Steve, I just turned 26 and currently have $5,700 in a 401K from a job I recently left (for a new one). I make about $38K per year and have $11K in credit card and $3K in car debt. I am getting married in April of next year and will probably add another $10K to my debt at that time. We would also like to buy a house the year after that and will need a down payment. I currently pay about $550 per month toward my debt.
Knowing my future expenses, should I liquidate my 401K to pay off my car and some of the credit cards to get out of debt quicker and begin saving for our future?
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The only time that you should liquidate your 401K to pay debt is the same day that you set your nose hair on fire for fun. In other words, never.
Your 401K might look tiny now but trust me, you will be amazed how big that will grow in the next 40 years if you add to it, and never drain it.
Is your beloved bringing debt into the marriage? What do your combined incomes look like? Is your spouse going to shoulder some of the additional debt related to the marriage?
Post your responses in the comments section. Let’s talk this through.I Just Turned 26. Should I Liquidate My 401K to Pay My Debt. by Steve Rhode