Added wrinkle: He has two kids, which makes it hard to pay down the debt
I currently have about $315,000 in retirement savings and am 38 years old. I have about $30,000 in consumer debt — about $24,000 of which is an unsecured loan that I’m paying about 10% interest on; the rest is on credit cards that are on a 0% promotional period and that I hopefully pay off before the 0% period expires in October 2020.
My plan for 2020 is to lower my 401 contributions from 15% to 5% and use the additional income to pay down debt. My company contributes 10% no matter what I contribute. What are your thoughts on this?Your issue is a common one: The average personal debt load of people with debt is about $38,000, according to research from Northwestern Mutual. And many of them, like you, are struggling to pay this debt down while also trying to save for retirement.
Frankly, you might even be able to contribute less to retirement if that meant you could pay down debt faster: “Saving money for retirement is incredibly important, but between your savings to date and your company’s 10% contribution , your retirement fund should continue to grow steadily — even if you take a pause from saving altogether and drop your contribution rate down to 0%,” says Amy Ouellette, director of retirement services at Betterment for Business — adding that’s true only “as long...
In general, many financial experts recommend that people with high-interest debt pay that down as quickly as possible, while also putting in at least up to what your company matches in your 401.
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