Recently, I have been thinking about dipping into my retirement savings to pay off my auto loan. You know what; it is a big deal that has preoccupied me with ideas in my mind.
So why did this thought first hit me? All those months, I have had that huge car loan receipt right on top of the kitchen counter and it was as heavy as bricks upon the back of my shoulders. That desire for debt-freedom is very tempting indeed given its possibility of giving me more pocket money thanks to junking car payments.
However, taking out money from 401(k) plan subjected me to risks and that’s no laughing matter. It took quite some time for that nest-egg to materialize and I don’t want anything happening to it.
Yes, clearing my auto loan would increase short term liquidity but what about long term? Will I lament having borrowed from Peter so as to give Paul when old age catches up with me? This can be a real thing on anyone’s mind lately.
Then also there’s the fact about taxes and fines. I must be prepared for a visit from Uncle Sam if I dare withdraw some cash out of my 401(k) before my retirement; he is going to need his share, and it will not be pretty either. Further, there are other costs such as penalties that lay hiding in the dark and will pop up at the least expected time.
Alternatively, this rewards one with peace of mind knowing that she or he is free from debts. Imagine having no worries about paying for your car every month or what will happen when I lose my job. It’s a thought that can’t help but tease you.
But is it worth jeopardizing my financial future over? This is a million dollar question, one that so far I am not yet sure whether or not to answer. In one hand, I could be without any debt and enjoy life to the fullest. On the other hand again, I may curse myself in future for making an impulsive move while being under pressure.
So, what to do? For now, however, I believe that I will desist from borrowing against my 401(k) and look at other alternatives instead. May be I can refinance the car or slightly cut down somewhere else in order to make more money. Perchance in the course of my search for a solution, I may find an answer which is like a secret jewel.
Meanwhile, I’m going to keep making payments towards that loan bit by bit slowly but surely. It might not turn out to be the quickest way to get out of debt; nevertheless, it certainly would be doing it without sacrificing my future.
But then again, who knows? Perhaps one day in future as I sit pretty with a margarita in hand retiring and not giving a damn about anything, this point will be appreciated by me and laud myself for being wise. In the meantime though it’s back to square one for me. But hey! That is part of the experience isn’t it?
Posted Using InLeo Alpha
Posted Using InLeo Alpha