http://asklizweston.com/2010/02/08/dont-raid-401k-to-pay-off-credit-card-debt/ Personal Finance Columnist Tue, 22 May 2012 17:44:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 http://asklizweston.com/2010/02/08/dont-raid-401k-to-pay-off-credit-card-debt/comment-page-1/#comment-1232 5 Investments That Build Wealth | Budget Musings Sat, 13 Feb 2010 15:05:03 +0000 http://asklizweston.com/?p=1784#comment-1232 [...] (RRSP for Canadians): 401(k)s are designed for retirement, not for short-term saving or paying off debt. Ideally, you will always work for an employer who [...] [...] (RRSP for Canadians): 401(k)s are designed for retirement, not for short-term saving or paying off debt. Ideally, you will always work for an employer who [...]

]]> http://asklizweston.com/2010/02/08/dont-raid-401k-to-pay-off-credit-card-debt/comment-page-1/#comment-1224 lizweston Fri, 12 Feb 2010 21:32:07 +0000 http://asklizweston.com/?p=1784#comment-1224 If there's no risk you'll lose your job, or if the plan allows you to pay back the balance over time even if you do, then I'd agree a 401(k) loan may be an option to consider. Too many people aren't in that enviable position, though, so they risk having the loan become an inadvertent withdrawal should they lose their jobs. If there’s no risk you’ll lose your job, or if the plan allows you to pay back the balance over time even if you do, then I’d agree a 401(k) loan may be an option to consider. Too many people aren’t in that enviable position, though, so they risk having the loan become an inadvertent withdrawal should they lose their jobs.

]]> http://asklizweston.com/2010/02/08/dont-raid-401k-to-pay-off-credit-card-debt/comment-page-1/#comment-1223 Howard Phillips Fri, 12 Feb 2010 17:44:09 +0000 http://asklizweston.com/?p=1784#comment-1223 An answer re: using 401(k) money to pay off credit cards is incomplete if you don't include the obvious positive result of borrowing from your 401(k) to extinguish credit card debt. Replacing an 18% borrowing cost with one at prime (plus a small fee), with prime paid to oneself, is not only fiscally responsible, but will free up funds to increase retirement savings. The argument that repaymemnts of 401(k) borrowing are double taxed is a myth, since it ignores the fact that the loan is tax FREE. An answer re: using 401(k) money to pay off credit cards is incomplete if you don’t include the obvious positive result of borrowing from your 401(k) to extinguish credit card debt. Replacing an 18% borrowing cost with one at prime (plus a small fee), with prime paid to oneself, is not only fiscally responsible, but will free up funds to increase retirement savings. The argument that repaymemnts of 401(k) borrowing are double taxed is a myth, since it ignores the fact that the loan is tax FREE.

]]> http://asklizweston.com/2010/02/08/dont-raid-401k-to-pay-off-credit-card-debt/comment-page-1/#comment-1200 lizweston Mon, 08 Feb 2010 20:30:21 +0000 http://asklizweston.com/?p=1784#comment-1200 Search "debt settlement" on MSN to find some articles about this, but debt settlement with original creditors can trash your credit scores and lead to lawsuits. It may be an option 1) if you can't pay the debt yourself (best option), qualify for legitimate credit counseling (www.nfcc.org) (next best option) or file Chapter 7 bankruptcy. Search “debt settlement” on MSN to find some articles about this, but debt settlement with original creditors can trash your credit scores and lead to lawsuits. It may be an option 1) if you can’t pay the debt yourself (best option), qualify for legitimate credit counseling (www.nfcc.org) (next best option) or file Chapter 7 bankruptcy.

]]> http://asklizweston.com/2010/02/08/dont-raid-401k-to-pay-off-credit-card-debt/comment-page-1/#comment-1199 Kurt n Litton Mon, 08 Feb 2010 20:05:01 +0000 http://asklizweston.com/?p=1784#comment-1199 Wow, great info. My retirement account isn't so well endowed, but I have been considering depleting it to eliminate about 40K in CC debt. Glad to know this is a bad move. I wonder about credit card (debt) settlement companies and the after effect. Wow, great info. My retirement account isn’t so well endowed, but I have been considering depleting it to eliminate about 40K in CC debt. Glad to know this is a bad move. I wonder about credit card (debt) settlement companies and the after effect.

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