I would be interested to get some opinions.

I'm at a crossroads....I've been debating in my head lately about cashing out some of my 401K to help us get out of some debt, plus help us through a couple of expensive months coming up. I am a sahm with a so-so amout in retirement from my old full time job. The $ would be used to either pay off cc debt or pay off 2 cars (about the same payment amount per month and per total balance). This would put us in a much better position with our monthly bills. And at the same time give us a chance to get some things done that have been on the list for a while: some spring clothes, some very minor house repairs and maybe get a little help with the yard. One corner of the yard is off limits to the kids. A tree was cut down 2 summers ago and we just don't know what to do with the disater spot left behind. To hire a landscaper to clean it up is expensive, but I beleive it will be the only way it will get done! Plus I just need some new uderware for heavens sake....

How wrong it is to dip into retirement to get things cleaned up? fyi-Dh's plan at work is generous and I will be investing the other half of the $ into another retirement account (I will have to move the $ out of my old company account to be able to make a transaction). I am looking at a Roth IRA for that....

Thanks!

Never withdraw $$ from your 401k!
after penalties, and uncle sam, you are basically left with only 60% of your total $$, which means, you just took out a loan at 40% interest!!!!
plus, those house things don't sound urgent. go to the library and learn to maybe do some of the work yourself...tons of people to that, because they dont' have the $$ to pay someone.
*it sounds like you need to make extra income,
maybe find something you can do from home that generated income.
*its great to be a sahm, but sometimes...families need 2 incomes, at least for a while...
does your husband have a 401K...? i'm divorced but, i would never use my 401K, bc what if i got separated, divorced....then he still has his 401K, and I used mine for "us"
no way.
(that actually did happened to someone...)
hope this helps
try other ways to fund these things you are needing.
maybe raise your deductions in your husbands paycheck for a while so you have more $$ from the paycheck...just ideas.
good luck

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Bestmommysaver!

Don't dip into the 401K. None of the things you listed were critical enough to even consider it. You'd pay too high of a penalty.

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You put your money in your 401K for retirement. I would keep it there where it is working for you. I have the same thing in haveing a small amount of money in a deffered comp program at my former job (I could now withdraw without penalties). I could take it out now it would make things easier. But I feel I am better off leaving it for a real emergency. Such as DH loosing his job or a major injury but really I would like to leave it there as long as we can

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Kimberly Proud Mommy to Bethany Rose April 2006

Thank you for your feedback. I appreciate your comments.
It is just SOOOO dang hard. We really are careful with our money and do with out a lot. I do try to offset our income by doing work when I can (selling on craigs list, working for a friend when she needs help and just recently launching a drop-in child care service). So I am not just looking for the easy road....I was thinking with the "extra" money per month, I would pay down the remaining bills......get us on some kind of level ground again, get some savings together.... The CC debt was not accumliated with luxury items. It was more on car repairs, oil bills....
Sigh....I really appreciate the honest and real feedback......I've got some more thinking to do.....

I agree with the other posts about never touching your retirement (unless strictly for an absolute emergency). My SIL had found her landscaper on craigslist for really really cheap...2 young guys looking for work! So look around at alternatives, don't always look at "retail".

You didn't mention the possibility of a loan from your 401k. we have done that in the past and there is no penalty. You just pay it back, paycheck at a time and the interest is to yourself. that is how ours worked.

One thing to remember about the loans that you have...
Sometimes the interest is low (like school loans). So low that the REAL rate of inflation is higher. You are paying money back that is worth less than what you you got. Forget the published rate that the government tells you about. They leave out anything volatile like gasoline. Well, duh...if you leave those things out we would be in ok shape. I believe the REAL rate of inflation is currently 12-13%. Doesn't make those loans look so bad.

Cathleen

Never Never Never! You get hit with so many taxes it's so not worth it! I know we did it years ago and I learned my lesson! You end up loosing way too much money in penalties, then at the next years tax time you pay even more penalties. Trust me, out of 10K you would clear maybe 4K. Been there, done that!

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A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

Personally, I would consider it. Check out what kind of penalties you would have if you did. Also, look into a loan from your dh's retirement account. We have done that several times in the past. It is cheap and easy.

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~Happiness is a large family~

Nope. Don't touch it. Along w/penalties, fees and taxes, calculate the loss of the interest/appreciation on those funds over the next xxx years and through retirement until it would be removed. It could literally add up to hundreds of thousands!

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