I am 45, I have a 401k with 41,000 in it from a old job I have a little over 21,000 in credit card debt I am drowing each month I do have other 401ks and other investments of 62,000 is it wise to cash out the 41,000 and pay off credit cards and build wy savings back where it naads to be :confused:

I would never cash out your retirement plan/money. What are you going to live on when you retire? Not to mention the penalties for cashing out such plans. Not only will you have to pay taxes on the amount you take out (401k's are pre-tax income), but you will have to pay an additional 10% penalty.

I would seek financial counseling from a professional. They can help with organizing your personal finances including your credit card debt. But, you have to address the real problem, i.e. what in your life is causing you to acquire so much debt? Credit cards must go!


Dave Ramsey has a talk show and books (total money makeover). I have not read the book, but have listened to his show... he gives great advice on these types of questions.

Good luck!

P.S. Don't cash out your retirement!!

I agree, taking a 401K early distribution is not a good idea. Even if you were to take just enough to cover your debt you would still need more than $27K out.

$21K for the debt
$ 4K for withholding
$ 2K for penalty


If you have an active 401K with your current job, roll the other 401K into it, then take a loan against it to pay off your debt. The interest will be a lot less so your monthly payments will be lower, plus any interest you pay goes back into your account. So you are paying yourself, building up your 401K even more.