My family and I are behind on $96,000 of credit card debt equalling 7 accounts. These accounts are all between 120 and 150 days pass due. My family budget is about $1,200 a month short to make the monthly minimun payment on these accounts.
One of our credit lenders who represents $82,000 and 5 of the accounts is offering to settle the debt for $33,000. I have $45,000 in my 401K. If I cash out my 401K, I know I will pay a hefty penalty. However, I will now have room in my budget to make the payments on the other two accounts? We have started using Dave Ramsey budgeting plan and baby steps and have no desire to go into debt again.
Thanks for your advice.
I wrote about this just yesterday in Should I Cash Out My 401K to Pay Off My Credit Card Debt? – Angie and I urge you to read that post about my position of cashing out the 401(K).
You might also be interested in an alternative spending plan approach by downloading my free book “Eliminate Your Debt Like a Pro”, start reading on page 81.
Be careful as you move forward, living on an all cash basis and avoiding having a credit card at all can hurt you more in the long run. Your credit can be easily rebuilt using secured credit cards that will let you live without debt but will also restore your credit score which will be beneficial in the future.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.