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I did it, good, bad or otherwise

November 16th, 2009 at 10:57 pm

I have gotten many responses to our idea of minimizing my contributions to my 401K and thought I would input some of our thoughts and expectations with doing this. As of today, I did go ahead an lower my contributions to 1%. This will free up approximately $230/mo. of which we will set up our emergency fund. When that fund hits $1,000, we will use the additional funds to service credit card debt and a vehicle loan.

I know this is not what you are supposed to do but at our age we think we will be able to make up for lost time. We are currently 32 years old so we are a long time out for retirement. My 401K has been generously contributed to for the last 5 1/2 years with myself contributing 6% with a 6% employer match, so we do have a significant balance on account as of today.

We are currently going to keep our HD. But we will look at that again next month.

Posted in Personal Finance | 6 Comments »

6 Responses to “I did it, good, bad or otherwise”

  1. homebody Says:
    November 17th, 2009 at 12:26 am 1258417577
    1258417577

    Eek you are giving up 6% of your salary in free money??? Can't you find the money some other way. Post your budget, hopefully we can help you find it.

  2. creditcardfree Says:
    November 17th, 2009 at 12:35 am 1258418119
    1258418119

    Homebody makes a good point about missing out on the company match! Let us know if you'd like us to look at your numbers.

    Do you have things you could sell around the house on ebay or craigslist to get your baby emergency fund in place? I have made over $2000 on ebay over the course of the last couple years. Kids clothing, especially name brands, sell extremely well on ebay.

    It's great that you are making the commitment to get your finance on the right track!

  3. whitestripe Says:
    November 17th, 2009 at 02:12 am 1258423979
    1258423979

    i am not sure how retirement accounts work in the US, but here, even though you put money IN your superannuation account, the market and economical times dictate how much there actually is when you go to withdraw - whether it be a lot more or a lot less. are the retirement account different over there? are you 100% guaranteed to have ALL of that money there when you retire? or is it a risk you take like it is here? i do not understand why people strain themselves financially to contribute to something that is uncertain.

  4. baselle Says:
    November 17th, 2009 at 06:06 am 1258437983
    1258437983

    Please think of it as a jumpstart only. Do it for 3 months, then return back to your original % no matter what your EF level at the end turns out to be.

    My fear is that you'll wait until you get that magic 1K. However we all know that fate will deal something big for you at $900. You then spend your EF (which is what its there for), then hold off a bit more. Then you realize that you'll take a tax hit because 401K contributions are tax deferred, and you'll need the EF for that, and you hold off still longer. Then you really have screwed yourself over.

    3 months that's it.

  5. baselle Says:
    November 17th, 2009 at 06:27 am 1258439257
    1258439257

    Matter of fact, I'm going to remind you to switch back at the end of February, 3.5 months from now.

  6. Broken Arrow Says:
    November 17th, 2009 at 01:18 pm 1258463916
    1258463916

    Something necessary, but coming at a terrible price....

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