Should I pay off my 401(k) loan early?

[RamblingMad]

Renting in a new area before buying is probably the best approach anyway. It's what I've done every move b/c while you can visit, you just can't get a real sense of where you want to live before you've been onsite 6-12 months...

And since you pay $200/month for the loan under $10K, I'd reserve another $200/month in a separate account (and save any tax refund this year for it)...it should let you pay it totally off within 2 years or less and get back to your house buying plans...

He’s going to want to go when the weather is less than ideal too. And he’s going to want to have some separation from all of the tourists. Visiting a place when everything is ideal is far different than living at a place.

Ideally, his tax refund should be zero.

 

[_19disnA]

In my experience advisors love to push their annuities. Wall Street makes money from fees, not making you money. These are Ivy League salesmen at the end of the day. The system is stacked against you from the moment you walk into kindergarten.

There are various types of annuities, not all of them are bad and a lot depends on your financial situation. This isn't a thread about annuities, but some financial companies who don't sell them want to lump them all into one category and give them a bad name.

 

[tvguy]

So I understand the money would best be spent back in the 401k. However, is there any sense in trying to achieve my other goals first? We are going to move no matter what, but we could put off buying a house to work on the loan. Not sure if that's wise or not because I'm also losing money towards rent right now.

Basically this whole situation sucks. I had to take out the loan, because I used it to cover credit card debt that I wouldn't have been able to pay off otherwise.

If it were me, I would retire that 401k debt before I considered taking on any other spending.

 

[MantaRider]

He’s going to want to go when the weather is less than ideal too. And he’s going to want to have some separation from all of the tourists. Visiting a place when everything is ideal is far different than living at a place.

Ideally, his tax refund should be zero.

Why would it be ideal to have a zero tax refund? Because I'd managed to increase my day to day income?

 

[MantaRider]

If it were me, I would retire that 401k debt before I considered taking on any other spending.

Right now I'm thinking of capping off the emergency fund, pre-saving for the move, and then hitting the 401k loan as the next step

 

[RamblingMad]

Why would it be ideal to have a zero tax refund? Because I'd managed to increase my day to day income?

Because you could earn money on the money that the government owes you.

 

[RamblingMad]

Right now I'm thinking of capping off the emergency fund, pre-saving for the move, and then hitting the 401k loan as the next step

FYI. My cross country move last year cost me $50k including the down payment on my home. Moving isn’t cheap.

 

[tvguy]

FYI. My cross country move last year cost me $50k including the down payment on my home. Moving isn’t cheap.

Yeah, that is one of the reasons I've moved very little. I'm 62 and I have lived in 4 houses.......not cities.....HOUSES. First two were my parents, I had no say in that. My wife and I rented for the first year we were married, and bought our house 37 years ago (coming up in May). And I married an Air Force brat. While the U.S. Government paid for all her moves as a kid (4 in one year at one point) she says having to make new friends, find new Doctors and Dentists etc just wasn't worth it.

 

[RamblingMad]

Yeah, that is one of the reasons I've moved very little. I'm 62 and I have lived in 4 houses.......not cities.....HOUSES. First two were my parents, I had no say in that. My wife and I rented for the first year we were married, and bought our house 37 years ago (coming up in May). And I married an Air Force brat. While the U.S. Government paid for all her moves as a kid (4 in one year at one point) she says having to make new friends, find new Doctors and Dentists etc just wasn't worth it.

Moving sucks. I moved back to help my parents out. But it took longer than expected to sell my last home, so I had to put money down on a home while I waited for the other one to sell, which also meant double utilities and double mortgage payments. I also had to rent an AirBNB while I house hunted. And I had repairs to do on the old house too. I hate moving.

 

[RamblingMad]

If it were me, I would retire that 401k debt before I considered taking on any other spending.

The good news is that he’s at least paying interest to himself. This is a far better situation than credit card debt.

Just don’t tell anyone in the debt dumper thread to not take on more debt.

 

[Searc]

The good news is that he’s at least paying interest to himself. This is a far better situation than credit card debt.

Just don’t tell anyone in the debt dumper thread to not take on more debt.

Yeah, that trip to the Grand could go a long way towards paying off the 401K loan.

That thread makes me cringe. "We have $80,000 in credit card debut, but we MUST spend $10,000 on a Disney vacation!!!!!!!!!!"

 

[RamblingMad]

Yeah, that trip to the Grand could go a long way towards paying off the 401K loan.

That thread makes me cringe. "We have $80,000 in credit card debut, but we MUST spend $10,000 on a Disney vacation!!!!!!!!!!"

And if you tell us that, you’re not being supportive.

 

[MantaRider]

FYI. My cross country move last year cost me $50k including the down payment on my home. Moving isn’t cheap.

We won't be using a moving company. We'll rent and drive a truck, and get help from family to load/unload, so I'm looking at around 3k total to move

The good news is that he’s at least paying interest to himself. This is a far better situation than credit card debt.

Just don’t tell anyone in the debt dumper thread to not take on more debt.

Yeah, they do get a little crazy over there. And thank you, that's the reasoning I had - 401k loans suck, but it's better than paying the bank back.

Yeah, that trip to the Grand could go a long way towards paying off the 401K loan.

Agreed, but it's an emotional thing for my wife and the family after I got sick this year. I dont' agree on the resort, but I do think we need the trip, as a family, for some good memories

And if you tell us that, you’re not being supportive.

Sometimes I feel really behind financially, as a 27 year old with the 401k debt/student loan debt. Then I talk to my friends, and go on debt dumpers, and I feel wayyyy better about my situation

 

[RamblingMad]

We won't be using a moving company. We'll rent and drive a truck, and get help from family to load/unload, so I'm looking at around 3k total to move

Yeah, they do get a little crazy over there. And thank you, that's the reasoning I had - 401k loans suck, but it's better than paying the bank back.

Agreed, but it's an emotional thing for my wife and the family after I got sick this year. I dont' agree on the resort, but I do think we need the trip, as a family, for some good memories

Sometimes I feel really behind financially, as a 27 year old with the 401k debt/student loan debt. Then I talk to my friends, and go on debt dumpers, and I feel wayyyy better about my situation

You’re young enough to dig yourself a much deeper hole. And you haven’t gone through any recessions yet. Take it easy. But still have fun. I’m mostly camping out this year to take a break from big expenditures.

Moving always costs more than you plan, so give yourself some cushion.

 

[MantaRider]

You’re young enough to dig yourself a much deeper hole. And you haven’t gone through any recessions yet. Take it easy. But still have fun. I’m mostly camping out this year to take a break from big expenditures.

Moving always costs more than you plan, so give yourself some cushion.

That's why we are being very careful and saving up money this year. I hate living with my MIL, but free rent is giving us 1,500 extra in the budget to set aside each month for our emergency / moving fund

 

[RamblingMad]

That's why we are being very careful and saving up money this year. I hate living with my MIL, but free rent is giving us 1,500 extra in the budget to set aside each month for our emergency / moving fund

I didn’t move out until I paid off all my debt. It sucked. But I grew up low income, so I didn’t really know better.

 

[MantaRider]

I didn’t move out until I paid off all my debt. It sucked. But I grew up low income, so I didn’t really know better.

That's not really an option for us. We are living, with our son, at my MIL's house. GMIL lives there too, and we are going crazy. I wish we could stay long term and pay off debt but it's not worth our mental health. IDK how we will make it through this year

 

[Searc]

That's not really an option for us. We are living, with our son, at my MIL's house. GMIL lives there too, and we are going crazy. I wish we could stay long term and pay off debt but it's not worth our mental health. IDK how we will make it through this year

I have a suggestion.

 

[chicagoshannon]

Since you have $1500 "extra" a month right now you should put maybe $500 aside for emergency fund and $1000 for the 401K. You want to pay that back ASAP.

You might have to delay a vacation for a while but if you save all you can you'll be able to vacation sooner than later with no debt. The time will fly by.

 

[MantaRider]

Since you have $1500 "extra" a month right now you should put maybe $500 aside for emergency fund and $1000 for the 401K. You want to pay that back ASAP.

You might have to delay a vacation for a while but if you save all you can you'll be able to vacation sooner than later with no debt. The time will fly by.

Sorry, plans are already made. This thread isn't really about the vacation. It's about, if I have 10k, should I pay off the loan or use that towards other investments or goals