Thinking about pausing 401k until I have debt paid off

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Current Events » Thinking about pausing 401k until I have debt paid off
Doe
08/14/2025
08:57 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
08/14/2025
09:09 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
08/14/2025
09:09 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
08/14/2025
09:09 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
08/14/2025
09:19 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
08/14/2025
09:31 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
08/14/2025
09:35 AM
#7
Need way more info if you want a math answer. Interest rates, monthly payments, monthly budget.
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theAteam
08/14/2025
09:42 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
08/14/2025
09:49 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.
Will_VIIII
08/14/2025
09:54 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
Advice from a dryer: Open the door to amazement. Don't shrink from your true calling. Accept life's wrinkles. Avoid overload. Reach into mystery!
Squall28
08/14/2025
09:58 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.
You can't go back and change the beginning, but you can start where you are and change the ending.
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Starks
08/14/2025
10:03 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
08/14/2025
10:05 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
https://imgur.com/gallery/dXDmJHw
https://www.youtube.com/watch?v=75GL-BYZFfY
eaglei3
08/14/2025
10:06 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?

KaZooo
08/14/2025
10:25 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.

Competing every night, both ends, shoot inside/outside, fast break, transition, Monta Ellis have it all
xTreefiddy350x
08/14/2025
10:30 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

whitelytning
08/14/2025
10:31 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
08/14/2025
11:01 AM
#18
Dont cut your contribution fully. Maybe by half. But even then will it make that much of a difference toward your debt?
Never forget where you came from.
#19
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Starks
08/14/2025
11:19 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
08/14/2025
11:33 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
Advice from a dryer: Open the door to amazement. Don't shrink from your true calling. Accept life's wrinkles. Avoid overload. Reach into mystery!
#22
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archizzy
08/14/2025
11:46 AM
#23
Asherlee10 posted...
33% match is incredible. I've never heard of this.

I have a 401k through my own company and my company matches my contributions at 10% lol

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
08/14/2025
11:50 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
08/14/2025
11:51 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
08/14/2025
11:53 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.
Advice from a dryer: Open the door to amazement. Don't shrink from your true calling. Accept life's wrinkles. Avoid overload. Reach into mystery!
pretzelcoatl
08/14/2025
02:05 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)

fan357
08/14/2025
02:09 PM
#28
Wait theres no contribution cap? What the bell
Never forget where you came from.
pretzelcoatl
08/14/2025
02:10 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%
CARRRNE_ASADA
08/14/2025
02:33 PM
#30
Its no big deal if you can afford them. If anything just contribute a bit less.
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misterbum
08/14/2025
03:35 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
08/14/2025
03:56 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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Current Events » Thinking about pausing 401k until I have debt paid off