I hate banks

[Marilyn. 340]

I don't think 401K loans are bad.. we took one out a few months ago and it will be paid back by December....

you are basically borrowing your own money... I don't see a problem with it...

[w¡n9Nµ7 §£@¥€r 123]

I don't think 401K loans are bad.. we took one out a few months ago and it will be paid back by December....

you are basically borrowing your own money... I don't see a problem with it...

Then you don't understand what a 401K is for. The experts haven't told you and you haven't taken the time to educate yourself.

[Marilyn. 340]

yes I know what it is for and I wouldn't normally like to take a loan out on it but at the time we had no other choice...

[w¡n9Nµ7 §£@¥€r 123]

yes I know what it is for and I wouldn't normally like to take a loan out on it but at the time we had no other choice...

Ok

[one...two...tree 2,762]

Then you don't understand what a 401K is for. The experts haven't told you and you haven't taken the time to educate yourself.

Compared to other conventional borrowing methods, it can sometimes be the better alternative.

[w¡n9Nµ7 §£@¥€r 123]

Compared to other conventional borrowing methods, it can sometimes be the better alternative.

If you think of a 401K as anything other than what it is - your retirement money.

[IndigoSkies 168]

The reason to avoid getting 401K loans is because you are already paying to 401K. When you get the loan, you assume you'd be able to pay twice as much as you are paying now to pay of the loan. But in reality very few of us have this capacity. So we end up not paying our loans in the time allotted. Then the bank either forces the money out of you or you end up saying you're withdrawing your 401K before your 59.5th year and you pay a huge penalty for that. On top of penalty, you may get to pay federal and state taxes. Generally 401K should be your last resort to raise cash, especially if you are doing supercilious things like take a vacation that you cannot afford.

IMO, the only reason to take a loan against 401K is for medical emergencies and/or foreclosure. Every respectable financial advisor will advize you to not take a loan against 401k.

Edited May 19, 2010 by IndigoSkies

[sara..... 371]

hmm it is not a loan for a vacation im moving to egypt for a year or so......really this is my own fault i should have had it wired......but in my small mind i figured with the world the way it is now that 48 hour was enough time for the check to clear as everything is electronic now....what i got upset at the bank about was my banker gave me numbers to call for the bank that issued the check to make sure it had cleared there and then request a fax be sent to my own bank so i could do what i need to do.......turns out the bank that issued the check will not cooperate or even verbally tell me it has cleared or not cleared......

i guess i just dont understand why a loan from my 401k is bad as i pay my self back interest on the money that i borrowed from it.......i have done it before for a college loan worked out ok sure is a payment each month please fully explain to me why its a bad idea because im very interested in learning why im not being rude or anything im serious about the information.......since i have already gotten the loan i dont want to do it again later down the road if there is really a reason its a bad idea.

sara

The reason to avoid getting 401K loans is because you are already paying to 401K. When you get the loan, you assume you'd be able to pay twice as much as you are paying now to pay of the loan. But in reality very few of us have this capacity. So we end up not paying our loans in the time allotted. Then the bank either forces the money out of you or you end up saying you're withdrawing your 401K before your 59.5th year and you pay a huge penalty for that. On top of penalty, you may get to pay federal and state taxes. Generally 401K should be your last resort to raise cash, especially if you are doing supercilious things like take a vacation that you cannot afford.

IMO, the only reason to take a loan against 401K is for medical emergencies and/or foreclosure. Every respectable financial advisor will advize you to not take a loan against 401k.

aha ok i get it now thank you for explaining it...and your right that makes perfect since

sara

[w¡n9Nµ7 §£@¥€r 123]

When you borrow money from your 401K, you're no longer compounding. Compounding over time is the whole point of a 401K.

[sara..... 371]

When you borrow money from your 401K, you're no longer compounding. Compounding over time is the whole point of a 401K.

ok please have patience with me when explaining this to me

but if ur money is still in their in stocks or what ever it maybe invested in.......and its a loan.......and your still putting money into the 401k as well as paying urself back with interest how are you not compounding if u default on the loan then they sell the stocks or what ever they invested ur money in and u have to pay penalty for early with drawl as well as taxes and of course that amount of money is no longer in ur account... but other than that truly i dont understand and i want to understand it.

sara

[Marilyn. 340]

The reason to avoid getting 401K loans is because you are already paying to 401K. When you get the loan, you assume you'd be able to pay twice as much as you are paying now to pay of the loan. But in reality very few of us have this capacity. So we end up not paying our loans in the time allotted. Then the bank either forces the money out of you or you end up saying you're withdrawing your 401K before your 59.5th year and you pay a huge penalty for that. On top of penalty, you may get to pay federal and state taxes. Generally 401K should be your last resort to raise cash, especially if you are doing supercilious things like take a vacation that you cannot afford.

IMO, the only reason to take a loan against 401K is for medical emergencies and/or foreclosure. Every respectable financial advisor will advize you to not take a loan against 401k.

with our loan the payment comes right out of our pay check... so it always get paid... we have stopped making contributions to our 401k at this time because money is a little short right now because I am not working at the moment....

[w¡n9Nµ7 §£@¥€r 123]

ok please have patience with me when explaining this to me

but if ur money is still in their in stocks or what ever it maybe invested in.......and its a loan.......and your still putting money into the 401k as well as paying urself back with interest how are you not compounding if u default on the loan then they sell the stocks or what ever they invested ur money in and u have to pay penalty for early with drawl as well as taxes and of course that amount of money is no longer in ur account... but other than that truly i dont understand and i want to understand it.

sara

Try this - http://abcnews.go.com/print?id=4347212

[mawilson 2,133]

Then you don't understand what a 401K is for. The experts haven't told you and you haven't taken the time to educate yourself.

I don't think there's anything wrong with 401(k) loans. If anything, you're paying yourself interest, which will grow tax-free.

[Pinocchio Liberal 268]

If you lose your job or something happens and you no longer can work the balance of your loan is due immediately and subject to the same rules as an early withdrawl.

[sara..... 371]

i have read the link and watched what has been posted about 401k loans and a lot of it makes perfect sense ..........i have to just make sure i dont default

sara