Comments on: Should I Liquidate My 401(k) In Order to Pay Off My Credit Cards? http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 25 May 2012 21:48:35 +0000 hourly 1 http://wordpress.org/?v= By: Rosemarie http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-445785 Rosemarie Fri, 24 Sep 2010 02:41:38 +0000 http://allfinancialmatters.com/?p=4662#comment-445785 What about doing a balance transfer to a new card or another credit card with a lower interest rate? If his credit his good, this would be a way to lower the interest rate and pay the debt off faster. What about doing a balance transfer to a new card or another credit card with a lower interest rate? If his credit his good, this would be a way to lower the interest rate and pay the debt off faster.

]]> By: Mel http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442803 Mel Thu, 11 Mar 2010 23:21:54 +0000 http://allfinancialmatters.com/?p=4662#comment-442803 If he's got an extra $1k to payoff bills, what's he worried about? $15k may seem like a lot but it's not. If he said he had $100 instead of $1000 left over than yes, liquidate the 401k. I think we're all still missing the main point here is that 401k is tax deferred. When it's time to draw from the 401k down the road, where do you think tax rates will be, lower or higher than today? Take a look at what this administration is doing and you will guess tax rates will be higher, much higher than today! He can bite the bullet now and pay the lower tax rate and the penalty, and it will still be lower than what's about to come down the road as far as tax rates is concerned. We won't see these low tax rates for a very long time. His better move is to convert the 401k to a Roth IRA, pay the tax over the next 3 years with the new tax law change and focus on living below his means and eliminate those CC's. If he’s got an extra $1k to payoff bills, what’s he worried about? $15k may seem like a lot but it’s not. If he said he had $100 instead of $1000 left over than yes, liquidate the 401k. I think we’re all still missing the main point here is that 401k is tax deferred. When it’s time to draw from the 401k down the road, where do you think tax rates will be, lower or higher than today? Take a look at what this administration is doing and you will guess tax rates will be higher, much higher than today! He can bite the bullet now and pay the lower tax rate and the penalty, and it will still be lower than what’s about to come down the road as far as tax rates is concerned. We won’t see these low tax rates for a very long time. His better move is to convert the 401k to a Roth IRA, pay the tax over the next 3 years with the new tax law change and focus on living below his means and eliminate those CC’s.

]]> By: Forex Trader 4 Life http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442737 Forex Trader 4 Life Wed, 10 Mar 2010 06:34:48 +0000 http://allfinancialmatters.com/?p=4662#comment-442737 I would not be advising on liquidating the 401k. But I would suggest stopping on adding on to it further until the credit card situation lightens. I would not be advising on liquidating the 401k. But I would suggest stopping on adding on to it further until the credit card situation lightens.

]]> By: Stacey http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442720 Stacey Tue, 09 Mar 2010 05:41:02 +0000 http://allfinancialmatters.com/?p=4662#comment-442720 @ Evan, 19% is the floor...he has some debt that is at higher rates. Any chance he could rollover the plan to the current employer and take a loan? If so that's the course I would take. I'd also ditch all nonessentials to take care of biz even sooner. @ Evan, 19% is the floor…he has some debt that is at higher rates.

Any chance he could rollover the plan to the current employer and take a loan? If so that’s the course I would take. I’d also ditch all nonessentials to take care of biz even sooner.

]]> By: BG http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442718 BG Mon, 08 Mar 2010 21:59:47 +0000 http://allfinancialmatters.com/?p=4662#comment-442718 I'd lean against liquidating a 401k to pay off this debt (like JP) -- but I am all for skipping on new 401k contributions until the debt is paid off. People with credit-card debt have no business in investing in the stock market. I’d lean against liquidating a 401k to pay off this debt (like JP) — but I am all for skipping on new 401k contributions until the debt is paid off.

People with credit-card debt have no business in investing in the stock market.

]]> By: Jade http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442715 Jade Mon, 08 Mar 2010 21:33:44 +0000 http://allfinancialmatters.com/?p=4662#comment-442715 I think your advice is solid. I often find myself getting off course financially by trying to get ahead NOW, instead of focusing on long term goals. It is important to remeber how quickly things can snowball to the good if you committ to a solid, workable long term plan. I think your advice is solid. I often find myself getting off course financially by trying to get ahead NOW, instead of focusing on long term goals. It is important to remeber how quickly things can snowball to the good if you committ to a solid, workable long term plan.

]]> By: Evan http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442712 Evan Mon, 08 Mar 2010 20:02:45 +0000 http://allfinancialmatters.com/?p=4662#comment-442712 19% IS A LOT OF INTEREST in today's credit environment. Can he take loan from the 401(k) (probably not since you mentioned former 401(k)? Does he have a Life Insurance policy with some cash value? He could take a long from that at a MUCH lower rate. 19% IS A LOT OF INTEREST in today’s credit environment.

Can he take loan from the 401(k) (probably not since you mentioned former 401(k)? Does he have a Life Insurance policy with some cash value? He could take a long from that at a MUCH lower rate.

]]> By: Don http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442705 Don Mon, 08 Mar 2010 17:51:22 +0000 http://allfinancialmatters.com/?p=4662#comment-442705 Yes. Ken's advice is very good. Yes. Ken’s advice is very good.

]]> By: Ken http://allfinancialmatters.com/2010/03/08/should-i-liquidate-my-401k-in-order-to-pay-off-my-credit-cards/comment-page-1/#comment-442697 Ken Mon, 08 Mar 2010 17:08:02 +0000 http://allfinancialmatters.com/?p=4662#comment-442697 I would also say don't wait till the payment date to pay the bill. Pay as soon as the money is available to help lessen the cost of interest. I would also say don’t wait till the payment date to pay the bill. Pay as soon as the money is available to help lessen the cost of interest.

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