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Author: superbooma Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25317  
Subject: Pay off debt or invest in 401k? Date: 7/1/2001 12:15 PM
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I need some Foolish opinions.

I have $6000 in credit card debt. I need to choose a strategy for paying this debt off. (See below)

Plan 1
Payoff credit cards in 8 months
Cost of $455 in interest.
Contribute $2500 into 401k (months 8-12)
Defer approximately $700 income tax.

Plan 2
Payoff credit cards in 12 months
Cost of $741 in interest
Contribute $7500 into 401k
Defer approximately $2100 in income tax.

To truely make a fair decision I believe you have to compare the two plans over an equal time frame. If this is the case then Plan 1 would have $2500 in my 401k after 12 months also.

I guess the question comes down to this. Is it ALWAYS better to pay off your credit card debt COMPLETELY before you start investing?

Thanks for your advice in advance,
Fool On!
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