Tilted Forum Project Discussion Community - View Single Post - Minimilize 401K investment to pay off CCard?

billege · 06-29-2005, 08:29 AM

My wife and I have one remaining source of non-asset debt: 1 credit card with a balance of roughly $3,200.

After this card is gone, the only debt we carry is our mortgage, auto loans, student loans.

The minimum payment on the card is $54.
After paying my motorcycle off last month, we're able to move the funds that were paying for the bike, to the card. Now we're paying roughly $175/month.

Ignoring interest, it will take 18 months to pay $3200.

We invest in our 401k at a rate that works out to $200/month. It occured to me that investing $200/month earning 8%-ish is not necessarily a good idea vs paying interest on debt at 15%.

We're tossing around the idea of minimilizing our 401K investment, freeing up about $200/month. Then we'd add that to the $175 we're already paying on our card. The accelerated $375/month rate pays $3200 in 8.5 months.

The question I put to you fine people is:
Is it worth suspsending 401k investment for 9 months to pay off our last remaining debt?

Keep in mind, we're 26 and 25 years old, and have our 401k as our primary investment at this time. We've been investing "heavily" in that for 20 months. It's not bad for a pair of kids.

Both of us are in college (again), student loans are going to need to have some interest payments (the unsubsidized loans). Freeing up the monies we're paying on that credit card would be very nice. Waiting 18 months to free that up is not a prospect we're happy about.

Thoughts?

06-29-2005, 08:29 AM	#1 (permalink)
billege Watcher Location: Ohio	Minimilize 401K investment to pay off CCard? My wife and I have one remaining source of non-asset debt: 1 credit card with a balance of roughly $3,200. After this card is gone, the only debt we carry is our mortgage, auto loans, student loans. The minimum payment on the card is $54. After paying my motorcycle off last month, we're able to move the funds that were paying for the bike, to the card. Now we're paying roughly $175/month. Ignoring interest, it will take 18 months to pay $3200. We invest in our 401k at a rate that works out to $200/month. It occured to me that investing $200/month earning 8%-ish is not necessarily a good idea vs paying interest on debt at 15%. We're tossing around the idea of minimilizing our 401K investment, freeing up about $200/month. Then we'd add that to the $175 we're already paying on our card. The accelerated $375/month rate pays $3200 in 8.5 months. The question I put to you fine people is: Is it worth suspsending 401k investment for 9 months to pay off our last remaining debt? Keep in mind, we're 26 and 25 years old, and have our 401k as our primary investment at this time. We've been investing "heavily" in that for 20 months. It's not bad for a pair of kids. Both of us are in college (again), student loans are going to need to have some interest payments (the unsubsidized loans). Freeing up the monies we're paying on that credit card would be very nice. Waiting 18 months to free that up is not a prospect we're happy about. Thoughts? __________________ I can sum up the clash of religion in one sentence: "My Invisible Friend is better than your Invisible Friend."