Anonymous wrote:You said you had a job loss. If you're not currently employed, you won't be able to borrow from your 401k.

I am employed now. The job loss was was a few years ago. I was unemployed for a period of time and then took a lower paying job.

You said you had a job loss. If you're not currently employed, you won't be able to borrow from your 401k.

Anonymous wrote:No. I would not trade my retirement for credit debt.

Then how would you advise OP to get out of debt in her situation, oh sage one?

No. I would not trade my retirement for credit debt.

Anonymous wrote:Keep in mind that if you are no longer employed there you have very little time to pay the whole thing back, so make sure your job is secure.

Yes and yes. I say do it but only if you are damn sure your job isn't going away.

I got a personal loan and am paying it off. I got 20K and the payments are 495 per month. Interest 9%. Got it for a 4 year payment plan. If I pay extra, the monthly amounts will not go smaller

I'd do it. Hell, I've DONE it. The interest rate on the loan from my retirement plan was much lower than the card interest rate, and it solved an enormous monthly cash flow problem.

Keep in mind that if you are no longer employed there you have very little time to pay the whole thing back, so make sure your job is secure.

Anonymous wrote:Sounds like it might be a reasonable idea if, and only if, you cut up the cards.

This. Normally I say NOOOOOO on this question because of the possible penalties, not to mention the lost of compound interest you'll never get back, but sounds like you're in a tough spot.

Thanks to everyone for your input.

I am 36 so still plenty of time to contribute. i dont have much in the account, only about $ 70K so that is a big concern too. It sounds like this is my best option.

with those rates I would do it. You are not getting anywhere near that level of return in your 401K. Try to pay it off at the same level per month you are paying on your credit cards.

It's your only way out. Do it.

Yeah, we have thought about this for a down payment. My 401k enables me to pay interest on that loan back to myself. Win, win. I think it matters how old you are, but then again you still have the debt. But if you're 30 I think it's a no brainer.

Sounds like it might be a reasonable idea if, and only if, you cut up the cards.

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.