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psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

rated:
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

rated:
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

rated:
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

rated:
debtblag said:   
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

  What's the interest rate on your remaining debt?  If it's all student loans at <7% I think I'd rather max 401k and IRA then throw everything after that at the loans.  Of course, if you want a house or something that the debt is getting in the way of, that's one thing, but if you're just committed to bettering your financial situation then I think you'll be better off 30 years down the line by maxing retirement and taking longer to pay off the loans.  Either choice is great though.

rated:
psychoslowmatic said:   
debtblag said:   
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

  What's the interest rate on your remaining debt?  If it's all student loans at <7% I think I'd rather max 401k and IRA then throw everything after that at the loans.  Of course, if you want a house or something that the debt is getting in the way of, that's one thing, but if you're just committed to bettering your financial situation then I think you'll be better off 30 years down the line by maxing retirement and taking longer to pay off the loans.  Either choice is great though.

The highest among them is at 7.65% (Originally 7.9% with the 0.25% discount for automatic payments) and my MAGI is high enough that I don't get to deduct student loan interest paid.

Luckily (?!), I have nearly $35,000 of that high-interest debt -- enough that making decisions about <7% debt is something I won't have to deal with for at least another year.

rated:
debtblag said:   
psychoslowmatic said:   
debtblag said:   
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

  What's the interest rate on your remaining debt?  If it's all student loans at <7% I think I'd rather max 401k and IRA then throw everything after that at the loans.  Of course, if you want a house or something that the debt is getting in the way of, that's one thing, but if you're just committed to bettering your financial situation then I think you'll be better off 30 years down the line by maxing retirement and taking longer to pay off the loans.  Either choice is great though.

The highest among them is at 7.65% (Originally 7.9% with the 0.25% discount for automatic payments) and my MAGI is high enough that I don't get to deduct student loan interest paid.

Luckily (?!), I have nearly $35,000 of that high-interest debt -- enough that making decisions about <7% debt is something I won't have to deal with for at least another year.

  Well, you've got 57,800 + 18000 for this year = 75,800.  I'll ignore the match.  You can typically borrow 50%, so you could borrow 37900 which would wipe out the 7% debt.  A loan kind of counts as a bond since it'll return whatever interest rate you're paying, so your asset allocation will be way too bond heavy for a while.  And there's all the limitations about immediate payback if you separate from your employer, and very important, you need to make sure your plan will let you continue to contribute to the 401k with an outstanding loan, some don't.  Also you may not be able to pay extra toward this loan unless you pay the whole thing off.  But if you can live with these limitations and your plan is good it might be worth it.

If you don't want to, 7% is pretty close to the long term average stock/bond return, so your plan to contribute to the match then switch to debt paydown is probably going to give you the best outcome.

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