I don't have any qualms about sharing my financial info here because I have relative anonymity, so rather than laying out some complex scenario, I'll just post the facts. I have 35,000$ in debt that I acquired while jobless a while back. It is split between 2 credit cards at 12%APR and 10.9%APR. Now my company offers 401K matching at 50% up to 6%, so if I contribute 12%, they will contribute 6%. I am currently paying ALL of my extra money to the credit cards to get them payed off faster. If I contribute anything at all to the 401K, it will be coming from the surplus I am currently using to pay the debt, thereby increasing the length of time to get them payed off and the amount I will be spending in interest.
So far all of the friends/family I have talked to say that I am lucky to have 401K matching and that I should contribute, but I am not so sure. In my mind, if the interest I am paying in debt is higher than the interest I am receiving from the 401K then I am losing. I think I should not contribute a dime until I am debt free. Am I right or am I wrong? why?
and...
In the online literature I was provided for the 401K they had a little calculator for how much you will save up by the time you retire, given a projected yearly raise and a given contribution percentage. In my case, assuming I work 30 years, it worked out to about 1.5million. Now, if you assume I started work in 1980 and I am retiring now, take the rate of inflation from where it was back then to now, then apply that to the 1.5M, in 2040 that 1.5M will have the buying power of about 250,000$ 2010 dollars. That's hardly enough to live 5yrs. So what I am I contributing for? I was thinking that LAND never depreciates. It will always stay at or above the value you bought it at (regardless of inflation), so if I were to take the 1.5M and save it over the years, periodically buying random plots of land near the outskirts of growing cities, wouldn't I be better set up to retire, selling the land as necessary to live comfortable? should I forsake the "generous" offer I have on the table in pursuit of what others would consider folly?
What do you think?
So far all of the friends/family I have talked to say that I am lucky to have 401K matching and that I should contribute, but I am not so sure. In my mind, if the interest I am paying in debt is higher than the interest I am receiving from the 401K then I am losing. I think I should not contribute a dime until I am debt free. Am I right or am I wrong? why?
and...
In the online literature I was provided for the 401K they had a little calculator for how much you will save up by the time you retire, given a projected yearly raise and a given contribution percentage. In my case, assuming I work 30 years, it worked out to about 1.5million. Now, if you assume I started work in 1980 and I am retiring now, take the rate of inflation from where it was back then to now, then apply that to the 1.5M, in 2040 that 1.5M will have the buying power of about 250,000$ 2010 dollars. That's hardly enough to live 5yrs. So what I am I contributing for? I was thinking that LAND never depreciates. It will always stay at or above the value you bought it at (regardless of inflation), so if I were to take the 1.5M and save it over the years, periodically buying random plots of land near the outskirts of growing cities, wouldn't I be better set up to retire, selling the land as necessary to live comfortable? should I forsake the "generous" offer I have on the table in pursuit of what others would consider folly?
What do you think?