I was in your shoes once. My advice? Don’t take the loan. When I was young, I thought I’d learned my lesson and wouldn’t max out my cards again, but I ended up paying off the loan and then running the balance back up. It’s easy to get stuck in that loop.
If you’re sure you won’t end up with more debt, try paying it down. But if you’re not, cutting up your cards and using only a debit card might help.
Don’t take from your 401k. That money grows over time, and you’ll lose a lot by withdrawing it early.
You’ll lose a lot in future money if you touch the retirement account. I’d pick up extra shifts, a part-time job, or a side hustle. It’s not ideal, but it’ll help.
Harlem said:
You’ll lose a lot in future money if you touch the retirement account. I’d pick up extra shifts, a part-time job, or a side hustle. It’s not ideal, but it’ll help.
I tried, but school and certifications are taking up time. My hours are odd since I work at the mall.
@Nico
Maybe put off the certifications until you clear this debt. Also, mall hours aren’t that strange, usually 11-7. Any ideas for extra work?
Cary said:
@Nico
Maybe put off the certifications until you clear this debt. Also, mall hours aren’t that strange, usually 11-7. Any ideas for extra work?
Just doing the certification to have a bit more on my resume before applying for jobs. Mall hours are usually 10:30-7:30 or 1-10, and they vary. Open to suggestions on jobs though!
@Nico
I get that extra work isn’t fun, but this is where you’re at right now. Taking from the 401k won’t help much in the long run and might hurt later.
If you can get a 0% interest intro card, move as much of the balance there as possible, then focus on paying it down. Try to keep extra spending as low as possible until you’ve made a dent.
Cleo said:
If you can get a 0% interest intro card, move as much of the balance there as possible, then focus on paying it down. Try to keep extra spending as low as possible until you’ve made a dent.
I get the point of transferring some balance to a 0% card to lower interest, but won’t applying hurt my credit score?
@Nico
You’d take a small hit, but it could be worth it if you get approved. Paying off the balance without all that interest adds up. If a transfer isn’t possible, paying down the highest interest debt as much as possible each month still works.
If you have multiple credit cards, try a balance transfer to one with a low transfer fee and 0% interest for 12-18 months. I did this a while back and paid it all off, just rolling the remaining balance to another 0% card when the time came. No interest makes it easier to manage.
If you pull from the 401k, you’ll face a 10% penalty, income taxes, and possibly state taxes too. That $4,500 won’t be worth much once you pay all that.
Pulling from your 401k means paying a penalty, taxes, and giving up future growth. You’ll lose a lot more than you’ll get. Better to stick it out and pay down your debt aggressively.
There’s a big tax hit on 401k withdrawals. Keep that in mind.