Quote:
Originally Posted by Bizzymammabee  
Actually paying into that 401k is very beneficial to you. First off if you look at your stub the money is taken pre-tax thus bringing down the amount of taxable income you have for the IRS to tax. If you don't opt for the 401k then your taxable income is higher and the IRS gets more and odds are you would still not see that money because they would suck a huge portion of it out anyhow.
Plus the added advantage is the free extra money you get. With my firm they do a matching up to 4% that we put into it with 2% percent of their money. So while I contribute 4% of my bi-weekly paycheck I actually get 6% put into my account bi-weekly.
Also a 401k is a good way to ensure you will be able to eat when you retire. |
I don't have the option of being in a 401K, but I would do a Roth IRA or regular IRA IF my debt was paid off. I would take the match but that's it - although most matches require you to be at a company for a certain number of years and nothing guarantees that.
Sure it's pre-tax and it's great that they match, but unless the debt is interest free it really doesn't work out all to be that much better than paying off the debt. Plus, if you have to borrow from yourself could you really afford to contribute to it in the first place? It obviously doesn't grow interest when you borrow from it.
Once my debt is paid off I'll be able to fully fund emergency, savings and retirement accounts rather than paying $50/month.
I'm totally not trying to attack you at all. It just sounds like one of those situations where it sounds like it makes sense - like not paying extra on your mortgage because mortgage interest is tax deductible. In reality, having a mortgage just for the write off is like saying you are going to pay the bank $1 so you don't have to give the IRS 25 cents.
I just think it makes more sense to pay off the debt, not take out any more, and build up savings and emergency funds before trying to save for retirement.