As part of my preps, I need to get out of financial debt.
So, a "friend" has some significant credit card debt. This friend can pay off this credit card debt by taking out a loan against his 401 plan. What this means is that the friend will have to pay back into his 401 to pay off the 401 loan. The interest paid on the 401 loan goes back into the 401 as well.
What's the down side here? The interest on the 401 loan is much lower than interest on credit card. The interest paid on the 401 loan goes to my own 401, not to the banks as in credit card interest.
All of my 401 is tied up in paper instruments (stock). If the market crashes, much of that value would be lost anyway, and if I didn't take out the loan, would still have the credit card debt.
My job is very secure.
Should I or shouldn't I?
So, a "friend" has some significant credit card debt. This friend can pay off this credit card debt by taking out a loan against his 401 plan. What this means is that the friend will have to pay back into his 401 to pay off the 401 loan. The interest paid on the 401 loan goes back into the 401 as well.
What's the down side here? The interest on the 401 loan is much lower than interest on credit card. The interest paid on the 401 loan goes to my own 401, not to the banks as in credit card interest.
All of my 401 is tied up in paper instruments (stock). If the market crashes, much of that value would be lost anyway, and if I didn't take out the loan, would still have the credit card debt.
My job is very secure.
Should I or shouldn't I?