Contribute to 401(k) vs. Getting Out of Debt

Dear Dave,

Should I continue to contribute to my 401(k) at work up to the match if Im still trying to get out of debt?


Dear Anonymous,

Nope! I know, you probably think Ive lost my mind on this one. Yeah, I know how important it is to take the match in a situation like that. In fact, it still kind of irks me to have to say these kinds of things. Im a math nerd, so I really dont like the whole idea of it very much.

But Ive learned a few things over the years. One of those things is that personal finance is 80% behavior and only about 20% head knowledge. And in the short term, the power of passionately focusing and sacrificing deeply to attack your debt will supersede the mathematics involved where your company match is concerned. In other words, if you stop saving temporarily for a year or two, and in that time wipe out your debts, the power youll gain in being free from those debts will be more beneficial to you than a couple of years of your company match.

I would never tell you to stop investing or doing the company match for 10 years or anything silly like that. But if you stop for just a little while and clean up your mess, then go back to investing for retirement, youll reap so many more rewards down the road. Not only will you have permanently changed your behavior, but youll also be able to invest even more for retirement and other things!


Dear Dave,

Ive tried for years, but I cant convince my husband to plan for tomorrow and stop living just for today. Is there anything I can do?


Dear Candace,

I hate to say it, but I dont think you can convince him. The essence of your question is this: How do I get him to grow up? If hes not willing to delay getting or doing things he wants, thats a sign of immaturity. You guys are probably going to struggle with money as long as he has an attitude of Thank God, its Friday! Oh, God! Its Monday&

Being careful with your money and planning for the future doesnt mean you cant have any fun. It just means you may have to delay certain things for a little while. My wife and I have lots of fun and cool things now. Why? Because we saved like crazy and sacrificed. We lived like no one else, so now were able to live like no one else. In other words, we paid a price to win.

Your husbands problem is that hes not willing to pay a price for a short period of time. That kind of immature thinking is a one-way ticket to a lifetime of mediocrity. And if youre unwilling to pay the price to win, then youre going to end up paying the price that comes with never having paid the price.


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