James, my wife and I have been in debt twice before to where we thought that there was no light. I can't really tell you what to do to get out. Heck, I can't even really tell you what to do to stay out of debt. One thing has helped us and it was mentioned before. I don't know where your faith stands and I'm not going to ask. Prayer. I have readed alot of post here on FTE and have started my own prayer list for people. I still pray for Archer1 and Fallen and I will add you and your wife to it. I hope that this may be of some help to you. It has been to me.

Tom

 

Check into borrowing against your 401K. For example, if you borrow $1K, you'll continue to pay into your 401K, but the amount in it won't go up until you pay back the $1K. Not only is it an interest-free loan, but out of every $20 that is taken out of your check, you really only see a net deduction of $13, because it is a before-tax deduction. Check with your plan administrator, they can tell you what you can or can't do.

 

The thing is though, if you dont cash in the 401K and you get a loan, you're still going to be making payments and have debt. The easiest way to get out of debt is to cash it in. I know it would mean losing some of the reirement money for now, but you have to look at the short term before looking at the long term. You could put all of your efforts into your 401K once you've paid off your debts. Some of those payments you are having to make now could be redirected into your 401K. Because if you can't afford to put as much into it one month then you wouldnt have to and no one is gonna come get your stuff or ruin your credit. Trust me making payments on a credit card is rough. I do it every month and it just doesnt seem to be getting any lower. Even though I pay twice the minimum payment. Sometimes 3 times it. You should get straight now instead of continuing to struggle until you retire. Then you can be stress and debt free and concentrate all of your extra money into the 401K. My mother in law did that and now she has more money in it than she did when she took it out.

 

you have to pay your credit card. unless your income and your retirement plan's growing at 25% a year, carrying a credit card debt is THE worst thing you can do.

get a loan to put a lid on the interest charges. get a bigger loan so the wife can take driving lessons and get this adapted vehicle she needs. i'm hoping the government or insurance is going to help you on this but whatever that vehicle costs. do it. even if her job only covers her vehicle and her insurance, it's still better than just you working all the time and leaving her by herself.

sounds like this debt is a one shot deal from your marriage and not bad habits. you've got the retirement plan to show that. you shouldn't have a problem getting a loan. i just hope there's some help out there to get your wife one of these vehicles she needs.

just sit down and do the math. bank loan to pay debts, driving lessons, and car for the wife. with your wife working, will it be enough to cover the loan and her health insurance

the rest you need to ask your banker or an accountant or somebody who works with people in your wifes situation. you probably know what this vehicle is going to cost you so you can do the math. if you do have to dip into the retirement plan can you avoid penalties by showing the money is for your wife's vehicle and health insurance?

 

Give this guy a call- he's the best- Ray Lucia 1-877-PLANNER

 

i've got my own problems calling companies trying to get work. it's been a bad year for construction. for me anyway. there's still work but it's been work one week, no work the next. anyway union called me and said they got a job for me on monday. hooray for now. excavation job not too far from home with a big company. i just hope i can work till christmas, pay off some bills and have some $$ left over

usually its not so bad a week no work but my girl just started a job at this plastic factory so i'm alone now. she gets 9$/hour and she'll be getting 10$ in a 6 months and that's gonna go a long way. but until they move to the new building in december, i drive her and pick her up and it costs maybe 15$/day in gas with my truck. ouasdf!! i'm gonna eat the cost for now cuz it took a lot for her to go out and find a good job and i want her to see some money for her troubles.

when we got the house all the extra money went to fixing the plumbing and the bathroom, putting a fence for the dog, so i had to draw the line at all the things she wants like taking down the nasty wallpaper and redoing the wood floors cuz it wasn't in the budget. now she's got our eye on a wood stove and i can't say no to that, not when the oil is 50 cents a litre and i got a truck and my brother in law's chainsaw. it was actually my idea cuz my dad had one and they're great but to her it's going to be cozy and romantic so now its something she wants. so i won't ask her for any money just for regular bills that stacked up while work is slow because i want her to save her money and get us that wood stove or whatever so she can have that to think about when she's working

so like a fool i went to the store yesterday and she bought a bunch of cakes and little bags of chips and stuff to pack in her lunch. she always makes me nice lunches so i want her to have nice lunches too. i miss her though. i would have asked them to put me on the same shift so i could see her and save some gas money but i need the construction pay and benefits right now.

when the house is paid will be a different story. i'd be a lot happier just going back to doing odd jobs, cutting lawns and stuff with my truck and not have any boss or stress. i dont smoke, drink, or do drugs except for a little beer. don't buy new cars, shop for clothes, take vacations or eat in fancy restaurants. best days were when i had my own jobs doing yard work and renovations jobs. could go home for lunch with her. take her to the garden place and let her pick out flowers for someone's garden

yeah so that's my plan... work hard, get a little security so i can go back to just scraping by and being irresponsible... think twice before you take advice from me

 

Look into Consumer Credit Counselling Services, they are free and can give you some great advice. You have gotten some great suggestions on this board maybe you can take a little from everyone and make it work. This is not an uncommon situation either so don't feel that you can't work through it. Good luck!

 

cash in the 401K , pay the penalties and pay off the debt.
I've been over my head in debt and you CAN'T borrow your way out of debt.

 

James, I'd do just about anything to get out from under all that debt. Once all the debt is gone, it's the best feeling in the world. You can always begin saving again, especially considering how young you are. If you have to sell some of the less-prized possessions do so, but don't let the ones go that you've spent years finding parts for and restoring.

 

I agree with buzzard and oldhalftons, not so much with 1081. Be very careful with so called nonprofit debt companys, 99% are a scam. Are you contributing to the 401k?

I was in a very similar situation a couple years ago. DW had a 401k, but since she isn't working, she hasn't added to it, just earning intrest. our debt was spinning out of control. We got all the same advice your getting here. Well, we cashed it in, got about $7000. Paid off about 75% of the debt, soon we started getting better offers on credit, and paid the remaining debt off over the next year at 0% intrest. We bought a house during that time. We've already got that 401k back in equity in the house. We don't regret cashing in, and I doubt we will.

The math only tells 1 side of the story, $50,000 in 60 years, you'll be what, 90. Add in inflation now its more like $30,000. That will be nice down payment on a brand new 2054 f150 with a 100 hp electric engine.

Good luck.

 

no its his age 58 59 and 60, not 60 years from now mleichtle. it wil be 28 29 and 30 years from now respectively.

don't mess with the 401K

Scott

 

The Consumer Credit Counseling is not a scam, it and absolutely NOT a non profit "debt company" it provides programs to help you budget your spending to stay out of debt and teaches you how to get out of debt. Its not this stuff you see on late night t.v. that miraculously gets you out of debt if you give them money. It is a place to get solid advice at no cost.

 

Thanks to everyone for giving all of the very sound advice. I think my wife and I are leaning towards doing whatever it takes to get rid of the debt. We live in a 2 bedroom apartment, and without that debt living on one salary for a short while is definitely feasable (one she is able to drive, hello second income!)

My biggest fear would be if she were to somehow get injured - with no insurance, that rollover 401K would be unecessarily taken out to pay doctors bills, and we'd still be in debt with no insurance. Get out of debt, reduce the toy level a bit, get on insurance.. it'll be alot easier to rebuild that money down the road. From what I see.. having that debt does nothing but hold us back. Having positive cash flow is better than only being able to pay minumums on credit cards - which I don't use anyways.

I also figure on taking this course of action once the credit card debt is eliminated - reduce their credit limits to something I could afford to pay off IF I needed it.

I think lack of medical insurance reasoning is good enough reasoning to getting things on a better track.

 

I sold off a good portion of my toys to pay off my debts. I am in a more fortunate situation and I didn't have to dip into my 401k... I did dip into my savings account... I do miss some of the toys from time to time, but the feeling of being debt-free cancels it out by far. Especially considering most of the debt was caused by those toys...

 

quote: "Don't cash in the 401k!!!! It makes no sence... do the math on that money appreciating at say 8% a year until you retire.

I suggest you also do the math on making minimum payments on credit cards at 18% -21% and compare that with the current earnings from your 401, which, if market based is making you less than the 8% suggested. You have the means in your 401 to eliminate a very expensive debt and to start rebuilding your retirement with that minimum payment money. Good luck.
Dono