Posted on April 7, 2008 at 6:34 pm I understand the implications for losing the compounding value of the 401(k), but I need to pay off: Mission Fed - $10k @ 12.99% Citi - $3k @ 29.99% (2 late payments in 12 months, but not delinquent!) Chase - $7k @ 24.99% (2 late payments in 12 months, but not delinquent!) Need $8k to pay balance of federal and state income tax (didn't hold back enough stock transaction last year)   My wife and I are cutting back seriously on monthly cash flow - no more gardener, no more housecleaner, tune back the cable/internet/phone bill, set the thermostat for 68/78, etc., etc.. But we need to knock down $300 more dollars a month in cash flow to get above water. Your thoughts?

Posted on April 10, 2008 at 11:29 pm I guess you have to weigh out whether it's worth it to you and your peace of mind. Of course this is my non-professional opinion but you're interest rates on the credit cards are pretty high and the odds of your 401K making more than what the charges will eventually add up to is questionable consider todays market. The benefit to borrowing the money from you 401K is you pay the loan back to yourself and not a lending instituation. Yes, you will be out 7% for the loan and lose whatever you would have made on your 401k...but what are your other options for eliminating the debt? The important thing is if you decide to go this route, do not get yourself back into the same position because your 401k won't be able to bail you out again until the loan is paid off. I believe you can only have one 401K loan out at a time.

Posted on April 14, 2008 at 7:17 am I note you say "cutting back seriously on monthly cashflow" - and then mention some items that I've never even been able to consider in my budget. I don't even have a thermostat to set! I have a wood fire and a fan for summer. If we get cold, we put on a sweater and snuggle under a rug on the sofa. How many meals a week do you eat out? How much pre-packaged food do you eat and how much could be made for a quarter the cost in your own kitchen? How about lunches at work? Coffee? Shopping trips? I'd say you should look long and hard at your current spending patterns and see what else could use some trimming back. You'll be surprised at how much you can save when you really have to.

Posted on January 3, 2009 at 8:24 pm Personally, I think taking a loan from your 401K is a smart decision if you have solved all the problems that got you into debt.  I have personally taken out a loan from my 401K and this is the last year that I have to pay it off; however, since I took out the loan in 2004 I have paid off my credit cards, aquired to real estate properties (1 where I am set to build an 8 to 10 unit apartment complex and the other a second home on a private beach), also I sold my condo and primar residence and moved into a larger home.  I am not saying this brag, my point is that if you have a legitimate plan and know what the opportunity cost involved are then it is a wonderful chance to make. With less than $2,000.00 left to pay my only challenge is whether to pay it off now or use the remaining 12 months and keep investing in myself via other investment vehicles.  I wish you luck and hope that you take the best path for you.

Posted on April 6, 2009 at 10:18 pm i agree

Posted on April 9, 2009 at 8:15 pm i agree with you

Posted on April 10, 2009 at 4:28 am good idea

Posted on April 10, 2009 at 6:12 am I think it would be a poor decision to use your 401K to pay off your other debts.  You will be penalized for withdrawing from your 401K and will have nothing for the future.  When I quit a job, I took out my 401K, and learned the hard way.  Try to think of something else to pay off the other debt.

Posted on April 10, 2009 at 5:08 pm With less than $2,000.00 left to pay my only challenge is whether to pay it off now or use the remaining 12 months and keep investing in myself via other investment vehicles.  I wish you luck and hope that you take the best path for you.

Posted on April 12, 2009 at 2:08 am Personally, I think taking a loan from your 401K is a smart decision if you have solved all the problems that got you into debt.  I have personally taken out a loan from my 401K and this is the last year that I have to pay it off; however, since I took out the loan in 2004 I have paid off my credit cards, aquired to real estate properties (1 where I am set to build an 8 to 10 unit apartment complex and the other a second home on a private beach), also I sold my condo and primar residence and moved into a larger home.  I am not saying this brag, my point is that if you have a legitimate plan and know what the opportunity cost involved are then it is a wonderful chance to make. With less than $2,000.00 left to pay my only challenge is whether to pay it off now or use the remaining 12 months and keep investing in myself via other investment vehicles.  I wish you luck and hope that you take the best path for you.