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Comment From a Reader Regarding My Dave Ramsey Post
By JLP | February 27, 2007
Remember the Dave Ramsey: Give up the 401(k) Match in Order to Pay Off Debt post from a couple of weeks ago?
That post received some excellent comments, one of which was this one from a reader named John:
What I saw my dad do was keep funding his 401k and still using credit cards, without paying off the debt. As his minimum payments went up and up he wasn’t willing to stop the contributions to quit using the cards, and he wasn’t willing to cut his lifestyle either. He ended up with about $65,000 dollars in credit card debt and he had to file for bankruptcy because all his payments were MORE than his paycheck. At this point he was STILL making the employer match. He just retired, and he only has $250,000 to live on. If he had just cut his lifestyle, cut his 401(k) funding for a few months, paid off those cards, he could have started putting in EVEN MORE, and STILL enjoying his luxurious lifestyle without those credit card payments. If you are DEEP in 20-30% interest debt you understand how much damage it does, it’s UNIMAGINABLE.
Personally, I think the cutting of the lifestyle is the key. However, it is one of those things people simply don’t like to do. It sounds to me like John’s dad just didn’t want to pay off the credit cards. In order to get out of debt you first have to WANT to do it.
I guess if you want to look at the good side of things, we should be happy that his dad was able to save up $250,000. Lots of retirees have nowhere near that much money at retirement.
What do you guys think?
Topics: 401(k), Credit, Credit Cards, Dave Ramsey |