Jun 17, 2007
Question of the Week: Should You Pay Off Credit Cards First or Invest in a 401(k)?
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The Question of the Week examines some aspect of personal finance where reasonable (and not so reasonable) folks may disagree. Post your responses to the question as comments, and I’ll summarize your views and mine at the end of the week.
Let’s assume an individual has $10,000 in credit card debt at 14.99% interest and their employer matches 401(k) contributions dollar-for-dollar up to 6% of gross pay. Should this person:
- pay off his or her credit cards first before investing in the 401(k)
- invest at least 6% in the 401(k) immediately to take advantage of the employer contribution
- or take some other approach?
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