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I'm considering paying out $7,500 from my only 401K holding to pay off as much of the $7,000 credit card debt I have. I understand the taxes and penalties, and yes, this is and act of last resort; I feel the debt burden is hurting me and I should eliminate it immediately. Does anyone have any other ideas of how I can do this? I know it is not recommeded what I am doing, but this has been suggessted for people in my case. Any advice?


I'm a young professional (almost 29) unemployed from the software industry about two years. In the last two years, I've started a home-based business and doing small, side work that barely pays my bills. After two years of earning sporadically, I have decided to go back to school to become a nurse. It will take me two to three years as I am doing a masters degree. I'm not too worried about the debt I will incur while studying…I will take federal student loans.

What I am worried about is the two years of debt I have incurred, almost $7,000 of credit card debt, mostly business expenses to get up and running, but some personal. I really want to get out from under this debt and am willing to take my money out of my 401K to do it. I understand all the taxes and penalities. I will have to pay. It is an act of last resort.
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