The gut check between paying off my car loan or investing into my 401k

I had $4,000 saved up last spring and had to choose between paying off the last of my car loan or putting it into my company match. My coworker Dave kept saying the match was free money but I hated that monthly payment so bad. I ran the numbers on a napkin at lunch and realized the match would give me $4,000 extra per year if I put in the same amount. So I dumped it into the 401k instead and honestly I still feel anxious about the car payment every month. Has anyone else had to pick between feeling free of debt vs making more money later?

3 comments

3 Comments

bennett.evan24d ago

So you're saying you set up that separate savings account and it actually helped quiet the part of your brain that hated the debt? Cause I've thought about doing something like that but I worry I'd just end up dipping into it for dumb stuff like takeout or a new video game. How long did it take before you stopped feeling that twinge of regret every month when the payment hit your account?

the_jake24d ago

Dave's right about the match being free money, but that monthly payment gnawing at you is real too. I did the same thing with an old truck loan, still had two years left on it, and every time I saw that payment come out I second guessed myself. The way I got past it was setting up an automatic transfer into a separate savings account that equaled half the car payment each month, so at least I was building a cushion for when the car needed tires or something. That way the math still worked in my head for the long term but I wasn't completely ignoring the part of me that hates being in debt.

ryan_shah3824d ago

the part about being gnawed by the monthly payment really hit me. I did the same thing with an old truck loan and it drove me crazy for months until I realized I had to find a middle ground. Setting up that separate savings account sounds like a smart way to keep the peace with both your future self and your gut.