Please, please, please, DO NOT BORROW FROM YOUR 401Ks!!

First, you are going to get nailed with heavy taxes and fees so by the time you get the total withdrawal of 100K you likely to receive 70% of it, if that.

Additionally, if something happens, say you get fired for not meeting quotes or whatever, or you get hurt and lose your job, that money is required to be paid IN FULL with in 30-60 days depending on the company policy.

Furthermore, your taken money out of your retirement at some of the worse times, since they have likely to declined in value significantly. So when the markets start to recover more your money is not there to recover so you will be taken a big lose. When, if you, pay the money back, your probably going to be paying a higher price for the same funds that you withdrew the money for much less, so your losing again.

Also, you are just taking out a loan and adding to your growing debt. Might be nice short term but long term it will catch up to you fast and big.

Those are just a few key factors but as you can see the withdrawal is going to cost you A LOT in the short and long run. Not worth it.

I'm sure times are hard but there has to be other options. Have you tried finding a second job or a different primary job? Maybe a hobby you can make some money from? Or, can you find child care for free or cheap so your wife can return to work?

I just returned to a full time job after being laid off in Dec. but to help cover expenses I did and still do a lot of side jobs I found on Craigslist like helping put up a deck, painted a woman's living and bedroom, ect. It's not much but the deck paid $200.00 for 5 hours of work and the painting paid $150.00 for 3 hours of work. So I made $350.00 in 8 which works out to $43.75 an hour, cash, in one week.

Also, I have made a post here, Some ideas to help make/save money about things to do to save/make money, maybe some will help you. Be sure to take advantage of stacking coupons at grocery stores. You can save a ton there. I get about $150.00 in groceries a month for $60.00.

Hope that helps, good luck.

sure, but thats easy said, depends where you are and life circumstances, I still believe it is an option if you are young enough, I agree its a last resort

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I don't think taking our a 100K loan is a solution. If it was a Roth IRA that has been invested for 5 years, maybe.

Thanks for all your help, we feel up against a wall. We cannot make the payments on what I'm making now. My wife wants to sell our house and downsize, but I'm not sure with that kind of debt we have and the housing market that that is real feasable. My money is in a self directed IRA since my company discontinued the 401K and hers is with her former employer. It is hard to touch that money since we contributed everything without matching. Maybe we'll try to negotiate some lower rates on the cards, all three are around 14-15%.

get on that first, make a status what you have and what you owe, be very conservative on the value of te house, look what other houses cost and what rent is going for, maybe the 401k is the right idea,I would use that at the very latest

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One problem with borrowing against a 401K is that you run the risk of the loan being called due in full if you lose your job. This can then increase your losses because typically the only source to pay the loan is the 401K itself with which you secured the loan, which will then kick in the penalties for early withdrawals. It is especially risky in times such as this. The other problem is that too often, people that use equity or retirement funds to pay off credit card debt, simply end up using the cards again and creating more debt. Plus they have now replaced unsecured debt with secured debt meaning the consequences for default are much greater.
As is frequently the case with these situations, a budgeting and counseling session is the place to start. Have you been relying on the cards to make your month balance in the end? Too often I hear a story like yours, and once you plunge into the numbers, you discover that, even if you take out the loan, you will need to continue using credit cards, thus increasing the debt until you simply cannot afford your bills any more. Delaying the inevitable can be a lot more costly than dealing with reality early on.
Your solution could be the loan you mentioned, credit counseling, debt settlement, bankruptcy, or even simply coming up with a better budget that allows you to pay it down on your own. Contact us or another reputable non-profit credit counseling agency and do a thorough budget. Check the company with the BBB, the industry regulator for the state you live in, make sure they have been in business a long time, and be sure they belong to a professional association such as AADMO, AICCCA, or NFCC. If the company passes all 4 tests, chances are that they are very good at doing the right thing.

This is an interesting discussion. thank you for sharing

I think a few people missed something significant from your second post. Yours is an IRA and your wife's is a former employer. I don't think you will have the ability to borrow from either of those. So you are looking at a withdrawal.

There is a lot more information that would need to be known before making a major decision like this. There is certainly an argument to be made to take the money, even with penalty and pay off or settle the credit cards to free up immediate cash flow.

Of course BK may be an option if your income is down, and you don't seem to have many assets. That could allow you to potentially keep your 401K intact, wipe out the debt and have a fresh start.

Again, arguments can be made either way, but you would need a full understanding of your overall financial circumstances and goals before being able to definitively say which option will be the best for you and your family.

only do it if you really need the cash. youll pay tons in penalties and taxes and god knows what else. they really dont like you taking your money