Have you thought about borrowing from your 401K? You are allowed to borrow against your 401K for various reasons. You are charged interest for taking out the loan, but you pay the interest to yourself. For this reason many people feel that this is a good way to get extra money from time to time. However this can be a dangerous practice.
In some ways you are stealing from your retirement, to finance your life now. Yes you do pay yourself back, but you run the risk of not being able to retire comfortably. Once your money is in your 401K, it is good to leave it there or in another retirement account. This helps you to plan and prepare for your future.
Another negative aspect of borrowing from your 401K is that if you leave the company the money is immediately due in full. This is a time when layoffs are not uncommon. You may also decide to take a better position with another company, but you may pass up the offer because you owe this money.
It may seem like an easy way to get a large sum of money quickly, but you need to carefully consider all the contingencies that may happen and plan accordingly. Usually if you do not have the money to do something, you should wait until you have enough cash saved. While some may look at your 401K as cash, it is best to simply forget that it exists until you retire.
If money is tight and you are trying to get out of debt or save aggressively for a down payment on a house, you may consider contributing less to your retirement for a short time. You need to weigh this option carefully as well. The earlier and the more you save, the more that your money will work for you. If you do make this decision be sure that you are disciplined and that you are not wasting the money you are supposed to be using for debt repayment or savings for dinners out.
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