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Reply to "Reducing 401(k) contribution -- s/o"
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[quote=Anonymous]I did some calculations and if I did them correctly, you should NOT withdraw, and you should reduce your monthly 401k pay contributions to the minimum that earns you the match, and pay off the debt with the balance. This assumed debt of $9500 (the amount you would pay back), rate of return on th e401k of 10 percent, and interest rate on debt of 20 percent. If you do what I recommend, the net value of your 401k ($14,250 + monthly contributions of $375 (yours plus match) at 10 percent would be $20,500. At the same time you would have paid off your $9,500 of debt so that it would equal about $3,100. Your net worth would be about $17,400 (401k balance minus debt). For comparison, your plan would give you a net worth in a year of $12,800. [/quote]
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