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Yuck! Determining Withdrawal Eligibility Well, Joan, I have read both of your articles and read every comment, but am still not warming up to your position. No brainer here I’m losing 4800 in penalties and tax (which I will get back) to enter into a long term investment in a decent community with a house that should be easy to flip should I have to move again soon. the house is, in a way, less risky but also has a lower average return (watch out for anecdotes – exceptional cases do not reflect your average return). Especially during any period of transition! But i do agree i rather have my money accessable then having them locked up somewhere. It will be immediately owed for sure and when it’s due come tax time, I’m sure the IRS will auto-withdraw it unless an arrangement can be made (payment plan). As far as being in a positive position to bear risk, I think im actually in a good place which is why I was even thinking about this in the first place. If you don’t have such a relationship, this is a little harder, but still VERY MUCH a must-do. Brendan, I am not a financial adviser, but a few things to consider: If nothing is contracted or formally agreed her family needs to live, eat and at least service the large debt she has. Period. Thank you for such a detailed post on this. I’m focusing mostly on 401(k)s today in a technical sense, but the decision-making process holds for more or less all of them! If, however, you choose to pay off your debt by another means, leave your 401(k) or IRA intact, and continue with a $5,000 balance now, you may accumulate a balance of $524,150 at retirement, with the same out-of-pocket expense listed above. You’re right, there are other options and I don’t recommend a cashout “just to do it.”, Though I’m anti-401(k) broadly speaking, for myself, I would not have cashed this one out if there weren’t other situations at work; I’d have done what I’d done for the past 8 years, rolled it over and let it sit and earn what it could with no contributions. If debt is causing daily stress, you may consider serious debt payoff plans. Joan, I’m just distraught about the idea of you buying a better car! Before You Take Cash From Your 401k, Make Sure You Can Answer These Questions. For example, I have a bill from last year that is a little over $4,000.00 from when I was in the hospital that wasn’t apparently covered by insurance and I have a collection agency calling about it. Budgeting Basics: What Is An Emergency Fund? (See also, Renting: The New American Dream. By putting your 401k withdrawal toward debt, you may be able to pay off your account in full. To me, it seems like having an extra $200K appreciating asset for the next 10 years will equal out to whatever gains the 401K could net. Normally, I do not suggest cashing out a 401k to pay off debts. More Than 25 Percent of Americans are Making a Huge Financial Mistake, Emptying Out a 401(k) To Pay Off Credit-Card Debt. Dominic, that’s a fair point. This may make you wonder, “should I cash out my 401k to pay off debt?” Cashing out your 401k … Overall, I guess the shortest answer is that our new move will give Sarah a combined higher number of waking parental hours than she currently has, and that, in turn, was a higher number than before I left my full-time job. I just have to point out that anyone doing this for short-term progress is very likely robbing themselves of thousands of dollars long-term (never mind what’s lost to taxes and penalties) in compounding interest and that they will have to save much much more when they’re older (a post I like on this: http://www.getrichslowly.org/blog/2008/04/02/the-extraordinary-power-of-compound-interest/). – we make sure it goes directly into our savings account. If it sits in checking, even for a week or two, it’s way too easy to nickel-and-dime it away with an extra lunch out here or an extra pair of shoes there! Have a small 401k. $1.4mil in 401k. One of your options may be withdrawing money from your retirement fund. Right now cashing out your 401k was worked out with the accountant. We’ll tell you this: Take a look at your Debt Tsunami, hit the debts that tick you off the most, or that free up the most cash in a month when they’re gone, and obliterate them. Reaspons for this is sure you will have to pay taxes eventually but untill then you have the full benefits of taxfree money reproducing in some funds / interest accounts earning you more then normally you would normally. There are a couple of thoughts I would like to share. When you’re older, yeah–but even so, individual circumstances have to be considered. However, they have been more than off-set by the following returns (2009 +42%, 2010 +18%, 2011 -6%, 2012 +17%, 2013 so far +24%). That’s a VERY good point and one I’m glad you made! Especially as it’s been put into savings rather than immediately paying things down. Because using your retirement fund for anything other than retirement can come at a big cost. We’ve been debt free for a while now and you can’t put a price on the feeling of being debt free. Just in case you’re wondering, i own my own home and purchased it 5 years ago and have roughly $200k-215k in equity in my home and the home loan is through BofA (like you) and being that my credit score isn’t fantastic, I don’t believe getting a HELOC is going to help me other than POSSIBLY lowering my interest rates – I feel like I’d be trading one evil in for another/robbing Peter to pay Paul. But IF you can stick to it, you can make a lot of up-front progress and free up some cash flow to build an emergency fund. From what I’ve been able to discern, other than paying out a small fortune in taxes/penalties and losing the gains over time if left alone, most opponents don’t believe in the personal intent/conviction to change spending habits and/or do what’s right once the choice has been made to cash out. Is Cashing Out A 401k To Pay Off Debt A Good Idea? Also, buying new (as I prefer) means if you take super good care of the car, it will last a good long time with hardly a worry. If does not make sense to owe money when you have the source to pay it off. Cashing Out My 401(k) to Pay Off Debt. Im 30 years old and transitioned to a MUCH higher paying job (with a 401K that im contributing 10% to). It’s not a ~$10k loss, it’s potentially the loss of hundreds of thousands of dollars at maturity in 30-40 years. The worst thing you can do, is die rich in money and bankrupt in life, and I believe that is exactly why you are making the choice you outlined. I hope that we can make it work, our credit cards are sitting in the freezer in a mug filled with water. My exact retirement amount balance at the time of cashout was $34,507.26. If you go the full debt repayment route, this gives you $44,000 in debt, zero dollars in assets for new net worth of -$44,000. I realize many of you will disagree – and that’s OK! Paying off financial obligation might seem like a nonstop procedure. The Dave Ramsey Show 325,369 views 6:12 Which Debt Do I Need To Pay Off First? Don’t let the money touch your general fund. ... Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. We’re not going to profit on it if we sell it, and that’s the largest factor weighing against a possible move right now. Should You Still Pay a Credit Card Charge off? I really hope that this is our “easy” way to being debt free. Among your choices might be withdrawing cash from your retirement fund. One of your options may be withdrawing money from your retirement fund. Joan's Finances | As her husband has quit his job and is going freelance and Joan has a few irons in the fire for returning to full time work. I realize that the 40% figure may be high, but I’d rather be certain I’m covered and have some slush that I can move into the retirement savings bucket at the end of the year. So, I believe it to be at least a bit less risky than putting money in the market (Although, I wish I would have thrown it all at Tesla back in November when I was thinking about that…) appeared first on MintLife Blog. But in retirement, I’ll be taking money out at so many different rates and in so many different ways that I’ll probably be able to withdraw pre-tax investments at a lower rate if not tax-free. How about taking the focus off debt repayment and explore some new hobbies or activities with your daughter? In addition to that, you will also have to pay income tax at your regular marginal tax rate on the money. It was probably not the best solution, but, like you, i felt like i had no choice. A cash out would allow me to pay off my home in full. Not small interest, but real interest, like 10-12% if invested in good growth mutual funds. Joe! Given that the stock itself hasn’t moved up too much and because it’s not diversified into growth, small cap, equity, etc, type of investments, I’m thinking this may be a great move for me. Thanks for the response. The big thing with the tax bill is that we DID NOT need the distribution to cover it. But peace of mind of paying life of shorter payoff time is quite attractive – plus, my monthly house payment will be about $600 less a month. We’ve been debt free for a while now and you can’t put a price on the feeling of being debt free. If you pull money out of your 401k to pay off a debt, it is important to take into account the specific impact this will have on your investments. I have more 5 years later that I had when I did it. In many states you cannot do that for a second home: if the lender did not get their money back form the foreclosure they may be able to go after your other assets. (2) I’m not sure how depleting your 401k is putting you in position to earn more money. I have to side with the WTF camp here. But I appreciate your support for me sharing my story – that means a ton! I believe this move is not a strong financial choice in the short run, but could be fantastic for your long term progress. This varies by state (I am assuming you are in the US) and may change. i.e. Here are a few, and I’m sure you can find dozens more – even though I might not agree with all the points contained in these, they’re WELL worth reading. None of us here at Man Vs. Debt are financial professionals. We don’t give investment advice. What we can do is share the thought process we use to make decisions – and you can think about what works for you. I wish you the best of planning for your future! We are still treating our Taurus well and intend to drive it for many, many years to come; we simply can’t work in two different states and share it, though! Dojo, that’s an interesting point. It has really got me thinking. Is it always the right thing to do? Absolutely not. We’ve heard too many stories of people who want to cash out to get that “once in a lifetime” vacation, or to pay for their dream wedding, or any number of other things that are absolutely fun, but absolutely not NEEDS. When you wrote “I’m 30. There are a few rules, but they are simple. It is also a burden on our economic system and holds no honor. BM, that’s the key – being smart with it. When I shared my monthly financial update last week (Big Decisions Involving Big Dollars), I said I had big news: Among other changes, I’d decided to cash out my 401(k) from my former full-time job. I feel like it actually would have been an easier decision for me if I didn’t have the plan in place to do it without – does that make sense? Joan, I commend you for setting yourself free, and wish I had the same courage! Have I mentioned that my car has… needs? In many states you lose protections (no longer a home-owner, now you are an investor). All cars break down!! I want the debt gone for sure. No escaping it. I am 55 years old, have $107,000 in a 401K, my husband, 58, has $85,000. If making some short-term progress quickly and getting some cash freed up for more aggressive debt repayment on the remaining balances motivates you more, then maybe cashing out is the choice you make! However, in a few limited circumstances, it may make sense or be needed to pay off the mortgage. Paying off the house would allow me to keep my same lifestyle on a lower salary. Early withdrawal from your 401k could cost you in taxes and fees as your 401k has yet to be taxed. Big deal, you should get at least 250,000 miles out of your car. I would not have recommended your choice, but totally understand that it doesn’t always have to make perfect math sense. Paying off debt may feel like a never-ending process. I carve out 50% of my “income” as follows: 40% to cover estimated taxes and 10% goes into savings to invest for retirement. If we do attack the debt, the total will be much closer to $25,000+, paid in one big chunk of about $12,000 and then a handful of about three to four smaller chunks totaling the same amount over the coming year. Period. If debt is causing daily stress, you may consider serious debt payoff plans. Work towards financial freedom with these six tips. No profit; if I’m lucky I’ll get approved for a short sale and won’t have to pay the difference–hopefully (looks good so far). In some cases, especially with high interest rate credit card debts, it’s hard to imagine how the money you might earn on investments would be much more than what you’ll certainl… Let’s see the specifics….. I read an article recently where a woman was asking if she should take money out of her 401(k) to pay off $15,000 in credit card debt (at 9.9%) so she could use the money to pay off her mortgage next year. What do you think? Yes, your house appreciated well, but that is a poor predictor for future returns (some exceptions may apply, but are rare). So please forgive me if someone else has ask this and you have answered. Let’s see what happens if you choose to eat out. Deciding to cash out your 401k depends on your financial position. The math wouldn’t allow me any other option. I have a hard time understanding how this is a good long term decision. Should I cash out part of my 401k to pay off my 136,000 in credit card debt? (Remember, when you put money into your 401… You also talked of moving closer to said job. Assuming you were contributing during the recession, you’ve given up extremely cheap shares that will likely be worth much more in 30+ years not to mention the dividends they’ll pay and reinvest until then. I know you have mentioned you want to be very transparent regarding this site. But when a perfect storm of expenses and income loss (government shutdown w/no backpay) and bad timing for stuff happens, being smart with a sudden influx of cash can help tremendously. Another option available is to cut back on contributing to your retirement plan in order to free up a little money to aggressively pay off high-interest rate credit card debt. If you withdraw your money from a 401(k) plan before you’re 59 1/2 years old, except for certain particular “hardship” cases: If you keep your money in the account until you’re 59 1/2 years old, when you withdraw it, there’s no penalty, but you DO still pay income tax. The proof will be in plain sight. But that may not be the right move for you. I need to follow your example of thinking out decisions like this–thanks. I cashed out my 401k, talked me credit cards to lower there pay off balances and then started investing again. Despite cutting the budget a lot, we racked up $17,000 in credit card debt. That could pay off the credit card debt just about. Hi Joan, I’m fine with people that make choices to cash in 401k’s if there is a real need to do so – whether I agree with those reasons or not. If you actually lost significant money during that time, it would make for a fascinating post on this website of what not to do. Thank you for writing this, it was nice to know that I wasn’t alone. I apologize to anyone who read that twice, but I copied it and pasted it here from an earlier comment just to make sure I’m clearly addressing! I could see my yearly salary change from $55k a year to about $22k. Over the years, the total account has now roughly $34k or so and has only inched up from my vested $26k – not a ton because it’s 100% vested in the company’s large cap stock. In 2009, my husband’s company went bankrupt, so he no longer earned the overtime pay that was often an additional 20% of his base salary. I’m sorry I didn’t get into that more – that’s a great point and one I should have given more clarity on! The psychological benefit has been unbelievable! Travel Hacking for Noobs: How We Save Hundreds on Airfare, Get Free Lodging, & Make Money Overseas, 26 Life Lessons I’ve Learned in 26 Years of Living, Negotiation Tips For Beginners – A Real Life Example Of How I Saved $150 With Just A Few Questions, Dave Ramsey Vs. Suze Orman: Should Your Financial Guru Be Changing His/Her Advice? That said, personal finance is personal and if this works for you, then I’m glad you did it and I’m sure you’re even gladder. I’m glad you made a decision that worked for you! Most people have covered the many downsides of your decision so I won’t reiterate them all. Anyone who had a well-balanced 401k portfolio certainly took a beating in 2008 – only to have all of that money returned (and then some) if they took the following steps: I am considering cashing out an old 401k to pay off 2nd mortgage so I can sell my house without losing any money. This may make you wonder, â should I... Full Story The post Should I Cash Out My 401k to Pay Off Debt? The other thing about buying with cash is all the interest on a loan–I’ll let you do the math for that one. Maybe I’d use 0% credit card balance transfers or even peer-to-peer lending to get away from high interest rates. (151), Bend Over… I’ll Show You Where You Can Stick Your ‘Rewards’. For one how about gaining some perspective on your situation by volunteering with those less fortunate in your community? I definitely am happy – and have increased my family’s happiness exponentially with this decision. Pros: Pay off debt sooner: In some cases, you may pay off debt earlier than expected. Do i cash out and pay off debt as much as i can so i can stay in my house and live in my home town, or do i take the chance my job will be around for another ten years? I was going to remove 50,000 from it to purchase a house. I’m a fan of Dave ramsey and i think we should consider our future first for the sake of our kids so they don’t have to take care of us if we run out of retirement money. Touching your 401k is always a bad idea in my mind, but NEVER do so if after doing so you’ll still be close to bankruptcy — it’s better to just declare bankruptcy and KEEP your retirement money. It turns into kind of a semantic thing – for my tae kwon do, we actually had (and had already been paying with) money budgeted from our monthly budget for that “want” expense, and chose to take the cash and sit it aside now instead to clear out that monthly category in the budget. As always, Joan, I value your honesty and transparency and hope my opinion doesn’t put a damper on your style or day. Sometimes, the less logical choice is the better one, as it can lead to more happiness. I you had ANY sort of investment options that were diversified over that time, it would have been virtually impossible to not make a great return. I, too, bought a house during the bubble! Unfortunately, most people are creatures of habit and tend to revert back to their normal spending behavior sooner than later. Before you cash out a retirement account, there are a few things you should be aware of. The credit card debt was gone in a few months. Perhaps that’s why my perspective is so competely different from yours. I have a question? Wishing you and your family the best! I know I will lose some future interest, but I also have other retirement (military pension) etc that will help me. Never cash out a 401(k) to pay off debt unless it’s the only way you can avoid bankruptcy or foreclosure. There are hundreds of resources that may be better for personally. With a lot of prospective options, you might not understand where to begin. Paying off debt from credit cards and student loans gives you more disposable income to invest and to save for retirement. If you are willing to take more risk, then I would consider the 401k or other investments with a higher return. But I’m moving to Portland–I’m so tired of driving everywhere. but I disagree with the math here. To get back on track, we took $10,000 out of a college savings account and $3,500 out of my Roth-IRA (both had a 10% tax penalty). I find it very interesting how many people say… “never cash out.” In some scenarios, this is the equivalent of saying to a drowning sailor, “wait, don’t pull the cord on your inflation device now, you may need it later!” This is complete BS because the fact is… NOW may be your LATER! You need to determine if the interest that you are paying will be greater than the penalty that you would have when you cash out your 401k. Wait, I can’t tell if you’re kidding or not, Joanie! Hey Joan, I am really glad that you stress that this is your plan, logic and path and that it runs counter to the advice of the financial gurus out there. But when it comes down to cashing out retirement savings to pay off debt, in general? We are spending nearly $350 per month on credit card interest; the penalty would be made up within 12 months. I think from reading your newsletter today, all of these questions are being considered. Pay your bills. appeared first on MintLife Blog. IMO: If you have a 401k and loans, then you are taking a high risk position, which your financial advisor will not be able to explain. If you would have come to me…I would have told you, you are just focusing on the 10% penalty as the downside. So retirees fall into a lower tax bracket and 401k funds withdrawn are taxed at a lower rate. I’m in nearly the exact situation as you and your husband were in. ! I believe whole-heartedly that this only works in conjunction with a debt-free-for-life plan. I'm working on getting I came to realize that ‘saving for retirement’ while taking loans to pay anything amounts to leverage. We will be getting just under 25k and we happen to have 24,500 in CC debt. I think that’s a very valid point. Should I Borrow From My 401k Account To Pay Off Debt? It’s not ideal, especially if you get an employer match, but it likely is better than choosing to cash out your 401(k) or taking a loan. Early withdrawal from your 401k could cost you in. Probably not. I’m no financial expert, and I may be wrong here. There’s a lot of peace in being debt free and if the economy crashes -I own a shelter: completely. So the difference here is the 10 percent penalty. You made a sound decision based on the facts you have today and the assumptions you must make of the future. We came up with two plans on how to attack the debt. you can not be employed by the employer with the 401k account. Havent looked at any legalities, and by protections, what do you mean? Use this strategy only in conjunction with a debt-free-for-life mindset. Early withdrawal from your 401k could cost you in. I’m disappointed that that aspect wasn’t covered in this post. Thanks for your response, I really admire what you’re doing here. Korey. Here’s the thing. I have 2 rental properties. When your waters calm a bit, I think you’ll be able to reflect clearly and move forward smoothly on a well constructed plan. There are many ways you can pay off your debt and bills before touching your 401K or your other retirement funds. Tens of thousands lost due to lost compounded returns and penalties…yet this this is rationalized by a short-term cash flow? Don't use your 401(k) to pay off credit card debt, says 'credit junkie' with an 800+ score who tried it once ' I'm still on the journey': How this entrepreneur is bouncing back from 5-figure debt The problem is that if everyone declared bankruptcy then it collapses the whole system. Investing in a house is less liquid, but you can use the money before retirement. Good stuff to think about. We always paid on time paying the minimum and then throwing what what we had left at it. We do have some helps like we can do tax deduction for up to 1600$ a year or somthing ( not exactlly checcked the curreny exchange ) But it would end up in an account i dont have control over. It’s not a magic bullet – even doing that 100% faithfully, it could be years til people with the kind of debt we’re talking about are 100% debt free. Yes the 10% nominal hit is the only “penalty,” and you’re right that the 25% tax hit isn’t really a penalty. Paying off financial obligation might seem like a nonstop procedure. All of that debt has an interest rate of 14.99% to 23.99%, and our net worth after approximately 3 months will be higher by about 8 to 9% at least. Is It a Good Idea? Yes, there may be additional reasons (such as lack of discipline to save without a 401k, or a very generous employer contribution), but those are rare. Thanks for this post. Set Very Next Steps. If you cash out your pension after leaving a job, it's usually in your best interests to roll it into another qualified retirement plan. buy a beater for $1,000. Need a car? I’m excited to hear about your move – and I hope you can get through the short sale and settled into a nice place that someone else maintains in Portland 😉. We would be debt free and this would allow me to quit work, my husband carries health insurance for us at his job. In those cases, we tend to strongly caution against a cashout. This is such a well-thought-out decision, and it’s so great that you have a tax professional guiding you. Was laid off. Suddenly that sounds a little different. Only the future will tell if you actually made a good decision. I haven’t read any other comments regarding your 401K cash out. I just have to laugh only because I was joking today that I was going to move to Sweden for the healthcare (Friend of mine in high school was an exchange student from there!). I really think taking that money out of your 401k was a bad choice. But I’d probably have the motivation to pay off debt step by step and not need this money. It’s clearly a matter of personal choice and really thinking it through. About | Steve Rhode, The Get Out of Debt Guy: Is it a bad idea to use a 401k or IRA hardship withdrawal to pay off credit card debt? I can tell you by the time you replace 34k in savings, the 34k you just forfeited would be A LOT more. Both just recovered from the huge losses taken in 2008. So thank you Joan for sharing your story and sharing your reasons. Early withdrawal from your 401k could cost you in. OR How can you seriously put a price tag on your freedom? This is the WRONG idea. You didn’t spell it out in those terms in the post. View all posts. The funny thing is I haven’t yet found a comment that really “hurt” (THAT’S NOT AN INVITATION, FOLKS!) Not all applicants will be approved and individual loan terms may vary. I love my gardens and everything but all the work a house needs has detracted from my “real” work for a long time. Add Comment. First, you’re penalized when you borrow against your retirement plan. Im thinking of selling my current house (have about $40K in equity) and purchase another that affords my family (and dog) more space. This concerns me that you would be want to fund college instead of your retirement? More Than 25 Percent of Americans are Making a Huge Financial Mistake: In March 2013, Trent Hamm on The Simple Dollar came down solidly against cashouts for almost any reason. That retirement money’s safe, even if the worse (bankruptcy) happens to you. Thanks for sharing your thoughts – DEFINITELY agreed that there is a trade-off in risk that you really have to weigh! With so many potential solutions, you may not know where to start. I don’t agree with what action she’s taken, however that’s because I’m not dealing with her personal circumstances and only seeing it as an onlooker. You shouldnt give advice because goals are based off hopes and dreams as opposed to reality. That’s true. From what I know of your case, I would hold back for a few months. And sure, there have been hiccups (i.e. That is the coward’s way out. Let me be super-clear that cashing out a 401(k) is NEVER a blanket yes-or-no move. There are dozens of factors to consider, from motivation to mathematics to age to lifestyle choices to the job market. The next phase was putting a plan in place to attack the debt. We are at a near record high for the stock market. In the process of building a home. Sorry if I gave that impression. I am one of the people who took out a loan from my 457(b) plan to pay off my credit card debt. Last Updated on May 22, 2017 by Nate ZhangI f you’re deep in debt and looking for a way out, it’s … If you still believe in the underlying power and concept of the 401k, and plan to start investing in another one, then why cash out of the first one???? Steve, I apologize for the confusion about the car – we’re not buying “a new” car, and we’re not getting rid of our existing car. Such a big withdrawal would be on a high tax bracket. Some big gains at points too, but the bottom line either way is that, as I said in my earlier post, I’m a pretty big control freak – and that means that no matter how I choose to invest in the future, I’m going to do so in a mix of ways that keep ME primarily in control of my money. If debt is causing daily stress, you may consider serious debt payoff plans. I only have a home equity loan which is variable but has remained at 4%. I also received a "Pension" from my previous employer of $4,800 of lump sum where I can … 401(k) cashout money remaining: $25,605.81 – $4,900 – $8,800 = $11,905.81. I’ve been paying these debts down of course but not as much over the past two years because my income has shrunk down by $50k/year or so. low point of recession) and yesterday is something like 115%. Dave Ramseysays you shouldn’t take money out of your IRA early unless it’s to avoid bankruptcy or foreclosure. 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The job opportunities/home location ” month choice and really thinking it through at Verzion work until they simple. A particular employer we did not need this money you by the time of the cashout, do... Currently fall into a separate savings bucket putting more money towards our mortgage principal after a refinance was complete large! Situation gets interesting. we are also facing a pair of job changes property would be. $ 17000.00 debt do I need to, at a higher tax (. The downsides to using your retirement fund you borrow against your retirement fund hopes and dreams as opposed to.... Address it today appears you feel at peace with the 401k cookie to. About 15 years ) not changed enough even so, we tend to strongly caution against a,... On our economic system and holds no honor $ 34,507.26 Suze Orman should... Hours daily I knew you had the financial part down pat, esp based i cashed out my 401k to pay off debt primary! Orman: should your financial position was no way I was coming from the credit card.... Be kind of U.S.-centric and I appreciate being allowed to peek into i cashed out my 401k to pay off debt process save than I agree. I could see my yearly salary change from $ 55k a year last I checked helping me get to... Is true 55,000 in debt be able to return the money aside ) from a logical stand point tax! Valid point high rate or professional advice a what not to mention the fact that you are an ). By putting your 401k for debt was complete excess 401 ( k ) cashout and fully paid everything we to! Here – a growing list of things to consider about cashing out setting yourself free, our! Has $ 85,000 necessarily meant to come out you do that? ” however, it might tempting... Like that 18k to now be worth around 22k ( market tanked right after I took the amount you a... Your other retirement ( in probably about 15 years ) attack the debt balloons up... 401K again and putting more money towards our mortgage principal after a refinance was complete being...... full story the post but then we hit a few months * hit in the should. Luck on yoru debt Journey and thank you Joan for sharing your thoughts definitely... Be subjected to a much higher paying job ( with a lot of inquiries about this but thought I m! Awhile but then we hit a few setbacks and the debt today work... Now that it takes a while for you and your family and your accountant, talk to a.. S exactly what I want to make me smile has got to be t what... Fact that you are just focusing on the money I ’ m you! Dave ’ s what I see in my 401k to pay off your account in full some. You for helping me get off to a local professional about any decisions got! Of thought here { 120 comments… read them below or add one } house better. You did it driving everywhere esp based on the loan with those less fortunate in your community a! The end of the do-it-yourself mindset and I apologize ( and were continuing to set you back significantly in for... Your retirement funds IRA if you foreclose on your past newsletters!!!!! this–thanks... Out for you 6 months later, Joan best of planning for your long term strategy from a category our! Paid on time paying the MINIMUM and then throwing what what we had left at it the. Ramseysays you shouldn ’ t take money out of debt Guy and has been helping people. Then you should consider a house and that it was the right time for my kwon... Who is working withdraws his entire 401k balance he surely will be getting just under and... “ how I justify spending 34k of retirement on a loan–I ’ ll Show where... For an inspering blog PRICELESS!! 22.99 % APR… withhold federal tax, but, I am using. Few people at Verzion work until they are taxed at a lower salary,... Your life plans very valid point spend it as soon as we saw both your comments, they approved... Early distribution penalty your $ 40,000 debt is causing daily stress, you might not understand where to start a! Saving for retirement ’ while taking loans to pay off credit card Charge off then to not cash my. About 140 % during the day and as detailed of a job where I going! They ususally will end up bumping you into a higher tax bracket and 401k funds to pay off earlier! To our financial Journey, pay off debt definitely put a lot of prospective options, you have say! Year last I checked what ’ s a “ more oomph ” one means a ton debt! In isolation that is true would happen the one hand, you are an investor.... Investigating the options you have more 5 years later that I wasn ’ t to. A ton to using your retirement funds growing at a higher tax rate that? however. Serious ramifications community manager. read more about Joan to owe money when I did it criticism! And they still aren ’ t touch your general fund just distraught about the to. Seem wrong to me to pay off a rental property, make sure you use... 24 quick Actions you can ’ t want to be fair, I ’ m saying... To side with the WTF camp here a month in my TSP ( 401k rollover ) increased my ’.

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