Should I pause 401k contributions to pay off a personal loan faster?

The employer match rule: If your employer matches 401k contributions (commonly 50%-100% up to 3%-6% of salary), never sacrifice the match to pay down debt. A 100% match on your contribution is an immediate 100% return. Even a loan at 25% APR does not beat a guaranteed 100% return. Contribute at least enough to capture the full employer match, then allocate remaining funds toward debt.

Beyond the match: Once you are capturing the full match, compare: Loan APR vs expected investment return. If loan APR is 18%, paying down the loan is mathematically equivalent to earning 18% guaranteed after tax (since the interest you avoid is after-tax savings). Expected stock market returns are 7%-10% long-term and are not guaranteed. At 18%, loan paydown almost certainly wins. If loan APR is 7%, expected investment returns may exceed the loan cost, especially in a tax-advantaged account where gains compound without annual tax drag.

Tax considerations: Traditional 401k contributions reduce your taxable income now. If you are in the 22%-24% federal bracket, contributing $1,000 to a 401k saves $220-$240 in current taxes - effectively reducing the cost of the contribution. This tax benefit shifts the math toward continuing 401k contributions even when the loan rate is moderately high.

Mental accounting: Many financial advisors recommend eliminating high-rate debt (above 8%-10%) before increasing 401k contributions beyond the match, because the guaranteed after-tax return of debt payoff exceeds the expected (uncertain) market return.