Am I making the right decision by withdrawing money from 401k?

Dear Paul! My total debt amount us $35000. I will have to pay it off by the end of this year. I am planning to purchase a home next year. I know that lenders won’t agree to lend me money if I don’t repay the debts. I am thinking to withdraw the total amount from my 401(k) account. I am young and hard working man. I can earn the money eventually. Do you think it is a good idea to withdraw the money from 401(k) account?

3 Answers

Not a good idea at all dear! Instead of what you  have in mind, you can negotiate with your creditors and tell them about your present financial hardship. They can always make a better repayment plan for you so that you do not default on your payments and they don't lose the money. However, withdrawing from your 401(k) account is not a correct thought as this should be retained for your post-retirement period.


I don’t think so. You can contact with your creditors and negotiate with them. You can explain them about your financial condition. You may try to arrange a better repayment plan with them. If you want you may also get help from a debt relief company.

 


Probably not a good idea.  As a general rule, they will not let you take the entire balance.  Secondly,if you leave/get laid off that current job, your 401k loan becomes due in full immediately. 

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