Thinking About Borrowing from Your 401k?

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Some people have pulled money out of their 401k to fund pet surgeries, a child’s college education, plastic surgery, or weddings. However, these people have to pay this money back in usually three to five years. It’s like swimming in a pool where you aren’t going anywhere, because when you pay this money back to your 401k, you’re in the exact same spot you were three to five years ago instead of where you would have been if the money went untouched.

Your number one priority has to be retirement, and you have to be saving more even though retirement may seem like it is so far away.

  • Why is not wise to borrow from your 401k?
  • Some people say, “But isn’t it my money and can’t I just pay it back?”
  • What should people do instead of borrowing from their 401k?

Les Szarka is a Certified Financial Planner and a Chartered Financial Consultant. He is co-author of Money Talks: Life Lessons to Help You Plan Now, Save Wisely, and Retire Well. He is also author of Money Brain: How Your Subconscious Mind Can Hijack Your Investment Decisions. He likes to refer to himself as a “financial psychologist.”