HappyGrace Posted June 11, 2012 Share Posted June 11, 2012 I know the experts say NOT to do this! But dh is 53 and only has about $40-50,000 in his 401k anyway-it's not like it'll be a huge help (which is a whole other issue but nothing we can do about it!) We were thinking of taking $8-10,000 out to pay off debt. We had a bunch of stuff (big car repairs, medical bills, etc) come up the past few months and we maxed out our line of credit on our checking account ($5000) and have about $5000 on our emergency MasterCard (which we've been having to use now more often that our line of credit is maxed out.) If we paid those two things off, we'd be able to catch back up again, and be ok. Or would a personal loan (7.99%, I think) be better? Dh is so stressed about this debt, and had a heart attack 5 yrs ago, so I'm worried about this stress! I am totally losing sleep over it too. There isn't any job I can do that can make more than minimum wage, and there is no overtime available for him. The MasterCard has always been at 8% but in about a month they are changing it (for everybody) to 12%. We thought about transferring it to a 0% card but know we can't pay it off in a year, and then they charge a penalty/very high interest if you don't. I don't know the line of credit interest but I think they're usually quite a bit. Quote Link to comment Share on other sites More sharing options...
elegantlion Posted June 11, 2012 Share Posted June 11, 2012 Don't you have to pay 20% in taxes for whatever you take out? It's been a long time since we've dealt with that, but I would check the tax implications first. Quote Link to comment Share on other sites More sharing options...
snickelfritz Posted June 11, 2012 Share Posted June 11, 2012 Will you have penalties for withdrawing from the 401k? Those need to be weighed in with interest discussions. But I will say it's an option I would consider. You have to look at long-term, but you have to make it through the present to get to long-term. Quote Link to comment Share on other sites More sharing options...
DawnM Posted June 11, 2012 Share Posted June 11, 2012 Do not pay penalties on early withdrawal of your 401! Personal loan if you have to. Do you have equity in your home? Quote Link to comment Share on other sites More sharing options...
teachermom2834 Posted June 11, 2012 Share Posted June 11, 2012 We took a loan from dh's 401K. Is that an option? We're still making payments but they are back to the account at reasonable interest- much better than revolving debt on a cc. If we aren't able to pay it back, then we will owe the penalties for taking the money out. This has worked out for us so far. The payments are more manageable and we are actually getting somewhere rather than it all going to interest. It is also much easier on me emotionally to be making those payments back to our own account instead of sending them to MasterCard. It helped us break the cc cycle. Now if you are going to take the money out but then still use your cc it would likely be a bad idea. Quote Link to comment Share on other sites More sharing options...
FaithManor Posted June 11, 2012 Share Posted June 11, 2012 I know the experts say NOT to do this! But dh is 53 and only has about $40-50,000 in his 401k anyway-it's not like it'll be a huge help (which is a whole other issue but nothing we can do about it!) We were thinking of taking $8-10,000 out to pay off debt. We had a bunch of stuff (big car repairs, medical bills, etc) come up the past few months and we maxed out our line of credit on our checking account ($5000) and have about $5000 on our emergency MasterCard (which we've been having to use now more often that our line of credit is maxed out.) If we paid those two things off, we'd be able to catch back up again, and be ok. Or would a personal loan (7.99%, I think) be better? Dh is so stressed about this debt, and had a heart attack 5 yrs ago, so I'm worried about this stress! I am totally losing sleep over it too. There isn't any job I can do that can make more than minimum wage, and there is no overtime available for him. The MasterCard has always been at 8% but in about a month they are changing it (for everybody) to 12%. We thought about transferring it to a 0% card but know we can't pay it off in a year, and then they charge a penalty/very high interest if you don't. I don't know the line of credit interest but I think they're usually quite a bit. I know a lot of financial experts say no. But, there is more to life than just thinking about the investment itself. If you are earning far less on the 401K than you are paying in interest, you are going in the hole financially. If the stress of the debt is huge, that has ramifications even health related ones. At 53, he doesn't have a lot of time to build a retirement fund, so that is a consideration. However, debt payments at retirement are very, very stressful and sometimes difficult if not impossible to make, if one's fixed monthly income at that point is significantly lower than during the earning years. The key is that you do not get out of debt and then run up more. You have to be committed to a debt free lifestyle after that. Otherwise you will have drained the 401K for no good reason and have even less to retire with...I think that is why many financial managers are against 401K loans. The other thing to consider is job security because the loan is paid back through payroll deduction and should he be laid off/fired, you have a short period of time in which to pay back the loan in full in order to transfer the 401K to another company, or you pay tax penalties which can be more than the interest on the debt depending on your rates. For us, we borrowed. Dh's company is not offering a single 401K that is earning anything more than 1 or 2% right now and had just about completely eliminated the employee matching which was the only reason to be putting money into it at the time - that's another consideration, employer matching because that can double your money. So, instead of borrowing money at 8% for the new roof (we'd used up our emergency and improvements fund when several big ticket items broke), we pay ourselves 6% interest on the loan at a time when we couldn't get a 401K investment that was making a dime. It was a win-win for us, but dh has a LOT of job security right now. Tough choices. Faith Quote Link to comment Share on other sites More sharing options...
aggieamy Posted June 11, 2012 Share Posted June 11, 2012 Are you familiar with Dave Ramsey? I know a lot of people dislike him but DH and I have been avid followers of his for years and it has made all the difference in our financial lives. When we met DH have $60k+ in student loans and I had $20k in car loans and credit card debt. Now we're debt free with an EF and have been for years. Get his book from the library and read it. It's wonderful. Quote Link to comment Share on other sites More sharing options...
ChocolateReignRemix Posted June 11, 2012 Share Posted June 11, 2012 I know a lot of financial experts say no. But, there is more to life than just thinking about the investment itself. If you are earning far less on the 401K than you are paying in interest, you are going in the hole financially. If the stress of the debt is huge, that has ramifications even health related ones. At 53, he doesn't have a lot of time to build a retirement fund, so that is a consideration. However, debt payments at retirement are very, very stressful and sometimes difficult if not impossible to make, if one's fixed monthly income at that point is significantly lower than during the earning years. The key is that you do not get out of debt and then run up more. You have to be committed to a debt free lifestyle after that. Otherwise you will have drained the 401K for no good reason and have even less to retire with...I think that is why many financial managers are against 401K loans. The other thing to consider is job security because the loan is paid back through payroll deduction and should he be laid off/fired, you have a short period of time in which to pay back the loan in full in order to transfer the 401K to another company, or you pay tax penalties which can be more than the interest on the debt depending on your rates. For us, we borrowed. Dh's company is not offering a single 401K that is earning anything more than 1 or 2% right now and had just about completely eliminated the employee matching which was the only reason to be putting money into it at the time - that's another consideration, employer matching because that can double your money. So, instead of borrowing money at 8% for the new roof (we'd used up our emergency and improvements fund when several big ticket items broke), we pay ourselves 6% interest on the loan at a time when we couldn't get a 401K investment that was making a dime. It was a win-win for us, but dh has a LOT of job security right now. Tough choices. Faith You are 100% incorrect. Due to the penalties associated with early withdrawal from a 401K (10%) and the associated taxes (assuming it is a traditional 401K) on the money withdrawn, pulling money out to pay off debt does not make sense financially. Quote Link to comment Share on other sites More sharing options...
cjgrubbs Posted June 11, 2012 Share Posted June 11, 2012 There will be a 10% penalty on any withdrawals AND taxes on the full amount you withdraw. Before I did that I would put myself on a cash only budget for purchases. When the money runs out you can't buy any thing else. This can be painful, I know. But taking what little money you have for retirement out is not the answer. You must make changes in some way to put yourself on a better financial track. Work towards living within the budget you set for yourself. Pay extra each month towards these 2 bills. Build up a cash reserve fund for your family. Make it a fun challenge by thinking of entertainment that is free (Family Game Night, ride bikes, hike, take a walk, etc) or plan a week long stretch where you purposely plan to spend NO money. Plan meals from your pantry, stay home or walk where you need to go. Put all this money into your new emergency fund. This can be really hard, especially if you have a kids. So make it a goal you can all work toward together, such as - if we can go all week with spending no money we will go out to eat on X day at X place. Choosing to not work away from home is admirable but you can work at home by using your time to meal plan, plan your grocery shopping and matching coupons (try southernsavers.com to see if any of your local stores are covered!) Eat meatless a few days a week and learn to cook from scratch -- it's healthier and cheaper for you! I wish you much luck! Quote Link to comment Share on other sites More sharing options...
The Girls' Mom Posted June 11, 2012 Share Posted June 11, 2012 Keep in mind that it may also put your income in a different bracket come tax time. We withdrew ours for various reasons last year, and although I had thought about all the penalties and taxes at withdrawl, I didn't think of our overall tax bracket for income taxes. :glare: I still would have made the same choice, but I didn't like that surprise in the spring :lol: Quote Link to comment Share on other sites More sharing options...
Maeintx Posted June 11, 2012 Share Posted June 11, 2012 We took a loan from dh's 401K. Is that an option? We're still making payments but they are back to the account at reasonable interest- much better than revolving debt on a cc. If we aren't able to pay it back, then we will owe the penalties for taking the money out. . Can you do this? We are considering doing it right now too, just waiting on a couple more details in our somewhat crazy life at the moment. Paying back ourselves seems better than paying interest on the debt, but dh is researching some more to really weigh the benefits. Quote Link to comment Share on other sites More sharing options...
cjgrubbs Posted June 11, 2012 Share Posted June 11, 2012 Can you do this? We are considering doing it right now too, just waiting on a couple more details in our somewhat crazy life at the moment. Paying back ourselves seems better than paying interest on the debt, but dh is researching some more to really weigh the benefits. It depends on the company and if that is an available option. Some have that, some don't. Quote Link to comment Share on other sites More sharing options...
BoZeeCo's Mom Posted June 11, 2012 Share Posted June 11, 2012 We cashed out an old one. After taxes, 40-50k will not be a lot. And if you do do it, make sure to find out what your state's cut will be and reserve that amount to pay at tax time! Quote Link to comment Share on other sites More sharing options...
Brilliant Posted June 11, 2012 Share Posted June 11, 2012 I don't always agree with Dave Ramsey. But I agree with his advice on early withdrawal from 401k: DON'T DO IT unless it's the only way to save your house from being foreclosed. Do whatever else you have to to get your other debts paid off, but don't take money from your retirement. The taxes and penalties aren't worth it. (someone else mentioned taking a loan from the 401k. I think DR says never do that either - but I'd do that before doing a withdrawal) Quote Link to comment Share on other sites More sharing options...
Momof3littles Posted June 11, 2012 Share Posted June 11, 2012 I would not. Agree with the PPs that you lose the investment, pay a penalty, and pay taxes. Not worth it, IMO. If you think you want to anyway, I'd talk with a flat fee financial advisor (not tied to a brokerage, just someone who will sit with you for a flat fee that is probably a few hundred dollars). They can look at your specifics and lay out for you exactly what the implications will be, which you should know before you act, IMO. Quote Link to comment Share on other sites More sharing options...
AuntieM Posted June 11, 2012 Share Posted June 11, 2012 (edited) You are 100% incorrect. Due to the penalties associated with early withdrawal from a 401K (10%) and the associated taxes (assuming it is a traditional 401K) on the money withdrawn, pulling money out to pay off debt does not make sense financially. It's not always about the financial good sense. Sometimes it's about being able to sleep at night because you have the peace of knowing you don't have creditors circling over you. Believe me, that is hard for me to say as I tend to agree with your position. But I think it is incorrect to say that FaithManor is 100% incorrect. OP, I will echo what others have said about counting the cost of penalties and taxes. Also, do see if your 401K plan is designed so you can "borrow" from yourself. Above all, do commit to staying debt free in the future and building an emergency fund to help Murphy-proof your finances. ETA One more caveat - I say the above with the assumption that you have exhausted all efforts at generating additional income to pay down the debt. That you have considered part time work or swapping a high-monthly-payment vehicle for a cheap beater 'til you're out of debt. You get the picture - the 401K is a last resort. Edited June 11, 2012 by AuntieM Quote Link to comment Share on other sites More sharing options...
QueenCat Posted June 11, 2012 Share Posted June 11, 2012 You are 100% incorrect. Due to the penalties associated with early withdrawal from a 401K (10%) and the associated taxes (assuming it is a traditional 401K) on the money withdrawn, pulling money out to pay off debt does not make sense financially. When done as a loan, you do not pay the penalties or taxes. At least not when we did it, which was quite some time ago. That said, I wouldn't do it again UNLESS it was the only option short of bankruptcy. Quote Link to comment Share on other sites More sharing options...
Twilight Woods Posted June 11, 2012 Share Posted June 11, 2012 When done as a loan, you do not pay the penalties or taxes. At least not when we did it, which was quite some time ago. That said, I wouldn't do it again UNLESS it was the only option short of bankruptcy. :iagree: Quote Link to comment Share on other sites More sharing options...
TranquilMind Posted June 11, 2012 Share Posted June 11, 2012 There will be a 10% penalty on any withdrawals AND taxes on the full amount you withdraw. Before I did that I would put myself on a cash only budget for purchases. When the money runs out you can't buy any thing else. This can be painful, I know. But taking what little money you have for retirement out is not the answer. You must make changes in some way to put yourself on a better financial track. Work towards living within the budget you set for yourself. Pay extra each month towards these 2 bills. Build up a cash reserve fund for your family. Make it a fun challenge by thinking of entertainment that is free (Family Game Night, ride bikes, hike, take a walk, etc) or plan a week long stretch where you purposely plan to spend NO money. Plan meals from your pantry, stay home or walk where you need to go. Put all this money into your new emergency fund. This can be really hard, especially if you have a kids. So make it a goal you can all work toward together, such as - if we can go all week with spending no money we will go out to eat on X day at X place. Choosing to not work away from home is admirable but you can work at home by using your time to meal plan, plan your grocery shopping and matching coupons (try southernsavers.com to see if any of your local stores are covered!) Eat meatless a few days a week and learn to cook from scratch -- it's healthier and cheaper for you! I wish you much luck! Agree with everyone else. Yes, it would be an unwise financial decision. Quote Link to comment Share on other sites More sharing options...
Granny_Weatherwax Posted June 11, 2012 Share Posted June 11, 2012 (edited) I have thought about this for awhile and here's my .02 -- Is it stupid? Probably. Will many people recommend it? Probably not. Would I recommend it? Yes and here's why. Your DH's medical history and your emotional well being. You say that the debt is due to unforeseen expenses and not bad budgeting or willful overpsending. Emergencies happen to everyone and not every family has a large emergency fund to cover multiple emergencies that occur in quick succession. If you are honest with yourself about your spending and the nature of your debt and you know (as best as you can foresee) that you will not accrue similar debt within the next few years, than withdrawing the money may be the best thing. If, however, you determine that the debt was avoidable and the prospects of revisiting the situation are highly probable than don't withdraw the money. It isn't a crutch or a temporary fix; it is an important decision that may impact your financial future. As a previous poster wrote sometimes there are more important things than gaining monetary interest. Your health and wellbeing and your DH's health and wellbeing are priceless. You state that both of you are experiencing negative effects from the stress of the debt. Let's say you don't withdraw the money and your DH's health deteriorates or he has another heart attack. Would the difference in interest earned or penalties saved be worth it? I would rather have a more relaxed, healthier DH (and self) than a few extra dollars. Again, though, this is based on the debt being caused by honest-to-goodness emergencies, not improper spending. -- After more reflection - do you have any toys (boats, jet skis, campers, etc.) that could be sold first? That is what I would do before I would withdraw the funds. I should have written this earlier but I assumed that avenue had already been discussed or you wouldn't be thinking about the 401K. Edited June 11, 2012 by The Dragon Academy Quote Link to comment Share on other sites More sharing options...
happypamama Posted June 11, 2012 Share Posted June 11, 2012 If you've got about $10K in debt that you're trying to pay off, you might possibly call the creditors and ask about a hardship plan, whereby they close the accounts so you can't use them any more, but they lower the interest rate significantly, to make it easier to pay off. If that won't work, and you take the money out of the 401k and pay off the debt, would that then free up a few hundred dollars every month? You could then use that free money to build up an emergency fund, so as to avoid racking up credit card/line of credit debt in the future, and once your EF was well-funded, you could work toward building up the retirement savings again. Whether that makes good financial sense or not, I don't know, but it's one option. Quote Link to comment Share on other sites More sharing options...
HappyGrace Posted June 11, 2012 Author Share Posted June 11, 2012 I can't tell you how much I appreciate the thoughtful responses! We scrimp and pinch like you wouldn't believe. We do eat organically but believe in it ethically so I shop at five different places to enable this (and use no processed foods; cook everything from scratch, buy in bulk, have a "price book" of where each thing costs the least and buy it there, etc). My car is 9 yrs old but we paid cash for it-I went for 8 months at the time with no car after my old one died and before we could finish saving the money to be able to pay cash. (My one occasional "splurge" is curriculum but I rarely buy new, and always resell, etc. But even that has drastically curtailed in the past few yrs.) We do not buy new clothes-almost all from consignment, etc., etc. So we pinch like crazy! There is not much else left to pinch. I laughed when I saw the thing about selling toys like boats-only because it is so far from our reality as to be funny (although of course I totally get what the poster meant-I just WISH we had something to sell!) We have not been on vacation for ten years (other than an occasional cheap wkend overnight once every few yrs.) We have a tiny TV (20") that a df gave us yrs ago and no cable. The Lord does help us and has helped us to have me be home all these yrs to homeschool. I just wonder if all this is the Lord calling me to something different now, but I hope and pray NOT! (And I am very familiar w/ DR but dh is not interested.) So anyway, I am going to talk to dh tonight. The 401k thing sounds awful, after reading this. I think maybe a personal loan would prbly be a much better option than that. Or something else. We do need to do something for piece of mind! Quote Link to comment Share on other sites More sharing options...
HappyGrace Posted June 11, 2012 Author Share Posted June 11, 2012 Oh, good-we belong to a credit union! We will check there, thank you! It won't actually help us that much because we will still be having to come up with the same amount of money each month, but at least it would be a fixed and cheaper rate of interest. It's so hard to hope that the benefits of hs'ing will outweigh the financial woes. We wouldn't have any of this if I worked and sent them to school :( Quote Link to comment Share on other sites More sharing options...
AuntieM Posted June 11, 2012 Share Posted June 11, 2012 I can't tell you how much I appreciate the thoughtful responses! We scrimp and pinch like you wouldn't believe. We do eat organically but believe in it ethically so I shop at five different places to enable this (and use no processed foods; cook everything from scratch, buy in bulk, have a "price book" of where each thing costs the least and buy it there, etc). My car is 9 yrs old but we paid cash for it-I went for 8 months at the time with no car after my old one died and before we could finish saving the money to be able to pay cash. (My one occasional "splurge" is curriculum but I rarely buy new, and always resell, etc. But even that has drastically curtailed in the past few yrs.) We do not buy new clothes-almost all from consignment, etc., etc. So we pinch like crazy! There is not much else left to pinch. I laughed when I saw the thing about selling toys like boats-only because it is so far from our reality as to be funny (although of course I totally get what the poster meant-I just WISH we had something to sell!) We have not been on vacation for ten years (other than an occasional cheap wkend overnight once every few yrs.) We have a tiny TV (20") that a df gave us yrs ago and no cable. The Lord does help us and has helped us to have me be home all these yrs to homeschool. I just wonder if all this is the Lord calling me to something different now, but I hope and pray NOT! (And I am very familiar w/ DR but dh is not interested.) So anyway, I am going to talk to dh tonight. The 401k thing sounds awful, after reading this. I think maybe a personal loan would prbly be a much better option than that. Or something else. We do need to do something for piece of mind! Please DO NOT use one of those debt consolidation services! Only take out a loan for an interest rate lower than you are currently paying. A loan really won't help your cash flow. There are sharks in the financial industry just waiting to take advantage of people in your situation. They will take your debt and and manipulate the loan payments to give you a low monthly payment, only for you to discover - after you have signed on the dotted line - that you will have to make those monthly payments every month for the rest of your life! So be careful and wise. Be sure that you well understand the terms of any loan you consider. Your next step, if you haven't done this already, is to contact those creditors and (as another poster said upthread) negotiate some hardship terms - lower interest, forgiveness of late charges - be bold and ask for the moon! Quote Link to comment Share on other sites More sharing options...
LisaKinVA Posted June 11, 2012 Share Posted June 11, 2012 It depends. When dh and I were first married, and had roughly $120,000 in retirement, we followed conventional wisdom and did a loan (which was tied to the house, but also came with pre-payment penalties, etc.) Absolutely the WORST mistake we made. We should have taken the money (and the financial hit) and been free and clear of all of our debt. 3 years later, our $120,000 in retirement was worth all of $18,000. :glare: Which, BTW, we had to cash in for medical reasons anyway. :tongue_smilie: Having the debt tied to our house also made it difficult when we had to sell. (Didn't know when we took out the loan we'd be moving across country 5 years later). We wound up having to bring $10,000 to the table, which was put on a credit card. Had we taken the hit early (when $$ wasn't an issue), we could have been saving money those 5 years instead of paying on debt and worrying when I lost my job. We could have sold the house faster and had money in our pockets, instead of bringing $$ to the table. Depending upon what assets you have, a small HELOC or personal loan might be worth it. But, there is something to be said for being "debt free" and "lowered stress levels" too. We are currently selling our brand new home to pay off most of our debts (that should be ALL of our debts, and give us $$$ in our pocket...but, whatever). The month-to-month struggle is just not worth it. Also, if some of your related bills are medical in nature, you can usually borrow against the 401(k) for medical, school, or home purchase (penalty-free). Check into that FIRST. The repayment terms on a 401(k) are much better than early withdrawal. Quote Link to comment Share on other sites More sharing options...
butterflymommy Posted June 11, 2012 Share Posted June 11, 2012 We borrowed from our 401k twice-- once to pay off our last house and another time to add to the down payment on our current house. The first time we paid back the loan quickly (can't remember exactly but less than a year) the second time, we still have some of it outstanding. If you borrow from a 401k you pay yourself the interest and not the lender/ credit card company so that is a significant advantage. If for whatever reason you lose your job then you have to pay back the loan in full immediately or be stuck with the tax penalty. Our 401K is associated with a home business so we aren't going to fire ourselves. As an aside, another thing you can do with 401k money is buy rental properties. We took all of our 401k out of the stock market ages ago so it's barely earning interest (but at least we didn't lose half our savings when things crashed). If you buy a rental property as an investment the rent goes into the 401k fund much like "interest earned." We're considering doing this now. Quote Link to comment Share on other sites More sharing options...
HappyGrace Posted June 11, 2012 Author Share Posted June 11, 2012 Please DO NOT use one of those debt consolidation services! Yes, I did know this, thankfully! Thanks for mentioning it though! Quote Link to comment Share on other sites More sharing options...
HappyGrace Posted June 11, 2012 Author Share Posted June 11, 2012 Also, if some of your related bills are medical in nature, you can usually borrow against the 401(k) for medical, school, or home purchase (penalty-free). Check into that FIRST. The repayment terms on a 401(k) are much better than early withdrawal. Lisa-I'm so sorry about your debt regrets-that is so hard! Thanks for this info. I am worried about borrowing against 401k because of having to pay it in full if the job is lost-that would kill us, so I don't think that's a good option for us. butterfly-very interesting about the rentals! I didn't realize that. But dh has enough on his plate right now; I don't think he could handle that, unfortunately.Thanks for the info-it's something we could consider for later. Quote Link to comment Share on other sites More sharing options...
kewb Posted June 11, 2012 Share Posted June 11, 2012 We had to cash out our 401K's or we would have been forclosed on. It killed me to do it but we really had no choice. Paying the penalties kind of sucked along with the taxes. Fortunately, some of the taxes were offset by the fact that we had no other income at the time. There is more to life than the monetary penalties. Do what you have to do and then get back on track. Quote Link to comment Share on other sites More sharing options...
KidsHappen Posted June 11, 2012 Share Posted June 11, 2012 We borrowed from our 401K to pay for my mother's funeral. We had to pay a penalty, taxes and pay back the loan in a short period of time. It also bumped us up to the next tax bracket which hurt even more. It was a horrible financial decision but the only one we had available to come up with that kind of money. Even that was not enough we still had to borrow a personal loan of $5000. My mom passed away in Feb. of 2008 and we still have $2000 left to pay on this. Any other way would be better. Not to mention there are limits as to when you can take out money and I don't think debt consolidation is one. Quote Link to comment Share on other sites More sharing options...
mereminerals Posted June 11, 2012 Share Posted June 11, 2012 I am worried about borrowing against 401k because of having to pay it in full if the job is lost-that would kill us, so I don't think that's a good option for us. When dh left his job to start his own business we had a 401k loan. The company that held our 401k gave us the option to make payments directly to them after he left or take it as a withdrawal. They offered us the option because the loan was a very small percentage of what we had in the 401k and since the 401k was over a certain amount they continued to manage it for us. Quote Link to comment Share on other sites More sharing options...
Mama Geek Posted June 11, 2012 Share Posted June 11, 2012 Lisa-I'm so sorry about your debt regrets-that is so hard! Thanks for this info. I am worried about borrowing against 401k because of having to pay it in full if the job is lost-that would kill us, so I don't think that's a good option for us. butterfly-very interesting about the rentals! I didn't realize that. But dh has enough on his plate right now; I don't think he could handle that, unfortunately.Thanks for the info-it's something we could consider for later. Check into whether or not you have to pay it immediately upon leaving the company. We had a loan against our 401K and left our jobs for a better job. We were able to jump through hoops and continue to pay on the loan until it was paid off. I am not sure if this varies from place to place or not Quote Link to comment Share on other sites More sharing options...
Serenade Posted June 12, 2012 Share Posted June 12, 2012 (edited) We borrowed from our 401k twice-- once to pay off our last house and another time to add to the down payment on our current house. The first time we paid back the loan quickly (can't remember exactly but less than a year) the second time, we still have some of it outstanding. If you borrow from a 401k you pay yourself the interest and not the lender/ credit card company so that is a significant advantage. Can anyone borrow against their 401K? I somehow thought this was only available to government employees. Are their any restrictions? My DH has a 401K, but I have what I think is called a 403B -- I worked for a non-profit, and the retirement plan was somehow considered to be different from a 401K. I am no longer working, so I don't know if that makes a difference. Edited June 12, 2012 by Serenade Quote Link to comment Share on other sites More sharing options...
LisaKinVA Posted June 12, 2012 Share Posted June 12, 2012 Can anyone borrow against their 401K? I somehow thought this was only available to government employees. Are their any restrictions? My DH has a 401K, but I have what I think is called a 403B -- I worked for a non-profit, and the retirement plan was somehow considered to be different from a 401K. I am no longer working, so I don't know if that makes a difference. A lot of the rules have changed over the past 10-15 years... but with private companies, it will depend upon the company's rules. Quote Link to comment Share on other sites More sharing options...
Serenade Posted June 12, 2012 Share Posted June 12, 2012 A lot of the rules have changed over the past 10-15 years... but with private companies, it will depend upon the company's rules. Thank you! Quote Link to comment Share on other sites More sharing options...
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