401k to Pay Credit Card Debt
I have about $14,000 in credit card debt. I rarely use these cards anymore but the interest and fees are basically all I am paying each month. I looked at the option to take a loan from my 401k. The interest rate is lower than most other loans and wouldn’t require a hard hit on my credit. I want to get this debt paid to stop paying all of this interest. Is this a good idea?
(taking on a 2nd job is not an option. I have 2 small children and already work a full-time job).
Thank you!
Terry Says
Aha! YOu knew I was going to suggest that you get another job! Could you find any way to earn a bit of extra money each week. Here’s why I ask. There is a secret formula to paying down credit card debt!
You take the current minimum monthly payment and DOUBLE IT. Then pay that exact same amount everymonth — that original payment (not double the new minimum). And if you don’t charge another penny on that card, it will be paid in full in less than 3 years.
If you borrow from your 40l(k) plan, and ever lose your job, it will be considered a withdrawal and incur taxes and penalties –and you won’t have money working for your retirement!
So please use the “secret formula” instead of borrowing!
Oh and go to www.CreditCards.com and search for a balance transfer card that will give you 6 months breathing room. But still use the original minimum monthly double payment every month from your old card to pay this new card down.
