Making a compromise
So how do you satisfy the 401k match while paying off the credit card? First off it all depends on how much credit card debt you have and the interest you're paying. The rule of thumb you should have is this: if you're paying more in credit card interest that what you can earn in your 401k plan, you should concentrate on paying the card off first. Forego the 401k plan and participate when you can afford it. Since an employer match is free money you still can't let it pass by unless you're so badly in debt. For the most part this is the plan you should follow: participate in 401k only up to the match and that's it.
Suppose that your employer will match up to $3,750 a year and you are paid biweekly with a $52,000 salary. The best way is to spread out the matching contribution through the whole year as in the table below.
|Gross Pay||Percent||Biweekly Amount|
So $144 every two weeks will be right around the $3,750 satisfying your goal. The reason to spread the 401k contribution throughout the entire year is for a few reasons: First you probably cannot afford to take a large amount from your paycheck otherwise you wouldn't need the credit card anyway. Second, a smaller amount each paycheck leaves more money to pay down on the credit card interest. Once you get your card paid off you can establish a more aggressive contribution to your 401k plan.
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