Have $22K in credit card debt - want to get rid of. Have $285K in a 401K.
Should I use 401K, take the penalty and pay off the debt?
No! It’s generally a poor decision to take from your retirement to pay any bills. The reason is that your 401k is earning and building for what you’ll need later. It’s like taking the engine out of the future funds that you’ll need. My advice would be evaluate your spending to find ways to tighten your budget and also evaluate your income to see if you can gain some extra to pay down those loans. As you think about your 401k, just pretend it’s not there. It’s working in the background strictly for your retirement. Plus, you may have penalties, taxes, and fees that make it even less of a good deal. After your debt is gone, build your savings so you don’t have to be in that much credit card debt again. Keep at it! | 09.19.14 @ 15:52