Should I take $ out of my 401k?

Question

So… some things came up last month & we couldn’t pay two of our credit card payments. Now we’re behind & got a late fee added on top of it. I feel so overwhelmed with everything. Life is expensive right now in general. I recently started listening to Dave Ramsey & my husband & I are going to be super disciplined with our money. We made a budget and trying to get on track. We do have 3 kids though. Should I withdraw $ out of my 401k account to help out a chunk of money down & reduce our monthly payment? I’m very young at only 25 years so I feel like I have lots of time to build that money back up. Also, I know there is a penalty. Let me know your thoughts or if anyone has been in this same situation.

Answer

You can actually loan yourself the money from your 401(k) instead of withdrawing it. And then you can pay it back in small increments. This way there's no penalty. ￼

Answer

I did that, best choice ever. Now debt free and have plenty of time to build it up again.

Answer

I personally wouldn’t

Answer

No, don’t touch 401k for this. Sell some of your stuff around your house to help cover the cost of the bills. Also, (not related to your original question but…) I highly recommend having a larger emergency fund saved up than Dave recommends, especially if you have children. We would have been in a nightmare of a situation when my husband got laid off when Covid started if we had listened to Dave 100% on this.

Answer

I touched my 401k if you are able to do it with a low penalty mine was 10% of what I withdrew and I took out on a repayment plan so I lay monthly around 276 for 2 years. That actually helped out so much. Just make sure to stay on budget and if you can cut things as much as possible for as long as possible as a family of 6 I was able to cut gorceries from 1500 a month to 800 for the past 2 months and it helped out tremendously. I wish you well and hopeful it sorts out quickly for you.

Answer

If you can catch up I wouldn’t touch 401k

Answer

It truly depends… YES you are young and have time to rebuild it- but is it going to help you significantly? If not, then I wouldn’t because you are taxed /penalized For touching it. I would start by scramming for money elsewhere, selling unused things etc before pulling money and being taxed for it. Unless you plan to pay off the entire debt with it, I wouldn’t bother with a payment chunk.

Answer

It depends. We tried to not touch 401k but life kept coming at us & the debt kept getting larger and we felt like prisoners to the debt. We made the decision to take a portion out & I don’t regret it. I’m also 26 years old and have time to build back up.

Answer

Absolutely not.

Answer

Yes I’d pay it all off if you could

Should I take $ out of my 401k?

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