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To: Washi

One more thing regarding your debt — as long as you can pay it and don’t have to default, I would say to not take out your IRA and 401K, because by doing that you lose a lot more, with the taxes, penalties and including not being able to recover the money you lost in the market. This loss is much more, than the interest you are paying on your loan, probably many years of interest you are paying.

Having a cushion, however shrunk, for emergencies is much more important, than having no debt, but no money for emergencies.


9 posted on 02/27/2009 7:23:24 PM PST by FocusNexus ("Good and evil are present in this world, and between the two there can be no compromise." GW Bush)
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To: FocusNexus

What if he takes a loan against his 401k, to pay down debt? I’d go for the car if the limit for such a loan isn’t sufficient to pay it all off, mobility is necessary for continued employment.

He’d be paying himself back, with interest, which would lock in a rate of return, protect his principal so long as he is able to repay, and the only real consequence of “defaulting” would be a tax bill on the amount not repaid.

Sounds like it’s potentially a way to kill two birds with one stone, so to speak.


13 posted on 02/27/2009 7:29:33 PM PST by RegulatorCountry
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