Comments on: Questions And Answers About Debt Reduction – Should I Cash Out My 401(k) To Pay Off Debt http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/ Debt Reduction Rocks - We Are Living Debt Free! Sat, 21 Nov 2009 11:44:22 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: financial wellness project http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/comment-page-1/#comment-126983 financial wellness project Fri, 29 Aug 2008 20:51:59 +0000 http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/#comment-126983 great points about not looking for quick fixes and doing the work. however, i am currently in a conundrum as i have been considering raiding my ira these past few weeks.. great points about not looking for quick fixes and doing the work. however, i am currently in a conundrum as i have been considering raiding my ira these past few weeks..

]]> By: AJC @ 7million7years http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/comment-page-1/#comment-96483 AJC @ 7million7years Sun, 16 Mar 2008 18:23:31 +0000 http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/#comment-96483 As somebody 'on the other side' of the getting-financially-free journey, here is what I suggest: 1. Keep your money in 401k AND keep contributing but only up to employer match 2. Save inside/outside of 401k at least 10% - 20% of CURRENT income 3. Save outside of 401k at least 50% of any FUTURE additional income i.e. payrises, excess business profits, tax refund checks. 4. INVEST the proceeds of 2. and 3. into: your own home then into rental real-estate and/or direct stocks (4 or 5 undervalued companies ... there are plenty around right now) and/or low-cost Index Funds 5. Repeat until Rich (prob. 10 - 30 years)! As somebody ‘on the other side’ of the getting-financially-free journey, here is what I suggest:

1. Keep your money in 401k AND keep contributing but only up to employer match

2. Save inside/outside of 401k at least 10% – 20% of CURRENT income

3. Save outside of 401k at least 50% of any FUTURE additional income i.e. payrises, excess business profits, tax refund checks.

4. INVEST the proceeds of 2. and 3. into: your own home then into rental real-estate and/or direct stocks (4 or 5 undervalued companies … there are plenty around right now) and/or low-cost Index Funds

5. Repeat until Rich (prob. 10 – 30 years)!

]]> By: MoneyBlogga http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/comment-page-1/#comment-96069 MoneyBlogga Fri, 14 Mar 2008 23:27:50 +0000 http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/#comment-96069 I am sick as I read your article today. I knew my financial devil-may-care attitude was costing me but, until I saw that 401K compounding chart, I didn't know just how much. Now I feel sick. And STUPID. Very very stupid. I am sick as I read your article today. I knew my financial devil-may-care attitude was costing me but, until I saw that 401K compounding chart, I didn’t know just how much. Now I feel sick. And STUPID. Very very stupid.

]]> By: tlange http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/comment-page-1/#comment-96065 tlange Fri, 14 Mar 2008 22:35:00 +0000 http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/#comment-96065 What do you do if you stand to inherit a non-spousal 401k/403b? I think the rules are different with those? What do you do if you stand to inherit a non-spousal 401k/403b? I think the rules are different with those?

]]> By: Get Out of Debt Squirrel http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/comment-page-1/#comment-95984 Get Out of Debt Squirrel Fri, 14 Mar 2008 15:11:29 +0000 http://www.ncnblog.com/2008/03/14/questions-and-answers-about-debt-reduction-should-i-cash-out-my-401k-to-pay-off-debt/#comment-95984 One other point to consider is that while the stock market is in the toilet right now, it will go back up. Every dollar you withdraw from your 401 now, will not make a return for you latter. For example, let's say in the next five years the stock market goes up 20% from where it is now. So the cash out will cost you 20% plus the penalties mentioned above. If you borrow from your 401 it will cost you say a 5% rate to repay your 401 loan plus the lost return of 20%. The promise to put the money back will still not result in the same return as if you leave the money in. One other point to consider is that while the stock market is in the toilet right now, it will go back up. Every dollar you withdraw from your 401 now, will not make a return for you latter.

For example, let’s say in the next five years the stock market goes up 20% from where it is now. So the cash out will cost you 20% plus the penalties mentioned above. If you borrow from your 401 it will cost you say a 5% rate to repay your 401 loan plus the lost return of 20%.

The promise to put the money back will still not result in the same return as if you leave the money in.

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