Dip Into My 401(k) to Pay Off My $25,000 Credit Card Debt?

Dip Into My 401(k) to Pay Off My $25,000 Credit Card Debt?


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• The Ramsey Show (Highlights):

[MarkSmithhhh]

I did this and it's scary but it's shocking how fast your 401k rebuilds once you have no debt

[cantbestoped]

I did a hardship withdraw from my 401k for about 30k to pay off my debt that was about 30k and to be honest it was 1 of the best moves I ever made I sleep better at night my stress is all gone I'll pay the taxes on that 30k with a 😁 for all that weight off my shoulder I been debt free ever since my bank account looks better than it ever had 30k set me back a little on my 401k but I believe with all that stress gone I'm going to live alot longer.

[XxMissingDataxX]

I had 20k in debit credit cards I took a loan out for 20k via 401k paid that debit off 1 shot. Setup the 401k payback from my work check. Best thing I did.

[ariantabibian]

For anyone that needs to read this, no matter what you’re going through there is a way out. Wishing nothing but the absolute best for you guys!

[Je.rone_]

$25, 000 in credit card debt is painful to even think about

[twiWright]

Stopping your 401K payments is scary. It should freak you out, but when you pay everything off and you're contributing 5x towards your 401k than your were before, you'll forget all about it.

[adamlee]

This dude is weird. In 25k debt with 90k house hold income? And contributes 25% in 401k? There's a spending problem in here.

[f-bodyjon]

Disagree. I did this on a 1 year 401k loan payback and it was a blessing. I no longer am strapped to credit card debt.

[MRDDev]

Caller: Take out money from 401k to pay debt
Dave: Nope
That could have been Dave's shortest call ever xD

[financiallift]

People will do risky tactics just to avoid admitting they have a problem getting themselves into debt. It takes work, no easy way out

[dlfleming]

This is absolutely NOT true with all companies/investment firms. I’m speaking from my own personal experience. You are NOT required to pay the loan back within 60 days or pay a tax penalty with all 401k plans.

[longterminvestmentsonly]

To be honest i sold some stocks and paid off about 45k. Its not a 401k but it was part of my retirement, and that 2k a month is gone and it was definitely a relief to not have to worry about it again

[ib]

If I’m not mistaken, Cares Act allows for 0 penalty and 0 tax if you pay whatever you pull within 3 years. Theoretically: Can pull, pay off the debt and whatever payments he was making to his CCs, start putting it back into his 401K.

[velayuthman]

This is my fifth year after retirement. I’ve been following the 4% rule thing, but this isn’t really how hard I expected things to be. I still hold cash of about $460k outside funds in my IRA, I want to know: Do I keep making additions to my portfolio, or do i just rely on my 401k?

[Ryan_DeWitt]

3 things I have learned Dave hates. 1. Credit cards of all types regardless of the circumstances. 2.Cosigning. 3. Borrowing from your 401k.

[paigethompson]

Depends on your employers rules but I have done this and it was the biggest blessing to be relieved of debt. You’re going to have to contribute back via paycheck anyways so this is not a one size fits all scenario.

[BrianErwin]

if you have $60k+ in your 401k, i'd say go ahead and pay that $25k debt. dave's advice is for people to feel remorse, go through some fights and depression in their marriages to hopefully develop character, live frugal for a few years so they never get back in debt again and develop a habit of living on coupons. but if you're more logical than emotional, none of that is necessary.

[Jnshaw]

Not all companies require a full 401K loan payback within 60 days. You can keep the account open and continue to pay off the loan. This does hold you hostage from rolling the account over to your new employers plan or an IRA. This was my personal experience with Fidelity but I’m sure loan company polices vary. Dave is spot on though... paying yourself 5-6% interest prevents you from making 10%+ by simply keeping your money invested in the S&P or better.

[hibye]

I’m 13 and have about $1200 in stocks! Thanks for all the advice! I love finance and you inspired me to make my own channel about finance, stocks, Entrepreneurship, later real estate, and more! Thanks!

[simplefinance]

Yo cashout your 401k to payoff your credit cards. Market is not going to up 21% forever. Take profit and pay your credit card and pay the taxes. Get rid of that 21% interest debt.