If you have 50k debt and you are paying more than 3% interest on that then you are stupid for putting money anywhere else. If the debt isn't something like a low interest mortgage let's run some numbers.
Save 6% at best (you said you can only afford 3%) of 33,000 = $2000. Company matches 50% so you are putting away $3000 a year.
At 3% you are only putting back $1000 and company matches $500 a year = so total $1500.
Now we look at your debt. I'll pull a number out of my ass and pick 10% but it is probably more than that if it isn't a mortgage.
50,000 * 10% = $5000 / year. So now you are in the hole $2000 at best if you are saving the 6% into VFIAX or whatever else was offered up. You said 3% so put yourself $3500 in the hole.
But the stock market does have some returns but most likely over time you are not going to beat 10% or whatever your debt is. Pay down your debt first unless it is low interest that the stock market might beat! Use the snow ball effect. If your debt is multiple accounts pay the smallest account first. As you start to knock them down you will be motivated to to save more.
Learn about VFIAX and all the other crap suggested while you're knocking out the debt.
This isn't the whole picture, and the break even point isn't close to 3% on your debt.
Consider if you were to increase your contribution to your 401k to 6% vs. putting that extra 3% toward loan payments. Here we are talking about $33,000*.03 = $990 extra toward 401k, or $990*(1-0.12) = $871.2 toward loan reduction assuming you pay around 12% in taxes.
If you were to invest that extra $990, you would immediately receive a 50% return on your investment of $495. In addition, you will pay around $118.8 less in taxes, for a total return of 613$ on $990, or 62% ROI (return on investment). Lets assume you invest in the S&P 500 fund and it returns 7% a year. You now have ($990+$495 = $1485) invested at 7%.
Now lets look at what your load interest rate would have to be to make investing a bad decision. We are talking about $871.2 @ (X)% vs. $1485 @ 7%.
Each year the $1485 @ 7% will create ($1485*.07 = $103.95) So, you debt would have to have an interest rate above ($103.95/$871.2 = 11.9%) to start making the investing look like a worse decision. This is still not the whole picture, because you had a 62% return in the first year.
Now we must consider that you will be out of debt in 3 years on your current payoff schedule. Lets say that increasing your 401k contributions sets you back 6 months and you your payoff date is now 3.5 years. So, over 3.5 years, what would your interest rate have to be to cancel out the 62% return in year 1?
In year 1 you had a return of $613. for your $871.2 in debt to eliminate this return over a 3.5 year period you would need an interest rate of 15.3% a year.
So, your debt would need a 15.3% + 11.9% = 27.2% interest rate in order to make the extra 401k payments a bad idea.
Debt is bad, there is not doubt about it, but not accepting the money someone is trying to give you is almost never the best financial decision.
It will run you about $35 additional dollars per paycheck (assuming bi-weekly paychecks) to hit the company match. $2 a day. If you can find a way to save $2 a day then none of this matters, you can stay on track with your debt reduction and make the extra contributions to your 401k. That is the challenge.
