I have gotten some great financial info from this board before so I thought I would post this up and see if you guys can help me make a decision.

I have worked for the same company for about 3 years and last Feb. we were bought by a larger company so our old 401k was left behind and I started to contribute to a new 401k account. I now have to decide what to do with the funds in the old account. Currently I have $3100 in the old account that I can cash out for a ~20% penalty (about $610) or roll into my new 401k that has about $1100 in it. The only reason that I am considering cashing out in because I want to pay off a credit card with the money. The balance on the card is $2100 at 9%. I am 27 currently and renting but I want to try and get a house next summer. The only debt I have is about $5000 on the loan for my Rover (will be paid off in Nov. 04) and other credit cards that I am trying to use the snowball method to pay off.

What do you guys think I should do?

roll it.


if you can't handle paying off $2100 in the next few months, you shouldn't own a credit card.

DITTO! Roll it!

Keep that 401K adding up... some day you'll be thankful. Ya, I was a little bit pissed about my 401K dropping from $240K to $40K... then my ex getting half.... long story, but DIVERSIFY IT. If you can put the vested funds into something other than your companys own stock.... you're better off in the long run.

Plus one of the "hidden" things that loan officiers look at when you go to buy a house... how much your long term savings are! I got a better rate as it was pretty clear if I was laid off, I had some reserve cash available (i.e. 401K). Thankfully never touched it when I was laid off, but nice to know there is some sort of cushion in addition to the savings account!

Sigh... with all the bills from last year (two mortgages, etc)... I haven't wheeled in over a year. This really sucks... but getting the savings built up for the shop is my goal!

Tom :usa:

I say roll it as well....

The future potential value of your 401k far out weighs paying off your current credit card with those funds, in today's value of money. If your credit card debt is gnawing at you, make the necessary sacrafices to pay it off... plain and simple. Even better, quit using your credit card unless you know you have the funds to pay it off in full each billing period....

Originally posted by Mo
roll it.


if you can't handle paying off $2100 in the next few months, you shouldn't own a credit card.

I'll second that.

If you cash out your 401k, you're a fawken fool. That's the truth and you need to hear it now. You'll regret it.

Just LEAVING that money somewhere at 12% interest will mean that in 32 years, when you're 59 and can take it without penalty, makes that money grow to:

$141,504.17

If you want to use $141k to pay off a measly credit card, go ahead. Just warn me when you're driving on the streets, cause I don't want to be around compelete idiots.

How's that for advice. :flipoff2:

Hell man, when you're 65 it'll be $289,673.08. Think about it. :rasta:

Here's the other side of the coin.

If you take a cash disbursement, the fund administrator will take out 10% income tax. In reality, you owe the IRS BOTH the penalty, AND a much larger actual Income Tax liability. The IRS will come after you like a serial killer-pedophile/necrophiliac. You will be required to pay CASH to silence them, or they will foreclose on your HOME. REALLY REALLY DO NOT DO THIS, UNLESS YOU ARE FINANCIALLY DESPERATE!!! They will burn your home, they will rape your women, then kill them. They will salt the earth around your home.

Yes, I know from personal experience. Fuck the IRS :flipoff:

Man I wish you guys would tell me what you think without dancing around the issue. :flipoff2:

Ok, I'll leave it in for now but I can't guarantee that I won't take it all out when I'm 40, buy a boat, move to some island, and slowly drink myself to death.:D

anyone know what the deal is with taking a 401K loan? Is it good or bad and what is the issues?

Is it worth it to pay off debt?

Originally posted by Patrickvr6
I can't guarantee that I won't take it all out when I'm 40, buy a boat, move to some island, and slowly drink myself to death.:D

Now you're getting the idea.
The IRS can't touch "liquid assets" that you've consumed!

:blender:

Originally posted by Bobzooki
Yes, I know from personal experience. Fuck the IRS :flipoff:

Don't hold back, 'zooki, how do you really feel? :D

Roll that sucker! By the time you pay income tax (both fed and state!) and the penalties, you'll have lost half of it. Back of the envelope figuring says that it'll probably get taxed at the highest bracket and add your 20% penalty afterwards. This is kind of like paying for a new rig and getting a broken Hyundai instead.

A chum of mine from high school cashed out a $7,000 401(k) fund in a similar situation, and has regretted it ever since.

ChiXJeff