Retirement Place Reviews - Retirement versus paying down debt?

Retirement versus paying down debt?

I am 44 years old, single, currently no children. I rent my apartment and have $109,000 in student loan debt and a $22,000 auto loan. The student loan interest is 7.75% (KILLING ME). My income last year was about $115,000. I currently divert $225 per pay check or $5,850/year into my 401K plan for two reasons; to build a retirment plan and to get the tax break. I am wondering if I should be putting this money toward my student loan instead. In January 2009 my student loan interest rate will drop to 7.25%. I do already have about $25,000 in a 100% vested profit sharing plan that is going to be rolled into my 401K and I already diverted about $3,500 into the 401K. I am fishing for general opinions. Should I put every extra penny toward paying down my debt or split my money between paying my debt and saving for retirement? I do put 10% of every paycheck into a savings account for a prudent reserve which is currently only about $4,500 because I keep having "emergencies." Interesting. So far 4 answers, 2 on the pay off debt side; 2 on the retirement side. Hard to know which advice to follow. And why did one person say "thanks for the giggles." What does that mean? This is serious, for me at least. Sorry if anyone thinks it's a joke. Please save sarcasm and criticism for another time. I'm seriously trying to decide what to do. I am going to hire a personal advisor but I already work THREE jobs (that's why my income is where it is). I can't work without a car do please don't tell me to sell my car. Anyway, I will be interested to see more conversation but please no sarcasm. What's the point of sarcasm? It certainly doesn't help me at all. Thanks in advance for sincere replies.

Public Comments

Personally, I'd aggressively save for retirement. The debt goes away when you die. But having no money in life will kill you, especially when you are too old or sick to work anymore.
Retirement Retirement Retirement. You should be able to shop around for a better interest rate on your student loans. I got mine down to 4% a couple of years ago. I'd start looking with the Fed lowering rates recently.
thanks for the giggles. SELL the car- get cash car . get budget and use it. live on 25K$ yr and pay off loans in 3yrs. get a second job and pay off loans. stop (temporally) funding ur retirement unless u want loans to live with u. heck after taxes on ur income if u were serious u could pay loans off in 2yrs or so. visit dave ramsey.com to learn what wasn't taught at 'college' - how to own ur money not be owned by it.
The secret for success is this.......... GET OUT OF DEBT !!!!!! KEEP OUT OF DEBT !!!!! when this is accomplished all else is possible The only place I would say it is OK to borrow is to Buy a residence under the following conditions..... Save up as big a down payment as you can. Get a loan contract that allows you to double up payments and make extra payment with no (or very little) penalty Then pay that residence off as fast as you can (My first house took 4 years, the next house was 3 1/4) You may also borrow for a car under the following conditions You have bought and paid for a residence AND you can pay the car off totally in 1 year, and DO IT. Now you have a residence and no debt, Buy all the 401 K you want, Get additional investment plans, Buy trips with available cash...the world is your oyster I did it, I'm Glad, I am now rich, and nothing can hurt me financially.
Put a portion towards the loan. Set up an amortization for yourself to determine how soon you can pay that off by adding extra to the principle. You might even look into another loan at a lower interest rate. Prime rate just dropped to 2.75. You should be able to beat 7.75. The car loan is collateralized by the car. You may be able to combine the two at a lower rate. Go to this site. Use the amortization template. It allows you to enter additional principal. This is an excel template. You can use it on site or download, free. Play around with it until you get something you can live with. http://www.score.org/template_gallery.html
Don't cash out what is already in retirement funds, but STOP adding until you are debt free. Your emergency fund should be $1000 until you are out of debt. If you keep having emergencies, your budget is WRONG. 99% of all emergencies are items you have no excuse for not anticipating and including in your budget. Also note, as of now, your entertainment budget is the cost of rabbit ears for the TV you already have. Cable/satellite is a LUXURY you can't afford. Eating out is a LUXURY. The 'tax break' for 401(k) contributions does not pay on month interest on your debt. NEVER make financial decisions based on tax breaks. You will ALWAYS make poor decisions on that basis.
Go with the retirement. You don't say how much your employer match is on your 401k (free money). You also don't say how much is in your 401k. Most people are underfunded. The tax advantages of a 401k are too great to pass up, so don't. Cut your expenses as others have suggested and pay down the debt with that.