DesertDiva wrote: ↑Wed Jun 26, 2019 11:48 am
I agree with his "debt is dumb" mantra. If you have debt, you should be aggressive about getting yourself from under that burden. Sell some stuff on craigslist or eBay. Cut your expenses. Get a roommate. Don't go any deeper into debt, etc.
But giving up the opportunity to get an employer match? No way. It is too valuable of a perk, especially since you will lose out on the "time value of money" -- the match you are given will grow over time. It's a missed opportunity you will never get back.
So instead of focusing solely on the psychological effects of paying off debt, think of the psychological boost of growing your 401(k).
I think it is possible that there are situations where it may be a good idea as others have mentioned. We give away "free" money all the time buy paying in order to prevent catastrophic failure in the form of insurance. Insurance is usually technically speaking a money loser. Life insurance is a waste of money on average, yet we do it anyway. It just depends on how likely the risk is, how bad the outcome could be, and how much we are paying to prevent that risk.
Forgoing your 401k match could be evaluated in the same lens. People who are not responsible with money and who are in dire straits financially, they have a risk of financial catastrophe due to debt, something that you or I probably do not have. If the risk is high enough, it may be worth "paying" in the form of losing your match. In other words:
1. What is the likelihood the debt will cause me financial collapse?
2. What is the outcome if I cannot control my debt?
3. What is the cost of preventing this problem in the form of 401k matching?
Consider all these factors, a majority of people should probably just take the 401k match. However, I think the number of people that would benefit from paying off the debt in lieu of a 401k match is non-zero. Just my opinion anyway.