401(k) versus debt reduction
Next month I will be eligible to start a 401(k) after being at my job for one year. It sounds like a no-brainer, but I am honestly still mulling it over.
Now before jumping all over me, hear me out. There is something to be said for having a clear mind and not having debt hanging over your head. I still have some college loans and credit card debt to pay off, and I have half a notion to clear that before investing in my future.
Yes, I would forfeit the growth potential of my 401(k) during that time but I also would be paying less interest on my loans if I pay them off quicker.
I sat down with a financial services professional last month to discuss whole life insurance. It is another sound opportunity, but I decided to put it off for the time being and stick with just the standard life insurance I have. The lease on my car is up soon so I would like some money handy and the holidays are not that far off.
Doing some research on my financial future, I stumbled upon an adviser's answer to a similar 401(k) versus paying down debt question. The response to the effect of, "Create a tight budget and do both," sounds good. I am all about responsibility but sorry, I am not about to make tons of financial sacrifices.
If I did not drink beer I probably would be in much better physical shape, but that is not going to happen any time soon either. I have some friends who live that way (fiscally, not alcohol-free) and cannot imagine turning down all the fun experiences they have passed up because they were watching their wallets.
My concern is that if I do not at least start my 401(k), though, I may find myself putting it off in the future as well. If I force myself to do it now, even on a small scale, then at least I will have a start.
Anyone else out there have any experiences or advice to share?
---Geoff Nason
