the ultimate commitment to us. We better be damn sure we're doing everything we can to get our debt paid down as fast as possible if we stopped our 401k contributions to do it. Every time I look at a McDonald's or think about Target, that is the one thing that runs through my head - is this worth my retirement? Is it worth my 401k?
3 comments:
That sounds like you have really thought about it and are comfortable with your decision as what you need to do now. I'd just be cautious about letting that one year of no 401k contributions _unintentionally_ turn into more, you know? But otherwise your arguments sound really true and valid to me, based on what you've said about your situation.
I think that those arguments are completely valid too and I would totally do the same thing as you. Just don't forget to start contributing again once you've got the debt paid off.
Moving contributions up to 15% of your income is part of the 7 step plan. We're only in step 2. I'll list out the steps in a future post.
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