No. of Recommendations: 2
I want to pay off debt.


I see this as an opportunity to do just that.

This is not paying off debt. It is rearranging your personal balance sheet. You are taking an asset (your 401K plan) and using it to pay a liability. The problem being that you will reduce your asset by between 35% and 50% in the process of getting it available to use against the debt. However, if you wait a few years the haircut on the asset will be reduced - at a minimum by the 10% penalty.

I see many of you screaming at your monitor, right now. "NOOoooOOO!"

That would be correct.

I would like to begin investing, without the short term liability's hanging around my neck

But you CAN begin investing. If you roll the 401k over into an IRA, you can begin investing that money yourself right away. You don't need to blow 1/3 of it on taxes and another 1/3 on credit card payoffs.


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