Comments on: Debt Snowball | Pay 401K Loan or High Interest Loan

By: -> 50 Personal Finance Bloggers To Watch In 2010 | Bible Money Matters

-> 50 Personal Finance Bloggers To Watch In 2010 | Bible Money Matters — Mon, 11 Jan 2010 20:07:10 +0000

[...] Deliver Away Debt: A blog by a guy delivering pizzas to help get rid of his debt. Recent post: Pay 401K Loan or High Interest Loan. [...]

By: Jeffrey Kosola

Jeffrey Kosola — Wed, 30 Dec 2009 14:40:44 +0000

That’s a great point Cat. I did think about it, but I was trying to compare the two equally without too many outside influences.

Yes, if you lose your job you have to payback the 401K. If you lose your job you may lose your house. You are still responsible to pay back the 2nd mortgage too, just like all debts.

People can loose their jobs at anytime for almost any reason. I just don’t want to go there life making all my decisions based on that. It sure would be a scary world always have a pending job loss on your brain.

Thanks for the comment, Jeff

By: Cat

Cat — Wed, 30 Dec 2009 14:24:02 +0000

Something I expected to see added to the post, but didn’t is that if you lose or quit your job, the 401K HAS to be paid back in full or you risk major penalties. I know no one thinks they will lose their job, but I would rather make payments to my 401K so I don’t have to worry about that scenario. It may not change a lot of people’s opinion, but it would certainly affect my reasoning. I’m just wondering if you considered the payback requirement as well in your decision making.

By: Matt Jabs

Matt Jabs — Tue, 22 Dec 2009 02:48:35 +0000

I’m going with 8.8% 2nd mortgage over 6% student loan – they are about the same amounts, although the 2nd mortgage is slightly more.

I’m excited for that day when I no longer have to think about which debt MY MONEY is going to go toward and instead can think about how should my money work for ME!
.-= Matt Jabs´s last blog ..Savings Money means Better Buys =-.

By: Jeffrey Kosola

Jeffrey Kosola — Mon, 21 Dec 2009 23:31:22 +0000

I certainly feel the same way about very situtation being unique and personal. Just like there are many ways to get into debt, there are many ways to get out of debt.

In my Debt world, the 2nd mortgage is part of the debt snowball. Anything and everything execept the 1st mortgage I consider in the snowball. I’m still debating whether to go after the LAST credit card at 8.15% or the 2nd mortgage at 12.7%. If I go for the CC then all CC debt is gone faster. If I go for the 2nd mortgage, I save a little in interest. Hmmmm. Choices Choices….

By: Matt Jabs

Matt Jabs — Mon, 21 Dec 2009 22:04:00 +0000

You can’t go wrong getting out of debt. Other than that, everyone’s situation is personal and unique, so all of us must simply do what works best for us.

Personally I am choosing a blended approach. For the most part I am sticking with the debt snowball… with the exception of the fact that I am going to pay off my 2nd mortgage before paying down my student loan – because the rates are so much higher on the 2nd mortgage.
.-= Matt Jabs´s last blog ..Savings Money means Better Buys =-.

By: The Katana: Randy Pausch, Basketballs And Favorite Posts 12/20 | Financial Samurai

Sun, 20 Dec 2009 09:12:41 +0000

[...] “Debt Snow Ball To Pay 401K Loan or High Interest Loan” from Jeff does a thorough analysis of his dilemma. The thing is, paying off your 401K loan is [...]

By: Jeffrey Kosola

Jeffrey Kosola — Fri, 18 Dec 2009 12:00:54 +0000

You do have a point, the card could be paid off first. If I paid the card off then I would have “Zero” credit card debt. I was kind of surprise by running the numbers though. I’m going to look at switching something around and see what happens. Now that my behavior is changed, its all about getting done FAST and paying as little as possible.

Ka-chiiii (that’s the sound of me opening a can) a can of whoop ass you stated. Let’s make 2010 a great debt free year. That’s for you input Money Funk…

By: Money Funk

Money Funk — Thu, 17 Dec 2009 21:49:02 +0000

Heck, I was going to say pay the Credit Card off first – no reason, just my inner thought talking. I probably think that way because all my stupid cards are raising their rates even though I am a great customer! *blah*

The 401K loan I would leave. I have one, too. Of course mine is only $2K, but the interest is among the lower side. I need to kick the others out before that one.

I do think it would be to your best advantage to pay the 2nd over the 401K – if that is the route you are going. Ready for next year?! I’m ready to kick some whoop ass on this debt.
.-= Money Funk´s last blog ..Personal Loan for Debt Consolidation =-.