When Using Your 401 (k) to pay Credit Card Debt is a Bad Idea
September 1, 2009
While we should not get into the habit of purchasing items beyond the limits our cash flow can handle, and certainly not do so on credit, many people still find themselves with more bills to pay than income to pay them. In the midst of our credit crunch many are being faced with the tough decision of using their savings to pay off outstanding debt. Although quickly reducing your principal is key to reducing your debt, there are times when dipping into your retirement accounts is the wrong course of action.
In recent weeks, I have met with several clients who have depleted their savings and retirement accounts in hopes of paying off their credit card debts before coming to see me. They now have to file for bankruptcy anyway AND no longer have the savings and retirement accounts that they could have kept despite bankruptcy filing. Read more
