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New Year, New Job (401k VS CC)

Anonymous
Not applicable

Re: New Year, New Job (401k VS CC)

 wrote:

I was laid off in 2017 Dec, I was forced to withdraw from my 401k - everything of it! I used the 401k to stay afloat In 2018, my CC debt  reached approx 30k (715 Fico)
I got a very good job in Jan 2019 - THANKFULLY. My employer has a VERY generous 401k plan ( matches 100% of the first 4%, and 50% of the next 4%.), should I start to contribute to it OR should i first pay off all my cc debt first AND then sign up for the 401k.? Im also making about 84k annually
 
Thanks!

What is the balance on credit cards and what is the weighted average interest rate?
Are you still in a promotional rate period?
20% would not be an atypical interest rate outside of a promotional period.
20% of $30,000 is $6,000.
Message 11 of 13
coldfusion
Community Leader
Super Contributor

Re: New Year, New Job (401k VS CC)

I'd suggest you sign up for the 401K for a token amount now (1%) and adjust upward later at the next open period when your debt load is more managable.

 

Besides the credit card debt, have you determined how you are going to fund your upcoming tax liability? Assuming you were under 55 when you made the withdrawal from the old 401K plan, i.e. no Age 55 Rule or age 59-1/2 exemption applies, you also have to consider the 10% early withdrawal penalty since the job loss wasn't due to disability. 

 

 

 

 

 



(4/2021)
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Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion
Message 12 of 13
BiwoAfr
New Member

Re: New Year, New Job (401k VS CC)

An update:
So before I made this post, I decided to put 10% of my wages into the 401k. Today I notice that they are taking out about $322 every two weeks.. that's approx $600 a month, I do some free lance work and I've been very aggressive and paid off 4000k on that debt. $600 can go a long way to pay this debt off. So I am going to forfeit the 401k for now until I'm really caught up.
Thank you for the advice.
I'm paying heavily for the early 401k withdrawal ☹.. so it is pointless to contribute to it at this crucial moment. I will come back to contributing once my debt is at about 5k .
Message 13 of 13
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