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Started By
Message
cash out 401k
Posted on 12/19/11 at 1:51 pm
Posted on 12/19/11 at 1:51 pm
Traditional wisdom would tell you to not withdraw from your 401k. 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?
mid 30's, 3 kids, dual income household.
mid 30's, 3 kids, dual income household.
Posted on 12/19/11 at 2:05 pm to sig3197
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?
Posted on 12/19/11 at 2:24 pm to sig3197
Paying off debt with a 401k seems like a really bad idea on the surface.
What kind of debt are we talking about here?
What kind of debt are we talking about here?
Posted on 12/19/11 at 3:44 pm to tirebiter
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.
Posted on 12/19/11 at 4:13 pm to sig3197
Taxes and penalties will take half. Hard to imagine a situation where that would be advised.
Posted on 12/19/11 at 4:14 pm to sig3197
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.
Posted on 12/19/11 at 4:18 pm to sig3197
Nt
This post was edited on 12/19/11 at 4:20 pm
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