I have high interest debt of about $15 K that I would like to manage better. I have two choices: Financial Resolution Center offered me debt relief. Or I can borrow from my 401K, that was recently halved by a divorce. I have enough in the 401K to borrow $15 K from, but that is roughly 1/4 of my 401K.
Should I eliminate my debt now, by borrowing from my 401K, paying myself back (with interest) on after-tax money? Or, should I use the Financial Resolution Center to manage my debt and pay it back in roughly 5 years?
I am not familiar with the debt relief programs offered by the Financial Resolution Center. What type of approach are they talking to you about? Is this a credit counseling or debt settlement approach maybe?
I’m not a fan of taking retirement funds out and using them. It’s hard enough to get them in the darn retirement accounts to begin with.
Are you able to make your regular monthly payments on the debt? Is this just a case of you wanting to get out of debt faster or struggling to get by?
- If you want to get out of debt faster then take a look at free solutions like Ready for Zero.
- It might also be that rather than rob your retirement funds you might examine the possibility of a debt consolidation loan to repay the debt at a lower interest rate. In that case I’d suggest you look at LendingClub.com.
- If the issue is you just want a repayment plan that lowers your interest rate and you are willing to have your included cards closed, then look at a traditional credit counseling program.
If you can, post more information on the suggested Financial Resolution Center plan and your situation in the comments section below.