I have some debt I want to pay off and I need some advice. My 401k has been losing money, would it make sense to borrow enough from my account to pay off the debt? Instead of losing money I would be paying myself interest on the loan but it would be a lot less than my credit card company is charging. If I borrowed the money from my 401k I would pay back about 8% in interest and would be saving the 20% my bank is charging. Is there something I am missing?
Maybe I'm missing something but in the middle of a bad economy with layoffs happening every minute how do you know your job is safe? If you borrow from your account and lose your job how will you be able to pay the loan back? When you leave a job with a 401k loan outstanding the loan has to be paid in full or it is considered a withdrawal and taxes and penalties are due.
My 401k has taken a hit too. When I talked to a friend of mine he said that I shouldn't be so stressed because the loss was only on paper. when the market recovers so will my 401k. It sounds logical but what if it doesn't recover, or what if it takes a long time to recover? The whole stock market thing makes me very nervous...any suggetions?
When you are looking to pay off debt there are a couple of moves you need to think very carefully about before you take action. One is borrowing against an asset like your house. When you do this you take unsecured debt and make it secured. If you have trouble paying yu could lose your home.
Your 401k is money that your lenders can't touch, unless you take it out of your account. If you borrow the money and your situation worsens, the money from your 401k is GONE! I've talked to people who were struggling to get buy so they took funds from their retirment account, savings, and any other place they could think of. Eventually, they still wound up in bankruptcy court.
Think long and hard before you do anything that could cause you to follow on their path.
