September 23, 2014
It is an absolutely terrible idea to take a loan out on your 401(k). Why? Alternatives?
It is an absolutely terrible idea to take a loan out on your 401(k). Why? Alternatives?
You should never steal from your future to pay for fun in the present. You will have a hard time catching up with your retirement savings if you take out of it early. An alternative is to just not spend money on such junk. You should try and plan your finances so that you do not need to resort to this final and poor last alternative. Always have an emergency fund that you can take money out of if you really need it quickly.
That was another very good answer, Garrett. Well done! Let’s recap.
Borrowing from your retirement plan at work is a matter of stealing from your future self. Don’t do it. Plan for emergencies with savings set aside outside of your retirement plan. DO NOT use your retirement plan as a piggybank waiting to be cracked open. Your future self will not be happy if you do!