No. of Recommendations: 0
Hi! I've found the advice here invaluable and thought I'd finally post and ask for some more personalized advice.

I'm about $30k in debt, down from about $40k (don't have exact figures here). All my debt has been balance transferred to cards where I'm paying either 3.9% or 4.9% for the life of the BT. I am not currently using my cards and not incurring any additional debt. Took me a long time to get to this point. I also have a $12k 401(k) loan that I took out 3 years ago and am making payments to my former employer monthly on that. I am in a position to snowball (slightly) my highest interest (4.9%) card and am finally making some progress on my debt. My car payment ($250/mo) to my inlaws for my car will be done in 3 months, and I will use that to snowball as well. On my current schedule, I should be out of debt in about 3 years, and have the 401(k) loan paid off about the same time.

In the past, I've contributed to my company's 401(k) account. My husband and I get hit by the "marriage penalty" on taxes as we own no real estate nor have any children and make an identical salary. I've been contributing (what I can) to my 401(k) for years to help offset this some. For the past year I've had no 401(k) as I changed jobs and was not eligible for a year. I am now eligible to start up the plan in my new job and am considering how to prioritize this.

I'm 43 years old and have $68k in my old 401(k) account. That's more than a lot of people, but really pitiful for someone my age. I know I need to save for retirement, and I know I could use the tax savings. I always thought I was better off getting a tax break by contributing (and adding to retirement) than simply increasing my withholding amounts to cover my taxes. But I also need to pay down my debt. My company does not match the 401(k) but instead gives a "discretionary contribution" at the end of the year whether we participate or not.

Would I be better off holding off on retirement savings right now and continuing to pay all that I can to debt (and also needing to pay a higher withholding on taxes)? Or should I start up the 401(k) and pay less to debts? Or an entirely different strategy?

Thanks for your advice!

Print the post  


UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.