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Does anyone think this is a smart idea?

My husband works in the steel industry. Fortunately, he works for a company that has a 'no lay-off' policy. However, their pay is based on how much steel they make. They make a small hourly wage plus a bonus percentage based on how many tons of steel they make that week. They haven't been making a lot of steel right now so his pay has been cut by about 2/3rd. (Went from bringing home $1500/week to almost $500/week.) I went back to work part-time but can't work full-time because of chronic illness. We were thinking it might be smart to stop contributing to his 401k until the economy picks back up. This would give us almost an additional $200 every week in his pay. He's young, 31, so it isn't like we need it to retire anytime soon. Plus, his 401k is losing money and we feel like we are throwing good money after bad. So, any smart money women here? Should we suspend the 401k contributions every week for a while?

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Asked by mizkaye at 1:57 AM on Apr. 16, 2009 in Money & Work

Level 3 (15 Credits)
Answers (9)
  • Right now most people are losing money in their 401k, so cutting back on your contributions is a very smart idea.....they they say "if it dont make dollars it dont make sense"

    Answer by LimoMOM5 at 2:02 AM on Apr. 16, 2009

  • Yeah, that's what I was thinking, too, limo...also, he's so young that we would have plenty of time to make up for the loss...I just got this image of us tossing money into an empty hole the other day as I was looking at his paystub and going over his deductions. Thanks for the advice...anybody else think this might be a good idea?

    Answer by mizkaye at 2:16 AM on Apr. 16, 2009

  • Right now the 401 business sucks! We lost 45% of ours also.
    He is young so it really won't affect him if he contributes less until the economy picks up.
    Steel industry has taken a big hit and it will not probably pick back up for some time, my community has been affected very badly by this. Good Luck!

    Answer by ronjwake at 3:28 AM on Apr. 16, 2009

  • I'd do it. Yes, you need to plan for retirement, but right now, it's more important, to survive today. As you said, you can always start contributing again later, when things pick up.

    Answer by tropicalmama at 6:22 AM on Apr. 16, 2009

  • Kaye - Yeah this 401k thing is a bit of a problem now isn't it. I don't know how your 401k is set up and how freely you can move your money. We have the option of putting our money in about eight different accounts. One option is buying straight up stock for the company my husband works for which is one of the oldest most diverse companies in the US, so I think it will survive the tough times. Sure we have lost a ton, but the flip side is right now it is selling dirt cheap, all time lows, so we have shifted a larger portion to them to snap it up while 'on sale'. Then the next time the market is up again we are cashing out paying the 38% penalty to the IRS for early with drawl (because that will be less than we lost this go round) and burying it all in our backyard. =0)

    If you need the cash right now maybe you can back off the amount you are putting in, put in $20 or so, so you are able to take advantage of the fire sale.

    Answer by athimom at 9:13 AM on Apr. 16, 2009

  • Yes, stop contributing for now. Don't cash out the 401k, just stop the contributions until things get back to normal.

    Answer by slw123 at 12:50 PM on Apr. 16, 2009

  • I did the same thing!

    Answer by science_spot at 4:43 AM on Apr. 18, 2009

  • My husbands job slows way down in the winter/spring months and so I just lowered the percentage we were contributing. We went very low risk and they are still matching. I figured its better than nothing. We just cut back on everything...spending, going out to eat, You would be suprised how much you dont really need. I'm feeling this way about health insurance.

    Answer by Momforhealth at 10:20 AM on Apr. 18, 2009

  • Bummer for you!

    Answer by Anonymous at 4:02 PM on Aug. 20, 2009

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