Reply to 401K loan to pay credit card debt

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[quote=Anonymous]Hi,

I know that borrowing from your 401K is never a good idea. But,  I'm wondering if it would be my best option right now.  I am about 27K in debt and have been paying on this for the last few years.  Sudden job loss, sickness, family issues, and pay reduction at new job have lead to accumulating this much debt.

My rate for the card with the smallest balance ($1,500) is just under 10%.   All of the other cards are 20-24%.  The rates started out at around 10% but increased over time.  They said the sent letters about this but I never received anything.  I've never been late on any payments and try to  pay more than the minimum.  They refuse to work with me on lowering the rates.

I'm currently paying between $900-$1,000 per month but I barely see a dent in the principal because it's all going to interest.  I spoke with HR and I can take a 401K loan to pay off all of the debt.  It would be a five year loan and my payments would be about $450 per month.   I would try to pay it off faster if I can.

I already work a night job in addition to my full time job so I don't have other way Of making more money.   I realize that I would get hit with taxes and penalties if I were to leave my job.  But, I'm paying so much money each year in interest.

Thoughts?

Thank you for any advice you can offer.

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