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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 311073  
Subject: Re: Thinking Of Borrowing??? Date: 10/30/2013 12:52 PM
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I'm not convinced that borrowing from a 401k is always a bad idea automatically.

Neither am I. I've thought about borrowing from my 401(k) recently, too, in order to purchase some investments that I'm not able to purchase in my 401(k). If there is a contingency to cover the risks of leaving your job, it can be a feasible option.

But in this case, we don't know that the OP has resolved the issues that caused them to build up the debt. If they are still living above their means (significant though those means appear to be), borrowing from a 401(k) is just going to free up the cards for them to charge up again, so they can get deeper in debt, instead of paying off debt.

I wish I'd had the foresight to borrow $100k (or more) from mine back in August 2008.

I'm going to pick another nit. Federal law limits the amount that can be borrowed to 50% of your vested balance, or $50,000 - whichever is less, minus the maximum principal balance of any loan outstanding in the prior 12 month period. So, there is no way that you could have borrowed $100k or more.

Would have saved me from the 35% dip in the market that came the next month. Then again, my crystal ball is pretty fuzzy, and I often have trouble making these things out.

Of course, if you had borrowed in early 2009, after you'd already had the 35% decline, you could have also missed out on some big gains. That's the thing about market timing with fuzzy crystal balls.

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