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cabledude

Try a 401K loan?

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There is one common denominator in the credit reapir game. That common denominator appears to be CASH!!! Having cash allows you to negotiate as that is really what they want.

I was on the verge of bankruptcy over a year ago when I started the process of repairing my credit. Consolidation loans were out of the question as I did not own my home. Someone then told me about a 401K loan. Most employer policies allow up to 50% of your total balance as a loan. No penalties for early withdraw by the IRS since you are repaying the loan to yourself. Does not even appear on your CR since you are borrowing your own money!!!! This allowed me to borrow $25,000 from my total $50,000 balance to work with.

Not everyone will have this option available, but anyone who puts money into a 401K retirement account at work may. I see alot on here about the issues with credit, but not too much about getting the necessary negotiating power, CASH!!! Thought I would pass this along as an option that worked well for me. Having some cash, even if it is not 100% of what you owe, made a huge difference in my repair process.

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That is the difference between the old economy and the new economy.

Social Security and many pensions such as a defined contribution plan, the money never did belong to you. It belonged to Uncle Sugar or the pension plan. You have virtually no control over it.

I have worked at places where the employees were treated like dogs because they were tied to the pension plan and could never move to another company. They were forced to endure severe humiliations because of they were a prisnor to their pension.

With a 401k, the money actually belongs to you. You can go to any job you want to and the money follows you.

You can use it for a down payment on your house. You can borrow against it. You can decide where to invest it. It belongs to you.

Lots of people bash 401k's because of certain stock losses. That is simply total ignorance. The most important person to manage your retirement is yourself. Not the government, not the plan manager, or the retirement fairy. It is your responsibility to decide where the contributions and the assets reside in and it is your responsibility to weigh the risks of stocks, bonds, or a combination of the two.

I have made loans on my 401k and they pulled my chestnuts out of the fire.

A 401k is a great tool...

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When you borrow from a pension like a 401(k), it may seem to be an easy fix, but you lose the power of the money being invested. Borrowing 25 grand may have in fact-cost you over 100 grand depending on your age. If the money isn't there, it's not invested and growing, even at a slow rate of 4-6%.

Also, if by some chance you get in a bind and can't pay it back, the IRS is going to slap you with a 10% penalty besides taxes on the original amount of the loan.

You are going to need ever dollar in a pension plan. The average social security check in this country is $675. Chances are you are going to live 15-20 years past retirement-most people seem to be living in their eighties now. If you think it's tough living paycheck to paycheck now and still have credit card issues, what are you going to do when you don't have that paycheck and still have the same bills!! Just food for thought!

In general-borrowing from a 401(k) is not a good idea.

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Try not to tap into your 401 k. Its for retirement wen ou cant work.

The only time it might be a good Idea is to satisfy a tax lien that is

accruing interest.

The point you need to learn from this board is to dispute everything

and then as a very last resort offer money 8)

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Good points on both sides. For me it was right and it kept me going until the stock market came back. I definetly think this has to be a last resort to avoid a bankruptcy or the like. Maybe I'm crazy to a fault, but I just can't dispute things that I know are 100% mine. I'm 33 so pulling from mine was not the worst thing as I have time to replace the funds. However, if you are older touching your 401K may be a definite no-no.

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That is the beauty about a 401k. It belongs to you.

I am 35 years old and I know that I have plenty of time to make up whatever I have done in the past several years.

Somebody who is 45 or 55 doesn't really have that option. And at that point of time, they should really be looking at the safest investments to grow their nest egg instead of risky stocks, no matter how enticing those tech stocks looked a few years ago.

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