Pull back on 401k contributions or take student loans

[Anonymous]

I was in a similar situation & one consideration is that if you pull back on 401k contributions, your taxes go up, so you are not keeping the full amount. I went from putting the max into 401k ($25kish since I am 50) to just enough to get the full match from my work (around $8000), and between DC & feds my tax withholding went up by $550/mo. The withholding schedules seem to be pretty screwed up/in flux since the 2018 tax reform so I am not sure how this will shake out in the end, but the tax sheltering properties of the 401k are an additional consideration when running the numbers.

[Anonymous]

If it is only a 24-week long course and you'd be starting soon, I'd cut back on 401K contributions to protect your emergency fund, and then if you get to the fall and haven't needed the emergency fund, I'd backfill some of the 401K (so it doesn't hit you as wrt to taxes). Definitely do not take personal loans for it--much too high an interest rate when you have other relatively easy options available.

[Anonymous]

Anonymous wrote:I was in a similar situation & one consideration is that if you pull back on 401k contributions, your taxes go up, so you are not keeping the full amount. I went from putting the max into 401k ($25kish since I am 50) to just enough to get the full match from my work (around $8000), and between DC & feds my tax withholding went up by $550/mo. The withholding schedules seem to be pretty screwed up/in flux since the 2018 tax reform so I am not sure how this will shake out in the end, but the tax sheltering properties of the 401k are an additional consideration when running the numbers.

Not to mention, if the OP is young enough, cutting back on 401k has compounding effects. Let's say she cuts back and shaves that 10k off. At a modest 8% annual growth, after 10 years ahe has lost out on 11k in growth, so that 10k has cost her 21k. That 10k shaves a year or more off retirement, depending on OPs age.

[Anonymous]

Take the 401k loan and use the emergency fund to pay it back if a new job materializes too soon.

[Anonymous]

Anonymous wrote:Take the 401k loan and use the emergency fund to pay it back if a new job materializes too soon.

This. OP sounds young. 401k contributions are most impactful when you are young. Stopping those are very costly in the long run. I know it's a stretch for OP to contribute the max, but one day she will be so happy she invested and never stopped.