Fund 401k While In Debt?
Carrie and her husband need to stop funding their 401k until they pay off all their debt except the house.
QUESTION: Carrie and her husband have $30,000 in credit card debt, $13,000 in a home equity loan, and a $70,000 mortgage. They stopped paying on the credit cards last year. They bring home $50,000 a year and they have a 401-K. Should they keep funding their retirement while they have this debt?
ANSWER: Stop the 401-K immediately and work your way through the baby steps. Only invest in your 401-K plan after you’ve finished paying all your debt except the house.