Withdrawal 401K to payoff debt
Hello Terry . I watch you all the time on wgn in the morning and try to follow your advice as best I can. Unfortunately in the past year I have found myself in a bit of a financial crisis. I have accumulated about 5300 dollars in debt due to credit cards and a loan. Also during this time I have exhausted my savings to a minimum of almost nothing. Thru my job I have a 401K retirement account that has accumulated 95000 dollars . The 401K plan does not allow to take a loan from the money. With knowledge that I will lose money due to penalties and tax’s, I was considering withdrawing the money to payoff my debt. My idea is that I will wipe my debt clean as well as increase my credit score back to 800 level which it once was. I also plan on saving 1600 dollars a month for the next year. After a year I will be able to reinvest into my 401K and will have 25 years to accumulate as much as I can before I retire. The last thing I want to due is file for bankruptcy and at this time I am living check to check, which I have never done before. I find myself a bit stressed out over this matter and would really appreciate any advice you have that can get me out this hole I find myself in. Thank you
Terry Says
NO! NO! NO! Am I clear on that?! This is a BAD solution. You may NOT take money out of your 40l(k) plan. You will thank me one day for this good advice! If you think you can "save $1600 per month for the next year" then start doing that right away. And pay down debt along the way. And get a weekend, or evening job-- and use that money to pay down your debt ASAP. Stop fooling yourself. Do a "cash flow" analysis about where all your money is going. Cut expenses. Earn more. Work your way out of this debt. And then never get in this situation again!
