401K to Pay Off Credit Card Debt - Is it a Good Idea?
When faced with a mountain of credit cards debts, the money in your 401k may be a tempting target.
However, draining your retirement funds is fraught with danger.
The main danger in using a 401k for anything besides retirement is that you may not be able to pay it back.
Especially in this economy, continued employment isn't something that can be counted on; even giant companies have had rounds of layoffs.
Plus, if you've gotten deep into debt, it shows that you have encountered financial difficulties.
Without making some serious changes, those same difficulties can easily prevent the replenishment of money from your 401k.
It is doubtful that you really want to risk being forced to get a job once you're in your 70s.
The 401k is your bulwark against finding yourself in the workforce when you have no desire whatsoever to still be there.
Using a credit card debt settlement service is a great alternative to draining your 401k.
These services work with you and your creditors to bring your payments down to affordable levels while still eliminating the debt.
Sometimes known as debt consolidation services, these companies set a single monthly payment, and that payment is applied to your debts according to the plan you agree on.
This single payment takes the place of all the individual credit card bills, and is often smaller than what the other bills would have cost you.
Therefore, you don't have to dip into your savings to pay it.
There are two main ways consolidation companies work.
One method is to collect your payments into an escrow account, which is then used to pay off your creditors in lump-sum amounts the service negotiates for you.
Others actually loan you the amount you need for a payoff, and then disburse the proceeds to your creditors.
You then pay back this consolidation loan.
In either case, it results in a single bill each month, and this bill is almost always lower than your original ones.
If your credit card bills have become overwhelming, it is imperative that you resist the temptation to pay it all off with your 401k plan or other retirement savings.
You've worked hard to accumulate enough money to retire on, and no credit card company deserves to be able to rob you of a comfortable retirement.
Consult with a credit card debt settlement company instead, so you can both pay off your bills and retire at the age you intended to.
However, draining your retirement funds is fraught with danger.
The main danger in using a 401k for anything besides retirement is that you may not be able to pay it back.
Especially in this economy, continued employment isn't something that can be counted on; even giant companies have had rounds of layoffs.
Plus, if you've gotten deep into debt, it shows that you have encountered financial difficulties.
Without making some serious changes, those same difficulties can easily prevent the replenishment of money from your 401k.
It is doubtful that you really want to risk being forced to get a job once you're in your 70s.
The 401k is your bulwark against finding yourself in the workforce when you have no desire whatsoever to still be there.
Using a credit card debt settlement service is a great alternative to draining your 401k.
These services work with you and your creditors to bring your payments down to affordable levels while still eliminating the debt.
Sometimes known as debt consolidation services, these companies set a single monthly payment, and that payment is applied to your debts according to the plan you agree on.
This single payment takes the place of all the individual credit card bills, and is often smaller than what the other bills would have cost you.
Therefore, you don't have to dip into your savings to pay it.
There are two main ways consolidation companies work.
One method is to collect your payments into an escrow account, which is then used to pay off your creditors in lump-sum amounts the service negotiates for you.
Others actually loan you the amount you need for a payoff, and then disburse the proceeds to your creditors.
You then pay back this consolidation loan.
In either case, it results in a single bill each month, and this bill is almost always lower than your original ones.
If your credit card bills have become overwhelming, it is imperative that you resist the temptation to pay it all off with your 401k plan or other retirement savings.
You've worked hard to accumulate enough money to retire on, and no credit card company deserves to be able to rob you of a comfortable retirement.
Consult with a credit card debt settlement company instead, so you can both pay off your bills and retire at the age you intended to.