I’m still thinking about it.

Author: messy

21 Apr

I’m still thinking about paying off all of our debt with my husbands 401K. It’s so tempting. My brain tells me it’s probably not the smartest thing to do but my heart tells me that we should do it. If we did go ahead and do this, we’d have enough cash flow to live credit card free, using only cash. Here’s my list of pros and cons.

PROS:
Freeing up $3,000 a month
Less daily stress
We could save money and go on a CASH paid vacation
We wouldn’t feel poor anymore
We could buy clothes and shoes for CASH and not be worried about making payments
We’d be living again, versus just barely getting by
My husband would be able to actually spend some of the money he’s worked so hard for

CONS:
We’re tapping from our future
Tax impact???

I’m sure I’ll be adding more to the list.

Update 4/23/08 - I spoke with my husband about my plan. He’s already aware of the 10% penalty and the income taxes we’d owe on the money. He’s not against the plan but he’s not 100% for it either. He said we’d talk about it when he comes home from his business trip.

Filed under: Debt Reduction Calculator, coming clean, debt, expenses, life, savings

2 Responses for "I’m still thinking about it."

Twiggers April 21st, 2008 at 9:42 am 1
Well, if I can…..I’ll add to the cons:

Definite tax impact! You’re going to be penalized for withdrawing early.
Your husband is close to retirement age (only 15 years away from the SS-late retirement age of 67, and only 10 years from early retirement). Do you feel confident you’ll be able to replace that 40K + interest + penalties + continue to contribute?

Now, you said your hubby has toys. So does mine. And he knows that all that stuff is the first thing out the door if we were ever at the point of being totally stressed out.

It took you a long time to get that far in debt, so it’s definitely not easy to get out. And I know this is an instant fix…but the long term consequences might be worse!

I’d sell the toys, go through every room in your house and sell anything and everything that you can. Hold a garage sale for the bigger stuff. People will buy broken vehicles and tools! You’d really be amazed at what you can sell and make pretty good money off of. Do you work? If not (or even if you do) have you contemplated a second job for some extra income?

Have you attempted to get balance transfer offers from your credit card companies to lower interest? Have you just tried to get them to lower it to save you money?

All of the above are things you’d have to do to replace that 40K!

But in the end, it is your decision. Have you considered calling a financial advisor at the 401K company to see what they say? They are the experts! Be prepared to tell them everything including how much debt you have, how much you want to live on when your husband retires, etc.

Keep us updated!
budgets are sexy April 21st, 2008 at 1:30 pm 2
i might have to agree w/ Twiggers here. debt sucks, no doubt about it, but having $ saved for retirement is key. personally, i’d only touch it in an extreme emergency, and that’s after going through credit cards, etc.

craigslist and ebay are your def. friends here! once a month i go around the house looking for things to sell that i don’t need/want any more, and can get $50 easy each time.

yard sales are also great, but i’d go w/ CL first. but when it comes down to it you gotta do what your most comfortable with i’d tend to follow the one that helps you sleep better at night.