kpow08
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| borrowing from 401k |
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Would it be wise to borrow 5k from my 401k to pay off credit card debt. We bought a house and put down the 20percent to avoid PMI, but didn't know wife was pregnant at the time. We had enough saved for moving costs, closing, etc, and still have a small reserve for emergencies. If I borrow, I would commit to paying it off in 1 year as I currently invest 12% annually, which is about 8k. So I would be able to continue investing as well as pay myself around 7.5% interest on my loan. What are anyones thoughts??
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Fri Sep 02, 2005 2:30 am |
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MattL
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I wouldn't borrow against your 401k. I think you would be better off reducing your 401k contributions until you get the debt paid off.
Debt Elimination
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Fri Sep 02, 2005 2:40 pm |
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sayyes
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I agree with not pulling money out of your 401k. This should be a "last resort" type thing.
If I were you (and keep in mind that I am aggressive with my money) I would put all the money you have saved into the credit card. I don't think it makes sense to have money earning 1% in a savings account while you're getting charged 15-20% on your card. Then, you can use your credit card in case of an emergency.
However, YOU need to do whatever lets you sleep better at night. That's just what I would do.
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Fri Sep 02, 2005 3:09 pm |
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luke101
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I disagree, I would suggest borrowing from your 401k to pay off debt if it is effecting your daily lives. If you decide not to borrow and you are in alot of debt, believe me you will eventually borrow from it. I would not make it a habit borrowing from the 401k because this would just increase your monthly loan payments and reduce the overall performane of the 401k.
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Fri Sep 30, 2005 12:02 am |
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Rolo
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| Re: borrowing from 401k |
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quote:
Originally posted by kpow08
Would it be wise to borrow 5k from my 401k to pay off credit card debt.
Is 5k really enough to warrant raiding your 401k? What is your CC interest rate and what is your 401k yielding?
Except for funds-matching contributions, can you lower your contributions and pay off your CC more aggresively?
"Expect me when you see me."
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Fri Sep 30, 2005 3:45 am |
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RobD8870
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Have you considered getting a credit card with a 0% intro interest rate and putting 5k on that. Then switching to another 0%CC after the six months at 0% are up on your original. If you are looking to pay it off within a year this would be ideal.
You dont want to dig into 401k unless your iin dire straits. I am no expert by any means so I am interested to hear what others have to say about this idea.....
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Wed Nov 16, 2005 9:52 pm |
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