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Current Events > Thinking about pausing 401k until I have debt paid off

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Doe
08/14/25 8:57:54 AM
#1:


$20k car debt on 5 year payment plan

$20k student loan debt in save plan, in "SAVE plan" but now interest is accruing

Really dislike looking at these numbers. My biweekly 401k contribution is currently $345, my employer matches $115 to that... basically whatever I contribute they match 33% of, there's not a cap like some plans have nor any amount of 1:1 matching

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CableZL
08/14/25 9:09:10 AM
#2:


I feel like finding the "right" balance between saving/investing and paying off debt is one of the hardest things. It's a constant nagging concern because, of course, the debt doesn't go away. Every day, you owe a little more on it.

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philsov
08/14/25 9:09:45 AM
#3:


don't. The 33% employee matching is way more gain than whatever single digit interest(?) you're paying with your student debt

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Squall28
08/14/25 9:09:45 AM
#4:


Don't contribute more than the match even if you pay off the loans.

And I think it's a good idea to pay them off.

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KaZooo
08/14/25 9:19:51 AM
#5:


philsov posted...
don't. The 33% employee matching is way more gain than whatever single digit interest(?) you're paying with your student debt
This is how I see it too. Compound that with whatever gains the account makes, it should put you ahead of your loan interest.

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Will_VIIII
08/14/25 9:31:02 AM
#6:


Can you sell the car and get something paid in full with cash? Not having a lein on the vehicle will significantly lower your auto insurance rate.

I'm trying to look at an outside the box solution where you can still save for retirement and reduce debt.

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JTsyo
08/14/25 9:35:10 AM
#7:


Need way more info if you want a math answer. Interest rates, monthly payments, monthly budget.

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theAteam
08/14/25 9:42:44 AM
#8:


Long term what you get back from that 401k contribution+match is much bigger than what you lose on whatever paltry interest you're losing on a 20k car loan

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Bleuets
08/14/25 9:49:34 AM
#9:


philsov posted...
don't. The 33% employee matching is way more gain than whatever single digit interest(?) you're paying with your student debt

I agree with this.
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Will_VIIII
08/14/25 9:54:22 AM
#10:


theAteam posted...
Long term what you get back from that 401k contribution+match is much bigger than what you lose on whatever paltry interest you're losing on a 20k car loan
Car loan interest is ridiculously high these days, this might not be true

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Squall28
08/14/25 9:58:54 AM
#11:


theAteam posted...
Long term what you get back from that 401k contribution+match is much bigger than what you lose on whatever paltry interest you're losing on a 20k car loan

eh it's going to be ages until he sees that 401k and the earnings. Paying off the debt will get him a bunch of cash flow now is going to make his life immediately better for the next 50 years.

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Starks
08/14/25 10:03:20 AM
#12:


Always contribute enough to at least get a full match. Even if it hurts.

Don't leave your retirement on the table.

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Doe
08/14/25 10:05:06 AM
#13:


Isnt "Full match" for people who have a 1:1 match up to a certain percentage?

for mine it doesn't matter how much I contribute... if I do $3 they add $1. If I do $300 they do $100

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eaglei3
08/14/25 10:06:56 AM
#14:


Starks posted...
Always contribute enough to at least get a full match. Even if it hurts.

Don't leave your retirement on the table.

Doe posted...

Really dislike looking at these numbers. My biweekly 401k contribution is currently $345, my employer matches $115 to that... basically whatever I contribute they match 33% of, there's not a cap like some plans have nor any amount of 1:1 matching

Am I misinterpreting what TC is saying or do people just show up with pre written copypasta statements to post in 401K topics?

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KaZooo
08/14/25 10:25:17 AM
#15:


Will_VIIII posted...
Car loan interest is ridiculously high these days, this might not be true
If TC got on a car loan at over 33% that'd be wild.


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xTreefiddy350x
08/14/25 10:30:27 AM
#16:


philsov posted...
don't. The 33% employee matching is way more gain than whatever single digit interest(?) you're paying with your student debt

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whitelytning
08/14/25 10:31:57 AM
#17:


KaZooo posted...
This is how I see it too. Compound that with whatever gains the account makes, it should put you ahead of your loan interest.

This is my take too. Unless there is some crazy interest in the debt I think you keep contributing to retirement.

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fan357
08/14/25 11:01:45 AM
#18:


Dont cut your contribution fully. Maybe by half. But even then will it make that much of a difference toward your debt?

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#19
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Starks
08/14/25 11:19:22 AM
#20:


I would assume it's a 33% match up to 6% of your salary. Usually it's 50%.

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Will_VIIII
08/14/25 11:33:17 AM
#21:


KaZooo posted...
If TC got on a car loan at over 33% that'd be wild.
Well I think he's either mistaken or miscommunicated the actual company match

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#22
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archizzy
08/14/25 11:46:01 AM
#23:


[LFAQs-redacted-quote]


It's the no cap I think is incredible. While mine isn't a 401k it is something similar through my work called TIAA-CREF and my work not only does a full match they double it so in reality it is a 200% match for up to 5% of your salary. Like I'm super happy about my 200% match but if he has no cap? Jesus that is incredible. I only spend like 20% of my monthly check. I would be dumping that other 80% of my money into my retirement every month if there was no cap. That is amazing.

It is one of the key reasons I chose this job for the long term benefits vs working at a city utility where the $ per hour is more. Because my retirement stomps theirs into the dirt and because I have free and good health insurance. Well it was free the first 22 years. The last 5 years they started charging us but it is $20 a month. Plus better schedule, robust vacation, 18 paid sick days a year outside of vacation earning yada yada.

My long term retirement choice is paying dividends now though. I'm way ahead of the curve for my age group for retirement.

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Compsognathus
08/14/25 11:50:59 AM
#24:


If you aren't incorrect about that match then you should absolutely keep contributing to your 401k. That return on investment is so much better than whatever your interest rate is, focusing on your debt would be costing you money in the long run. And frankly, that's probably true even if you were only getting a more standard 50% up to 6% match.

Really the only time you should focus on debt repayment over a 401k is if the debt is likely to prevent you from paying other living expenses in the present. But if you are able to pay your bills and make your required debt payments then you really should be focusing on your 401k, at least enough to make sure you are getting the full employer match.

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archizzy
08/14/25 11:51:35 AM
#25:


I wanted to keep my thought on this separate from my previous reply to another post. No way in hell would I pause contributions to my retirement. Ever. The long term gains with compound interest should make you a multi-millionaire. It will outweigh what little amount of debt you are talking about.


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Will_VIIII
08/14/25 11:53:52 AM
#26:


archizzy posted...
I wanted to keep my thought on this separate from my previous reply to another post. No way in hell would I pause contributions to my retirement. Ever. The long term gains with compound interest should make you a multi-millionaire. It will outweigh what little amount of debt you are talking about.
This is where I would circle back to my first post then about looking into selling the vehicle with the loan, getting something paid in full if possible, to then lower the insurance rate. That opens up the opportunity to contribute more to retirement, or knock out the student loan faster. Or even divy that up 50/50 once that debt is gone.

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pretzelcoatl
08/14/25 2:05:52 PM
#27:


philsov posted...
don't. The 33% employee matching is way more gain than whatever single digit interest(?) you're paying with your student debt
Real. At least cap the employer contribution max, then focus on debt over 5% APR

5% is about the average return rate for money in the market, so if you have loans over 5% it's better to pay that down fast as you can rather than invest that money (imo)

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fan357
08/14/25 2:09:27 PM
#28:


Wait theres no contribution cap? What the bell

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pretzelcoatl
08/14/25 2:10:56 PM
#29:


Will_VIIII posted...
Car loan interest is ridiculously high these days, this might not be true
It really depends on your credit + your down-payment. We're not getting 2% interest rates anymore, but I think reasonable rates are floating around 6 or 7%
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CARRRNE_ASADA
08/14/25 2:33:58 PM
#30:


Its no big deal if you can afford them. If anything just contribute a bit less.

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misterbum
08/14/25 3:35:59 PM
#31:


philsov posted...
don't. The 33% employee matching is way more gain than whatever single digit interest(?) you're paying with your student debt
This.

Never leave the company match on the table. Always try to max that out at all times, however you need to do it.

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ReturnOfDevsman
08/14/25 3:56:40 PM
#32:


I thought this too, once upon a time, but no. Employer match is downright overpowered. You're gaining years of interest instantly, on top of whatever interest it actually accumulates.

Let's say your 401k makes 5%. The 33% match is the same as if you deposited the money six years ago.

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