Anonymous wrote:You are young enough to do this so if you feel you will have the discipline after the fact to not use CC and to save for retirement, you might as well go ahead and do it.

I might make sense to do this. I was given the $7K to pay off the cards from my aunt. Now that I have no debt on the cards I feel like I have so much money! I plan better, and I might wait until the next month to make a large purchase. But at $70K with all those expenses...It is going to be hard no to use those credit cards for the large purchases. Right now I have to get a new car seat for the next stage. I don't know what I didn't get a convertible one. I knew nothing about car seats that is for sure. I still don't know...but I know the one I like is $240. I have some time, but not much. I will just have to put it on the card, but I am trying not to. That is a low rate of pay for DC, being a single mom. Sure people do it, but I don't know how. On the HPAP chart for DC that is considered low income.

I also vote not to touch the 401k. Check out www.mrmoneymustache.com. He does regular case studies on ways to cut down your monthly costs (many good ideas already floated on the forum). My husband and I started cycling to work last year and it save us probably around $500/month. Yes, I know this is not the answer for everyone, but there are certainly other ways to cut down your transportation costs (where there's a will there's a way). I'm rooting for you!

Anonymous wrote:

Anonymous wrote:I would rent a cheap one bedroom for a year and try to pay off the cc debt that way.

You also have to factor in moving costs and the hassle of moving. Sounds like you have an easy commute -- I would stay.

Agree with PP about not moving. Moving costs will eat into a lot of the potential savings. Factor in the costs, stress, and quality of life impact of a longer commute, and you'd need a huge drop in rent to make a move worth it.

Look at car and daycare expenses again. And as PPs have noted, you have to get a handle on food spending--there could be big room for savings. Are you eligible for a credit card balance transfer offer? Buy yourself some time, save aggressively, then throw your savings at the balance while it's still at 0%. Something I'd only recommend if you are NOT continuing to use cards.

And keep your 401k money where it is.

You are young enough to do this so if you feel you will have the discipline after the fact to not use CC and to save for retirement, you might as well go ahead and do it.

Usually only current one but she could be able to roll old one into current plan. Also on the loan - yes you have to pay back but it's just treated as a distribution at that time if you don't. So at least you defer the bad tax effect while still working at same place b

OP is talking about an OLD 401K since she has a new job - can you take a loan on an old 401K or only one that is active?

PP here. I want to add that my cash flow is better now. I just robbed Peter to pay Paul for awhile. I ended up doing a 401K loan (TSP loan actually) and consolidating it all. I have a positive cash flow now each month and I'm using the extra to pay off the loan early and rebuilding my savings. I make more money this year (was at 70K last year, under 50K when DD was born). Tuition costs will also drop in September for me (rising Ker). I just accepted that it would financially suck for awhile but it was temporary. I had way more debt than you (20K). At 7k, you can easily knock that out beginning in September.

Anonymous wrote:OP back- Yes, I think I am disciplined enough not to use the CC ever again. I can't reduce my living expenses though. I work in Tysons, so I need a 2 bedroom in an area commutable there. These are my major costs:

-My rent currently is $1600. I don't think I can reduce that unless I live way out and then I would have to pay more in gas, tolls ect, so is it even worth it?
-Daycare: 1300
-Cellphone: $70
-Internet & Cable: $75 ( its basic cable, cheapest I could find)
-Car Ins: $150 ( i have 3 accidents)
-Car Payment: $350
-Credit Cards: about $400/month
-Utilities: $250
-Gas:$200
-Food: Varies

So these are my main expenses. Thanks

Our income, age, family size, and commute are roughly the same. I saved on rent and daycare, less than 200/week at a church daycare with a wonderful curriculum (and I'm not religious).

OP, do NOT touch the 401k, whether cashing it out or taking a loan. Put that idea out of your mind and work on your current expenses. Use the emergency fund you discovered and get to it.

Anonymous wrote:I need to hear OP say she's going to stop paying extra on a 3.3% car loan when she's carrying credit card debt at 20% plus.

Are you sure she's actually paying extra? My impression was just that she took a short loan term. The payments are probably fixed.

Look at the fine print before taking a 401k loan. If your plan requires full payment immediately if you separate from your job, I would not even consider considering it. If they allow monthly payments to continue, I'd only use it as a last resort.

When you tried for a lower interest rate, were you only asking your current cards? You need to go after balance transfers with a new company. The MyFico forums are a good resource for determining which 0% cards are more forgiving in accepting applications.

NP here. I don't think you should touch the 401K; don't cash it out or take out a loan. You will end up in the same situation over and over again if you take the easy (and more expensive) way out of debt.

You need to get organized and take charge of your money. List out all of the debts that you have to pay off, including the interest rates, minimum payments, and current balance. You need to see it all in black and white in one place. Look at your monthly spending and see where you are spending your money. Look hard to see what you can cut. Several posters have provided good suggestions so far. You have to change your mindset of "well it's only $25 a month". That adds up, both over time and when when you combine each of those "just $25" expenditures.

If you list out your debts, then we can help give suggestions for how to prioritize paying them off, and illustrate when you could expect to have each paid off. That might help motivate you.

Do you need to move? It is hard to quantify the commute/schools/stability, so that would not necessarily be the first place I looked to save money, but it is an option.

Anonymous wrote:401K LOAN is a better idea - most plans have that ability…

Got to be careful with the 401k loans -- they are tied to your job.
If you lose your job or quit, you need to pay back the balance on the loan almost immediately.

Go in with eyes open, if you chose this option.

Do you think taking a 5k loan would be beneficial? I know 401k loans are amortized up to 5 years. So let's say I take a 5k loan, then I can pay the Cc almost down and then repay the 401k plan ?

401K LOAN is a better idea - most plans have that ability…