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Financial Planning / Foolish 401(k)s


Subject:  Don't want to borrow, but... Date:  10/23/2001  11:58 AM
Author:  phoebesnow Number:  13467 of 26303


Let me just first say that I think borrowing from ones 401k is a bad idea. However,...

My DH and I find ourselves looking for a house about 6 months earlier than planned. We cannot stay in our current place, because the owner has sold it.

We have enough money saved to put 5% down on a house. We had planned to save for another 6 months and put 10% down. The larger down payment makes the monthly bill much more manageable.

We can scrape up the 10% plus closing costs by borrowing from the Bank of Dad and borrowing a small amount from my 401k. My plan allows for loans, and the plan also allows for continued contributions while I make payments on the loan. I would continue to contribute enough to get the full company match.

I realize that my money will be taxed twice (repay with after tax dollars and taxed again when I withdraw at retirement), but should I think about taking this loan?

I'd appreciate any perspective the Fool community could provide.

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