+17 votes
by (1.2k points)
Two questions please (sorry it is long). I work at a hospital and my employer is having to make some adjustments because we did not get a surge. First they are no longer matching our retirement money til the end of the year. I normally put 6% because that's what they match. Should I keep putting the 6 percent in or lower it since there is no match? Second question. I know borrowing from retirement is frowned upon. Don't judge, I already have one for 10k. I'm paying 400 a month on a 4 percent interest loan. Because of covid I can defer payments until December. I'm wondering if it would be smart to do that so I can put that 400 a month towards my 10k credit card with a 16 percent interest rate?  
Two questions please (sorry it is long).

17 Answers

+16 votes
by (19.7k points)
 
Best answer
I would keep putting that money in even without a match-you'll be glad you did later. I would not remove money.  
by (10.1k points)
@kurdistan What about the debt? Pay the 16% credit card or 401k loan?  
by (19.7k points)
@fredericksburg that i do not know for sure.  
by (10.1k points)
@kurdistan It would be far better to pay off a credit card at 16% interest than to put money in the stock market that earns less.  
+3 votes
by (4.6k points)
What kind of retirement fund is it? A 401(k)? A Roth 401(k)? Retirements accounts have a hierarchy. Roth 401(k) is best, then 401(k) with match, then Roth IRA, then 401(k) without match, then IRA. So it depends on what account you already have. If it’s a 401(k) without match at the moment, I’d switch to a Roth IRA and then switch back to the 401(k) once the match starts up again.  
by (4.6k points)
Oh, and no, pay off the 401(k) loan first. If you were to lose your job, the entirety of it would become due almost immediately. Get that sucker paid off ASAP.  
+3 votes
by (1.9k points)
That’s a sticky one! I’m a fan of contributing anyway; just a few more months when they won’t match & you’re still investing. Unlike many people I’m also all for having a 401K loan out because simply by paying it back every month you’re increasing your purchase power in your investments. Yes, it is after tax but when would you be buying in if you weren’t? Tough choice but maybe a combo of both paying the card down & contributing. Maybe the card company can work with you as well, due to covid? Come December, your employer may decide not to match anymore either. This is the first time we’ve all been through something like this & I don’t think we can count on something like that.  
+2 votes
by (10.1k points)
I would pause your retirement contributions since there is no match. Pay off the credit card with your 401k contributions and $400.  
+13 votes
by (1.7k points)
If no match, don't contribute. Invest your money in a Roth IRA instead (you have more control over your investments). Pay 401(K) loan first always, because if something happens and you lose you're job, you have the pay back the entire loan all at once. Credit cards sucks but 401(K) loans are worse to not pay.  
+11 votes
by (8k points)
I’d keep putting the money into a retirement account somewhere- whether it continues to be your 401k or you choose a Roth or Trad IRA is up to you depending on your individual circumstances. I’d continue paying back the loan ASAP and try very, very hard to not borrow from there again,  
+4 votes
by (2.7k points)
When you defer a payment, is it still earning interest? When it comes due will you owe the amount you didn't pay during the deferral period?  
+13 votes
by (3.3k points)
Instead of contributing, pay more on the 401k loan.  
+15 votes
by (9.2k points)
I would stop contributing for now and use that money to pay off your retirement debt. Otherwise its like asking should I buy my car out right and continue to pay the lease on it?  
+2 votes
by (4k points)
Contribute anyway. Don't steal from Peter to pay paul. Keep the course.  
+7 votes
by (8.8k points)
I would not pause. Unless you are in a Roth IRA, your 6% is pretax money so you will not see a 6% increase in your check and you lose the tax incentive of reducing your gross income which will increase your tax burden/lower refunds. Plus, you are contributing when the market is lower which results in greater stock purchases. I made this mistake in the 90’s and pulled my contributing amount from Home Depot stocks and they dropped to under $20 a share and when they restructured they split 2 for 1. The shares sit at over $200 a share and had I left my plan alone, I could have retired by now, with millions (I have worked there for 23 yrs)
0 votes
by (7.6k points)
I would pause contributions and pay back the 401k loan ASAP. Then I would. restart contributions and tackle that cc debt.  
0 votes
by (9.1k points)
I think it depends on how intense you want to get on paying back the 401K. We dropped 401k contributions down to the match bc we are killing our debt this year. We do not have one, but if we had taken a loan against our 401k that would be first priority on the debt pay down, then the credit cards.  
+3 votes
by (1.2k points)
My retirement plan is a 403b. I dont really know the difference between a 401k and a 403b. My intention was to get out from under these credit cards and then put more into retirement once I have more money freed up.  
by (9.1k points)
Usually a 403b is a non-profit organization.  
+16 votes
by (4.4k points)
Sorry to hear about the adjustments, I’d continue to pay on the retirement loan as if heaven forbid they do lay offs the loan amount on your retirement would be due immediately  
+3 votes
by (4.5k points)
Do you work for R1? I’m still contributing without the match. I would not pause your contributions because you’ve already taken a loan. Keep making the loan payments if you can afford to. You don’t want to get further “behind” if you can help it.  
+8 votes
by (14.7k points)
Keep putting in the retirement. Defer the payment but keep paying half and then pay the 0ther 200 to your cc debt. I also work for a hospital and am going through the same thing except my debt is lower
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