To contribute or not to contribute?

With the goal of paying off of my debt, I have been wondering whether or not it makes sense to discontinue my 401(k) contributions

Over the last two years, I have worked hard towards reaching the goal of putting as much in 401(k) each year.  Is that a good thing?  I’m not really sure.  I just know that everyone has talked about putting as much in there as you can, but I think the majority of that advice comes when you’re talking about matching contributions.

In Total Money Makeover, Dave Ramsey talks about foregoing contributions to your 401(k) to pay off your debt.  For me, it’s a hard decision.  I could use that money to pay off some debt with interest rates that are pretty low (between 4.99% and 15.99%) or just keep contributing to my 401(k) as I have done in the past.  It’s a closer decision because there are no matching contributions, so the “automatic return” that most people talk about when making that decision isn’t present in my scenario.

To be honest, I will have to research whether the smarter move is to put more in there or just use the money for other purposes.  Even though the value of my 401(k) has suffered in the past few months, I still think saving is a better option, so my 401(k) is almost like my little lockbox.  Money in my savings account is touchable, whereas the 401(k) penalties are pretty hefty.

Here are a few takes that I was able to find from around the net:

• Funding 401(k)s when faced with credit card debt

• The Simple Dollar » Retirement Savings Or Debt Repayment

• Should I Stop Contributing to My 401k to Pay Off Debt?

• Pay Off Credit Cards or Contribute to a 401(k)?

• Six Money Dilemmas

I’m still looking for more about this, but would love to hear your take.  I can see how this creates a dilemma because you can forego some of the future in exhcange for getting rid of what ails you now.  The only problem is that you can’t get that organ back after you donate it.

- broke

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