The DJIA peaked out around the year 2000, and has lost half of its real value since then. For a lot of people, that means that even with matching funds, their real rate of return is pretty dismal.

The bottom line is that any investment is a risk, while paying off debt is not. Just ask the millions of people who have lost most of their retirement funds in this depression, and still have a mortgage to service.

Once a person has paid off their debt, and has spare change in their pockets, then investment may be a good choice. Not before.

To stick with the 30% interest rate, if inflation is 3%, then that means that the inflation-adjusted interest rate (and thus the ROI you’d be earning by paying off the debt) is only 27%.

Same thing with a 401k match. Instead of an instant 100% return it’s an instant 97% return.

If anything, that seems to me to be an argument in favor of the 401k match. (Because inflation only takes away 3/100ths of the return rather than 1/10th of it.)

What you say may be true in terms of dollars but not in terms of wealth. When inflation is figured in, I have lost on every form of investment.

Remember, money is not wealth, and the goal should be to increase our wealth, not inflated dollars.

I am debt free, but I would be a lot wealthier had I completely shunned 401Ks and IRAs in general.

Also, if you were to invest in stock funds in your 401(k), even with poor market returns, the instant 100% match makes for an ROI that’s likely better than that earned from paying off debt–even high interest debt.

That said, if you’re dead set on not investing until your debt is paid off, then that’s fine. Nobody’s going to tell you that a 30% risk-free, tax-free option is a bad choice.

I think that people should always take advantage of an employer 401(k) match. I would hate to leave that money on the table.

One trick I like to use is to increase your 401(k) contribution with any raise you get at work. This is a great way to painlessly increase your contribution at to the limit of your employer match.

For reference, the book is intended for people who are either finished paying off high-interest debt, or close enough to that point that they’re ready to start learning about the next step toward their financial goals.

Investments always carry risk, but paying off debt does not. Unless the investment is %100 a sure thing (which I have never found), and pays off at a higher rate than the interest on a person’s debts; the best use of the money is to pay off or pay down the highest interest debt first.

Paying $1000 toward a debt with a 30% interest rate is the same as making 30% on a $1000 investment, plus its tax free.

Thanks for spreading the word about the new book.

I hope your readers find it helpful!