I’m looking for comments good or bad, I can take it.
I’m drowning in payments here, I won’t go into all the nasty details but there are many of them and they are killing me. I barely have anything left at the end of the month. So here’s what I’ve been thinking about doing. I’m just not sure it’s the correct thing to do. I want to ask my husband to cash in a 401K that he has that hasn’t done anything in years. It has $22,000 in it. I’d also like for him to sell this dump truck that we have that’s worth $5,000 and is never used. I’m thinking, after taxes I might have $20,000 and I could pay off two loans freeing up $600 a month. Is this a good idea or a bad one?
I’ve also been thinking about tapping my husbands big 401K he has a very large sum of money in there. What if we tapped that to pay off all our remaining debt? We would be taking 20% of his 401K. Is this a good idea or a horrible one? Is it even possible to do this?
If we went ahead with both these plans, we could be debt free (I’m guessing) in a month or two. I would also be freeing up over $3,000 a month, $36,000+ a year. We could max out his 401K contributions and put money into savings.
If you are reading this please leave a comment good or bad and don’t tell me what you think I want to hear, tell me what you really think, it will be appreciated more than you know.
Thanks in advance.
{ 7 comments… read them below or add one }
Twiggers 04.19.08 at 7:03 am
That is such a tough dilemma. Many many people would say to NEVER cash out the 401K. You are going to get hit with taxes, and that will impact you come next April. It also depends how close to retirement you are. Remember, the point of the 401K is to never do anything with it until you retire! And all that compounding interest will now be gone!
Selling the truck is a GREAT idea! What other assets do you have that can possibly be sold?
messy 04.19.08 at 7:54 am
Twiggers we have some other assets but I’m pretty sure my husband wouldn’t be willing to part with them. 2 newer paid for quads, 1 car trailer, 1 broken tractor, about 8 chain saws and an old jeep. I have a few sewing machines I’ll be listing on ebay this week sometime but I won’t be getting very much money for them, at least not enough to make much of an impact on my debt. At this point the money will go straight to my savings account, it’s just about tapped dry.
My husband is quite a bit older than I am, he’s 52.
Christy 04.19.08 at 2:01 pm
Get rid of the dump truck!
Can you part with the broken tractor, a few chainsaws and the jeep? Not sure where you live, but Jeeps go for quite a bit where i am due to hunters and off road stuff.
And since your DH is pretty close to retirement, I wouldnt touch the 401K. Do you have any retirement savings? If not, you will need the 401k for you both.
No one said getting out of debt was easy. But just think of the reward once you are out of debt.
Christy 04.19.08 at 2:05 pm
My DH says sell all those additional assets! You shouldnt have ATVs if you have $40,000 CC debt!
David 04.19.08 at 3:23 pm
I honestly like the idea. If your 401k is getting an average return of 5% but your debt’s average interest is, say, 15% then your net loss is still 10%. If you used your savings to pay off your debt, then your net worth would turn sharply to the positive; not to mention that all your monthly payments to debt could now go to wealth.
Chicky 04.19.08 at 6:24 pm
I know you want to get rid of CC debt as soon as possible that’s why you are dipping in your 401K.However, most experts dont recommend this at all. Even though it is very appealing, if I were you I wouldnt touch it. If you continue making your payment every month as you do, slowly but surely you will win this war.
messy 04.21.08 at 8:26 am
Thank you all so much for the comments.
I’m still considering paying off all our debt with my husbands 401K. After we take the money, he’ll still have approximately $400,000 in the account. We’d also have an additional $3,000 a month to save, invest or whatever. It’s so appealing, we could stop struggling every month and not have to pinch pennies here and there. My husband makes a great money but we don’t really see any of it because it all goes out in payments every month.