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401k withdrawals
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<blockquote data-quote="mountaingoat" data-source="post: 313541" data-attributes="member: 1250"><p>In financial counseling, there are two types of people that come to me in debt. THe first says that he's thinking about getting out of debt but can't give up certain things like cable TV (what will I do if I cut out all my other expenses). The second type is ready to sell his organs and children to get out of debt. Believe me, the second one is serious about it.</p><p></p><p>If you're thinking about stomaching the penalties, you're probably serious because the penalties and loss of time in the 401K will utterly cripple your retirement. Let me explain. First, you'll get a huge whammy from the Federal Government for withdrawaling the money before you said that you planned to. AND, you'll get taxed on that money. So, if you take out $50,000, you're paying taxes on the withdrawal PLUS a 10% penalty on top of that. Ouch.</p><p></p><p>Now, I applaud the fact that you're seeking to rid yourself of consumer debt. People have already posted some good advice about contacting credit card companies to lower interest rates. That's a good idea. Here are some others:</p><p>1. Get a second job, or have others in your house contribute to the household income. If your kids are working and they are not contributing to the household income and using your resources, they need to contribute. It's a family affair.</p><p>2. Reduce your expenditures to the bare bone. What is a NEED vs. a desire. Is the NFL cable channel package a NEED? If you don't know what you're spending money on, beginning writing it down and keeping track of it.</p><p>3. Contact the CC companies and explain your plan to them. As long as you're calling them and working through a plan with them, they won't be calling you.</p></blockquote><p></p>
[QUOTE="mountaingoat, post: 313541, member: 1250"] In financial counseling, there are two types of people that come to me in debt. THe first says that he's thinking about getting out of debt but can't give up certain things like cable TV (what will I do if I cut out all my other expenses). The second type is ready to sell his organs and children to get out of debt. Believe me, the second one is serious about it. If you're thinking about stomaching the penalties, you're probably serious because the penalties and loss of time in the 401K will utterly cripple your retirement. Let me explain. First, you'll get a huge whammy from the Federal Government for withdrawaling the money before you said that you planned to. AND, you'll get taxed on that money. So, if you take out $50,000, you're paying taxes on the withdrawal PLUS a 10% penalty on top of that. Ouch. Now, I applaud the fact that you're seeking to rid yourself of consumer debt. People have already posted some good advice about contacting credit card companies to lower interest rates. That's a good idea. Here are some others: 1. Get a second job, or have others in your house contribute to the household income. If your kids are working and they are not contributing to the household income and using your resources, they need to contribute. It's a family affair. 2. Reduce your expenditures to the bare bone. What is a NEED vs. a desire. Is the NFL cable channel package a NEED? If you don't know what you're spending money on, beginning writing it down and keeping track of it. 3. Contact the CC companies and explain your plan to them. As long as you're calling them and working through a plan with them, they won't be calling you. [/QUOTE]
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