What would you do?

Hi! Short story, I have some debt right now and it has put a lot of stress on me and has been weighing on me the last 3 years we’re I am living paycheck to paycheck even with my job who pays decent. Anywho I am relatively young and have a 401k were I have some money where I could pay off some debt that would lift a lot of this burden and stress off me.

Would you take some of that 401k out some of it to pay the debt I have now about 5000 worth or just keep paying payments for the next 3 years living paycheck to paycheck?

Btw I know there is a 10 percent penalty fee for taking some of your 401k before your supposed to.

Any help or suggestions, thanks you

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BigBulge · 41-45, M

Instead of taking money out of your 401-k, find out if you can BORROW from it. That's what I did. I borrowed $12,000. Because I borrowed it from my 401-k, instead of a bank, as I made payments, the payments PLUS INTEREST went right back into my 401-k.

JaneCas · 26-30, F

@BigBulge the whole point of getting money out of my 401k is so I won’t have the stress of multiple payments one various accounts so I don’t see the point in borrowing from my 401k

Zeusdelight · 61-69, M

@JaneCas If it is a cheaper rate and will cost less in the long run it would seem to be a viable solution. It would give you an immediate cash boost and not interfere permanently with your 401K balance.

Taking money from your 401K now and not replacing it will cost you much more in the long run.

Venturist

Dont do that. Average stock market return is 8-10% per year compounded.

Continue to pay down your debt as you can and as fast as possible but keep funding your retirement to the maximum of the company match.

Someone below mentioned something really really smart... borrow against your 401k if you can. It will give you significant relief without compromising your retirement savings.

Nick1 · 61-69, M

Don’t touch 401K. Do best to pay your debt. Pay your highest interest charging debt first.
Borrowing from 401k will be cheaper and you may have longer period to pay back.
Do your best to free from credit card debts first. Try is any close family will lend you interest free loan.
Good luck.

Slade · 56-60, M

You gotta ask yourself, is losing the stress worth $600+? If it is then do it. If not hang in there

JaneCas · 26-30, F

@Slade more Like 4500 of loans where my interest and it’s affecting my credit due to not being able always to pay on time because of other expenses that may come up, it’s like the money I get paid every two weeks is set for all these bills and I don’t have money for other things that may come up. This is stressful

Slade · 56-60, M

@JaneCas I just meant the penalty you pay. Borrowing from it seems the best option

Applepiedom · 56-60, M

Financial advisors say never touch 401 k

LamontCranston · M

Don't do it.

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