We Are Thinking of Cashing Out Our 401K to Pay Off Some Debt. – Mary

“Dear Steve,

We are a couple in our late 50’s.

Our problem, we bought a house two years ago, payments $1700. we have $15000 in CC debt all in collections, we had a cut in income….we bring home $3100 a month. We have exhausted all savings, we cannot pay insurance, expenses, cc, etc. in full. We do not save any money, we do not have an emergency fund. We do have small 401K’s. One of ours $31000. with a $10000. loan against it. Is it wise to cash it in to pay off our debt. We have no equity in the house, we paid $275000, it’s worth now $180000. The loan was for $256000, we owe $253000.

We have no money extra to do anything with. There is no room in the budget for emergencies.

Should we cash in our 401K to catch up now?


Dear Mary,

I had the following questions that I’d like for you to answer before I can answer your question. #comment” rel=”bookmark” title=”Comments Link: “>offer advice in the comments section please feel free to participate.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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