Objective information about financial planning, investments, and retirement plans


  1. JoeTaxpayer says:

    Bad idea. As you suggested, the 25% (marginal rate) young earner will have the 10% penalty in addition to the tax. $15,385 needs to be withdrawn to net $10,000. 30 years of lost growth, this money could potentially have grown to $120K or more (napkin math, 7% doubling every 10 years).

    Instead, a $10,000 loan at 5% would be about $188/mo for a 5 year payoff. The payment on the same debt on a 24% credit card is $288. At the same time, I would argue with cutting the 401(k) deposit to just grab the match, and use the funds to save a bit of emergency money, so the next expense doesn’t just load the card up again. Other bloggers remind me it’s not only about numbers, it’s about motivation. I’m thinking a plan that doesn’t hack your retirement account, drops your interest burden by as much as 3/4, and puts you on track to clean up your debt in less than 5 years should fit the bill.

    • Roger Wohlner says:

      Joe thanks for the comment and your analysis. As always an excellent suggestion for folks to consider.

  2. Good insight Roger. I would definitely tend to agree and think in general that it’s a bad idea. You can almost always find more ways to make some extra money to pay off debt, but retirement is a one shot deal. That 14% stat, though not surprising, is very problematic.

    • Roger Wohlner says:

      John thanks for your comment. Every retirement readiness study I read is sobering to say the least.

  3. JStC says:

    taxes….seems to be a stymier……if you do this…taxes…if you do that…taxes……taxes taxes taxes……getting oneself out of debt…stymied….the book of ways is small……very small

    • Roger Wohlner says:

      Thanks for your comment. When dealing with retirement plans, taxes for better or worse are a key consideration when contemplating an early withdrawal. This can make doing so prohibitively expensive in many cases.

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