How I Almost Cashed Out My 401(k) to Pay Off My Credit Cards

Once upon a time, I did stupid financial crap all of the time. Then I cleaned up my act and got on the path of the righteous and started paying off my debt and stopped being an active compulsive shopping addict and sold all of my shoes on eBay. You've heard this about 90 times, right?  

Well, now, I have just over $13,000 in credit card debt left. I am so going to kill that in 2011. Considering that I had $37,000 on credit cards in April 2009, the current balance seems like NOTHING. Mere pennies. (I know, most of the personal finance types who read this are still thinking that I am the most financially-irresponsible person ever, but I have paid off $30k in unsecured debt in 18 months. Praise the progress.)  

As I have mentioned, I am working at a new firm. My 401(k) from my last firm needs to be transferred. Briefly, I considered cashing it out to pay off the credit cards. It would feel sooooooo good if those balances were gone. I mean, I was thinking about it a little too much for my own comfort. 

Fortunately, I didn't act. When I am about to do stupid shit, I have a good support system. I emailed a friend who believes that I need to be physically shaken whenever I am going to do something that he disagrees with (i.e., something financially irresponsible). I confessed my plan to him. A lecture followed. (Cyber shaking.) Exactly what I needed. No more urges.  

I will now rollover my 401(k). Probably to my ING Sharebuilder. Into some sort of IRA. I will figure that out later.

I'll keep paying off my credit cards the same way I have been. Through my regular monthly payments.  KILLING them. We are so close to Discover's viking funeral. (That will be a vlog, if I can scrape off the account number.)  

I am confessing this money sin to also demonstrate my progress. Now, I mostly think about doing the stupid crap. Like Small Business Saturday. (Which was extended through December anyway.) Now, at least I can recognize my idiocy and I stop or I reach out to my support system before I do anything silly. I believe this is called growth.

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  1. This is the first thing I did when I needed a big infusion of cash in 2005, a few years before I figured out how to actually get out of debt instead of living beyond my means. I needed to pay my ex & business partner back his half of an investment in our shared business and the first thing I thought of was the 401K. Stupid stupid stupid. Luckily they only let me take out a small portion. I think I had already rolled too much of it into IRAs or something. So I only cashed out about 20% instead of all of it. Luckily.
    You made a good decision.