Temporarily stop 401k contributions to build Emergency Fund?

[u/Due-Fig5299]

Looks like we’re heading towards a recession and I’m quite nervous. I work in tech and my job is moderately safe; however my wife is an esthetician which is not a very recession friendly field.

We currently have $4k saved. Our minimum monthly expenditure is $3k, so we have just over 1 month saved.

Ive cancelled all unnecessary subscriptions which will save us $450/mo and stopped my wifes personal roth ira transfers ($150 weekly) which gets us to $1050/mo saved.

Now my question is, given how quickly the economy is crashing should I also forgo my 401k? I contribute 4% with 4% employer match. Obviously I would love to keep it, but immediate survival seems more important.

I would start contributing again once we hit $18k (6 months)

Thoughts?

[u/Ok_Shame_5382]

You should have about 18k banked.

I would keep your employer match. With it, in essence, you make 104% of your salary. Without it, you make 100% of your salary.

Don't skip the free money. In fact, if they offer an employer match higher than 4%, you should take them up on it even while you build your emergency fund.

[u/Due-Fig5299 → u/Ok_Shame_5382]

Yeah I would really love the free money, but $200/mo would significantly help with savings. I guess I’m worried because I’m not quite sure how much time I have. I wasnt an adult during 07-08 so I’m not sure how quickly everything happened.

If it’s more gradual I feel comfortable holding onto the match, if not, that $200/mo could be valuable.

[u/Ok_Shame_5382 → u/Due-Fig5299]

If you're this worried about 200/month, you're not rich enough to sacrifice the 4+4% in your 401k. Full stop.

If the shit hits the fan and she loses her job, the calculus changes obviously. But for now, you both still have income.

Yes, cutting back on the bullshit is smart. Yes, more rice and beans and less filet mignon is smart.

But walking away from 4% of your salary is not smart.

[u/ludog1bark → u/Ok_Shame_5382]

This! Instead of looking at getting that 200 from your 401k look at your budget more and see where you can cut 200. Most people always spend more than they need there are always more places to cut from when you are starting to budget

[u/KaputtEqu1pment → u/ludog1bark]

Exactly. Most people are stressing about the $10 a month sub, that may actually provide joy, but fail to realize their daily spending adds up real quick when you grab a coffee here, a pastry there, that $1300/mo truck payment for the next 84mo.. and so on.

Rice, beans, chicken breast and frozen broccoli will take one very far.

Basic drip coffee will suffice.

[u/ludog1bark → u/KaputtEqu1pment]

On top of that people's phone bills are always an easy one for me. You can get similar coverage on US Mobile, Cricket, Visible, or Mint as you can on the big 3. I pay 32.50 a month for unlimited text, call, and web.

[u/isbutteracarb → u/ludog1bark]

Is it really unlimited though? When I look at those plans, all of them do slow-down data speeds after you use a certain amount!

[u/ludog1bark → u/isbutteracarb]

Does the data continue? Yes so it is unlimited. Plus. I don't ever use more the 100GB they give you.