My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash

Nope...first, you%26#039;d have to quit your job to get access to it. You can%26#039;t take a hardship withdrawal to pay off credit card debt (even if the debt was incurred for a legitimate hardship reason).

But, reason you shouldn%26#039;t is actually quite simple. You can do one of three things....take it out, stop making deferrals into it (and use those funds to pay it off then restart when it%26#039;s done), or continue to pay outside AND make deferrals.

Let%26#039;s assume are 25 years old and you make $50/mthn contributions and earn 8% on your accounts. If you pay the credit card using funds from outside the 401k and continue to make your $50 deferrals until you hit age 67 you will have $242,000 in your account. If you stop making deferrals to use that $50/mth to pay off your credit card debt (assume it takes 5 years) you will have $171,000. Already you%26#039;ve cost yourself $71,000. Third scenario is to take the money to pay off the debt. If you do that and get a job tomorrow and start up paying that $50/mth you will have $206,000. That%26#039;s better then the $171,000 but still you%26#039;ve lost $36,000. Now you look at what the lost retirement was spent on, will you be paying $36,000 on that credit card??? Answer is no...Will you be paying $71,000 on it? Answer is still NO. You%26#039;ll be paying about $3,000 at the very worst! So you%26#039;ve exchanged 3k of spending for 36 or 71k of revenue. Don%26#039;t do it...find some other way to pay it. Keep your 401k, keep making deferrals, find some other way to pay the credit card debt.

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

There are a lot of tax issues cashing in your 401(k) and you will lose a lot of your cash by doing so; however, if this is the ONLY way you have to pay off your credit card debt and you%26#039;re paying a really high interest rate, I%26#039;d cash it in. Just make sure you start doing what you can to save up for retirement and build a nest egg.

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

The correct answer is no but since you dont have hardly any money in there, I would pay off the card.

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

I would never recommend ever touching a retirement plan. First, you will be penalized 10% of your withdrawing from your 401K early (unless you 59 1/2) which already puts you in the whole. Depending on how much money you make I would try to pay down the debt on a monthly basis, if at all possible.

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

I%26#039;d generally advise anyone not to cash in their 401k unless they are making an investment like buying a house. For such a small amount of money, it wouldn%26#039;t hurt you that bad--you just aren%26#039;t using your 401k for what it was intended. Also, you don%26#039;t really cash out a 401k until you retire, you take a loan from it.

The drawbacks: You won%26#039;t make any investment money until you pay it back. You have to pay it back to yourself with interest (of course, you keep the interest in your 401k) from money that has already been taxed (not pre-tax the way your contributions work now)--so if you want to keep building your 401k, you need to take more out of your pay to repay the loan. Finally, you will have to pay a penalty and taxes on the $1200.

If you have another option to pay this off without touching your 401k, that%26#039;s what I%26#039;d do. It would be better to stop contributing to your 401k for a few months to get it paid off than to take that money out and pay it back later (your $1200 will be earning income, you just won%26#039;t be adding to it yourself). With the tax and other penalties, you%26#039;d probably only get $600 - $800 out of it, and would still owe yourself $1200.

Everyone I know who dipped into their 401k regretted it!

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

NO!! You will always have things you want, credit card debt, other obligations, but if you leave your 401k alone and keep contributing to it every month no matter what, you will still end up with a huge pile of money one day. But if you cash it out every time it breaks $1000 or even $10,000, then you will end up empty handed with nothing to show for it.

By the time you cash out that $1200 you will only have like $800 left anyway after taxes and penalties.

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

Absolutely not. Aside from the penalties and taxes, why would you erase the best financial move you have made in order to clean up the wort financial move you have ever made? You need to learn to live on the money you have, not the money you will have.

Similarly, don%26#039;t consider your 401(k) your money. It%26#039;s your money when your sixty. So ask yourself: are you really paying off your credit card debt or transferring your credit card debt to your 60-year-old self?

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

No. First of all, most 401k plans do not let you withdraw the money unless there is a showing of hardship. Having a credit card bill generally does not count. Secondly, even if the 401k lets you take the money out, you will have to pay a penalty for early withdrawal. And on top of that money you put in your 401k is not taxed - it is tax deferred. So you will have to pay tax on that money when you take it out.

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

NO!

The taxes and penalties you pay for cashing in a 401(k) are MUCH higher than your interest rates on credit cards.

ST

My 401(k) has approximately $1200 in it, and I have some credit card debt to pay off. Should I cash it in?

No. Your plan administrator may not allow it to pay off credit cards. Also, you will be taxed heavily on pulling that money out, you%26#039;ll see very little it.