Don't know what he is thinking...
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Don't know what he is thinking...
| Sun, 09-26-2004 - 4:04pm |
My husband got his raise in pay. I was thinking...Yeah...pay off debt with the extra cash without any thought of what to do with it. Well what does he do? He decided to figure out the amount of money that would be coming in that we aren't used to...he moved that "extra" cash to his 401k, so that we never even see it. Why????? I don't understand, wouldn't it make more sense to pay off debt with the extra cash, then after that add to the 401k?
Somebody please make some sense of this for me? I know that he is trying to save save save...but come on now, wouldn't it make more sense to pay off debt first then save. If you think of all the interest rates that are now, and to increase, and the money that they are making off the debt we owe. I can't think of anything better than to use the extra money to pay it off faster.
Trisha

I am not an expert, I am just giving you the positive side of 401ks in an attempt to understand your DH's decision.
* 401k contributions are tax exempt, which means you will actually be getting all of the raise since there will be no income tax on it. It also prevents your raise from raising your tax bracket, and costing you money in taxes.
* Does your company match 401k contributions? dollar for dollar or percentage wise, its hard to pass up free money
* Compounding interest works in your favor. (Instead of against you like with credit cards). There is a chart in our brouchure showing how two people who each invested $600 per year. "Sally" invested $600 between the ages of 25-35 (10 years). "Marc" invested $600 between the ages of 35-65 (30 years). At retirement, Sally had more money because it had more time to grow (and she invested less money).
Undoubtedly, your DH should have discussed it with you. We all worry about different things. Maybe retirement is his financial hot button.
I now understand the reasons behind it better thanks to your "break it down" response. As far as the company contributing to the 401k, they DON'T. They were suppose to in the beginning, talking a big talk about how wonderful it will be that they match the 401k dollar per dollar. They just never followed through with that. So it is just whatever we put into it. The company my husband works for is not family friendly and don't really care if you love your family or not. It is a hidden rule that if you are married or not, the company comes first. So they really string him around and throw us all for a loop once in a while. We just found out that after years of not working Thanksgiving or Christmas, he is now going to have to work those Holidays in another state. The response from the VP to my husband was....."those used to be my favorite Holiday's too, but I got over it, so will you". My husband really is ready for a new job, and even if that means the 60% cut in pay, I really think he won't think twice about it.
I don't blame him, but if we don't get out of debt before he decides to take that jump, I am not quite sure that we will be able to make it. Like I said before, he isn't willing to give up the house, or sell anything we own. I don't see how else we can manage if we don't do something drastic if he changes jobs.
Trisha
I'm thinking that yes, the 401K is nice, but right now, it sounds like you would rather be out of debt. Maybe if you can talk to him about how right now, you all feel dependent on his job, and so therefore have to take what they dish out in order to pay for everything. If you didn't have any payments-I betcha The Job would find itself at a lower priority.
My DH told me a good story this last weekend-it's what we are working toward. He was at a friend's anniversary party, and was talking to the men. One of the guys said, "yeah, I only see my boss for 10 minutes a day. I only have to put up with him for that 10 minutes. Well, Friday, I just didn't make it that far. I only lasted 8." After listening to his boss basically sound like a yappy dog, the guy tossed his hardhat and said, "That's it, I quit. I'm out of here." So, then, the boss looked at the guy and says, 'So, we'll see you Monday, then?" "No, because I QUIT!!!" "well, then, you'll need to go talk to the HR people." "Yep, because I want to be sure that I get paid for all my accrued vacation."
The secret here was that the guy has done extremely well in the stock market, and would be able to live for EIGHT YEARS without touching his principal. He didn't HAVE to work, but he really enjoyed what he did. (He was a non-destructive testing guy) But it really really hit home with me. This guy could walk because everything was paid off-he didn't have to take the crap anymore. It's like my hero, Dave Ramsey says-if you have everything paid off, and no payments, when you've had it up to there, you can simply look at your boss and walk off. When he asks where you're going, you can reply, "Don't have any payments."
yes, this is not how 'normal' society lives, but if how it is seems to be putting this much stress on you, I'd say it was time for a change!
Good luck to you-
Lisa (who is having difficulty with capital letters tonight, lol)
That is a wonderful story. I just might have to share that with my husband. Of course he is out of town right now, but when he comes back I will have to tell him of a little story I heard.
Trisha