cash out 401k

quote:

---

If cash flow is tighter than my comfort level and 401k could payoff all debt (after taxes and penalites)except for mortgage. Would you even consider it?

---

Evaluate why this situation has occurred/ongoing. Has something changed significantly with househould finances or is this a result of long term overspending, etc. If you can make budget changes that would help workout of the situation without drawing down the 401k, that would be best. Would you still be contributing to the 401k in the future? Maybe you would be better off maintaining the current balance of the account and ceasing 401k contributions to use the additional cash flow to pay down debt instead of paying costly taxes/penalties?

Bad idea..

Hammer meet nail....This has been addressed. Been very disciplined last 2 years and definately light at end of tunnel. 18 mos to be all paid off. At times, i think it would be easier to wipe it out and have a clean start again. Made poor decisions early and continuing to pay for them. Did Dave Ramsey and snowball is going, but knowing it could all be gone in an instant and then could put 4x in 401k as currently contributing. Sorry for ranting, just thinking out loud a little bit. student loans, vehicles, credit cards, i had a little bit of it all. Have over 1/2 paid off in last 2 years, but its this time of year that it really hurts that i made poor decisions 5 years ago that i am working may way out of.

Before considering cash out, have you looked into a 401K loan? If discliplined, the math is not as punitive as cashing out and depending on ROI can actually make sense. Again, if you are discliplined and stable employment.