I've regularly heard the best advice for a young professional is to max out your employer's 401k contributions (maybe 3-5%, or limited in some way), then focus the rest on paying down debts. After the debts are paid, you increase your 401k contributions.
However I'm in an unusual position in that my employer matches 100% of what I contribute during the year as a single lump contribution in December, up to the federal maximum ($19.5k as of right now).
Does this classic advice still hold true in my unusual case? In the future, if I get a raise, how do I figure out where I should put that extra money (paying down loans vs adding to 401k)?
Basic details:
- Age: 28
- 401k balance was ~48k, now ~$36k in the midst of this pandemic
- Total of loans is $44k, currently making payments of $670/mo targeting the highest interest rate loans
$ 2.6k @ 6.5%$ 27.3k @ 5%$ 14.2k @ 3.1% — 4.4%(several smaller loans here, split up among these rates)
- 401k contributions are at $12k/year
- Current mortgage principal is $172k with ~30k home equity
- Cars are both paid off