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Should I cash out my 401k to pay off my credit card debt?

I currently owe about $4,000 in credit card debt. I have about $9,000 in a 401(k). Should I withdraw the money from my 401(k) to pay off my credit cards? I no longer work for the company, so if I withdraw the money, it's all or nothing. What do you think I should do? -Conner

Dear Conner,

I highly recommend that you not only leave the retirement account alone, but keep adding to your 401(k) through your new job or through an IRA plan. The penalties for cashing the account are severe (probably about 37 percent!). There may be another solution.

nonprofit credit counseling agency can help you set up a plan to pay off that debt. Trained professionals are standing by at 800.432.7310.

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