401(k) contributions or debt reduction?[ Edited ]
I currently put about $1,100 per month into my 401K. Should I reduce this, and use this money to reduce debt, or should I continue the 401K contributions at the current level?
Wow, I'm excited that you're socking away $1,100 per month into your 401(k). An Employee Benefit Research Institute survey from earlier this year indicated that 57% of workers had less than $25,000 in savings (excluding their home & pensions) and that trend is a big problem...a problem that you appear to be on course to avoid. Well done!
Without having a better understanding of your debt, it's difficult to provide a specific answer your question, but here are a couple of guidelines that should help you chart your course.
First, if you decide to temporarily reduce your 401(k) contributions, keep those contributions at a level that at least allows you to take full advantage of any matching contributions your employer offers.
Second, consider reducing your contributions while you eliminate credit card and other high interest debt. It makes sense to be aggressive in your efforts to knock out this type of debt. On the other hand, a more balanced approach (between retirement saving/debt elimination) is in order when it comes to mortgage debt or student loans.
Keep up the good work as you build your retirement nest egg and clean up your debt. Good luck.