Mortgage

By Terry Savage on August 17, 2021 | Housing / Real Estate

Hi, Terry! I’m 54 years old, divorced with four boys living with me. I’m self-employed as a landscaper. I lost my bartending job due to my employer being angry I didn’t work during Covid. I have about $209,000 left on my mortgage. I am told my house is worth somewhere around 350,000. Is there any advantage at all to emptying my 401(k) to pay off the mortgage? Then re-pay the 401(k)?
Thank you!

Terry Says

No there is absolutely NO advantage to emptying your 40l(k). In fact, there are huge DISADVANTAGES to doing that! You’d pay a 10% penalty, then ordinary income taxes, and you would lose all future tax-deferred growth on the account. Don’t do it!

I applaud your ability to support four boys in these tough times. Come up with another strategy –especially for winter when landscaping (except for snow-plowing) probably is slow. There is a great demand for labor right now. This is the time to search, before everyone else loses their unemployment and tries to find work!

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