I have gotten into some credit card debt by thinking I could use some credit (interest free that later turned into higher interest credit), time the market, and then pay off the debt...it didn%26#039;t turn out that well and instead my credit balance increased and I feel I should pay it off.
Iwill receive a public sector pension when I retire in a few years, so I%26#039;m not %26quot;all%26quot; that concerned about my deferred comp. balances at the moment, so I feel I should borrow from my 401k plan (my public sector oranization will allow me to borrow up to half my balance in my 401k from myself) and pay off my credit card debt...
I feel this would be better that withdrawing the money from my 401k ( I know I must pay tax and a penalty if I do this)....
Does my plan of borrowing from my 401k to pay off my credit card make sense, and if so, does it make more sense than just withdrawing the required amount of money from my 401k to pay off my credit card debt...??
Borrow from 401k?
NO NO NO AND HELL NO!
Borrow from 401k?
yes, and the best thing is the interest you pay on the 401 k you are paying to yourself. why continue paying the interest debt when you could be paying yourself interest because your the bank. just borrow the money do not withdraw it. you will be fine, i have done this 2 times.
Borrow from 401k?
I would borrow from the 401K. You have to pay it back with interest but the rate is probably lower than what your credit card is charging and you%26#039;re paying the interest to yourself.
Borrow from 401k?
If there is any other way to keep yourself current on the debt, then NO don%26#039;t touch your retirement.
But if you do need to get into the 401k: if you do a straight withdraw of the amount, the federal tax portion will be your marginal income tax rate + 10% early withdrawal penalty. State penalties vary (California runs state tax rate + 2.5% penalty). If you do a loan, you don%26#039;t get hit with the taxes unless you leave service with the company -- then the outstanding balance becomes a distribution and the taxes and penalties will be due on the outstanding amount.
Borrow from 401k?
Borrowing against your 401k does make sense (so would maybe a home equity loan if you are a homeowner). In terms of borrowing vs. just withdrawing, I suggest calculating the cost in interest of paying back the 401k loan (being realistic about how long that will take) vs. the taxes, penalties, and forgone returns from withdrawing outright. Odds are, either one of these options will save you money over the interest on your credit card debt, which have the highest interest rates of most anything.
Borrow from 401k?
I do not recommend taking money out of your 401K, instead I would recommend to either get a new credit card with a free balance transfer for a year or just take out a loan.
If you%26#039;ve got a stable job with a good source of income, you might be able to apply for a loan through a website called Prosper. This site is a People-to-People (P2P) lending site where individual borrowers join in on the loans to help fund yours. The following is a link of a group that can help to walk you through the whole process:
http://www.prosper.com/groups/group_home...
Best of luck
Borrow from 401k?
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u are about to make a mistake. the only person who is going to benefit from u making this kind of a decision is me, others like me and the bank or your lender somewhere. let me explain the time i spend here may be 30 minutes in 2 or 3 weeks is to read about other peoples experiences (mistakes) so i can learn and avoid them. am sure others here are doing the same.
don%26#039;t touch ur 401k in order to pay off your credit cards. don%26#039;t borrow any loans or open another credit card to do balance transfers. it won%26#039;t work for you. am not being negative but u asked for advice and that is the fact. u have already done it and u said urself the credit card balance increased. do u want to know why it did? money is about personal behaviour. unless u change it u will get the same results. would u borrow 10k form ur credit card to go invest in stocks etc? i hope u said no. so the same applies to u r question - no it does not %26quot;make sense to borrowing from my 401k to pay off my credit card make sense, and if so, does it make more sense than just withdrawing the required amount of money from my 401k to pay off my credit card debt...??%26quot;
u need to take the time sit down and get organised financially. u need to bump up ur income. do something extra like afew hours a day. u don%26#039;t have to continue that the rest of ur life. it%26#039;s for paying off ur cc.
bottom line is what u don%26#039;t know about money will hurt u. books will educate u about what u don%26#039;t know. i recommend u get the book Total money make over by Dave ramsey. he has taught me and millions of others how to get out of debt and live debt free. he has an excellent radio call in show check out daveramsey.com for ur local listings. but please please please check out the book even if u just browse it at borders. it will change ur life for the better. i wish i can sit down with u and show u what i have been able to accomplish - pay off over 10k in cc, my car is paid off and am planning to pay cash for my home in 3-4 years. the goal is to owe nobody nothing - it%26#039;s the best feeling when u go to bed. u actually get to sleep and dream not have nightmares like i used to.
summary of what dave ramsey teaches
- save $1000 in an emergency account
-list ur debts and attack them with a gazelle intensity start with the smallest.
-build ur emergency fund equivalent to 3 to 6 months expenses
-pay off ur home
-invest to make money and u will have even extra to give away.
u have nothing to lose check out the book.
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