So what is your opinion? We are using some savings and have to go with either 401k or bank loan to get started. Think we are crazy for using 10-15% of our 401k? I feel its ny money and the penalty doesn't make or break us by any means. Id rather lose some up front rather than start of in debt before we even buy our first property. I'm thinking I know what type of responses I'm going to get....lay it on me, I'm ready!
you will have to pay penalty plus taxes on both, federal and state level and depending on your tax bracket combined this would be as much as 40% in some cases.
I agree with you that you need to get out of debt first before you start investing, but not at this cost. I don't know your situation, but if you are serious about your financial future you need to set strict budget and eliminate all non-essential expenses. Use debt snowball method to kill your debts one at the time and then save all those funds towards investing. If you stay focused and diligent you can make this happen quickly.
Wish you the best!
Use a bank loan before withdrawing from your 401k. If you have the option to BORROW from your 401k that might not be all bad. But remember unless its your primary residence you're limited to a 5-year term.
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