7. 401(k) loan
This is a trickier method, not one that experts would recommend using unless you’re at your wit’s end and can’t figure out any other solutions. You could try tackling debt by using a 401(k) loan which is, confusingly, actually not a true loan.
This works as borrowing money from your 401(k) and reinvesting funds one payment at a time. You may be able to borrow up to $50,000 or half the balance in your account- guidelines vary between employers, so make sure to reach out to your HR team to learn more.
But is this really a good method? It could be a last-ditch effort as doing this might cause irrevokable damage to your retirement savings. You will have fees and penalties to pay up, but those will be the least of your worries. By borrowing from your 401(k) you’ll lose most financial gains that you’ve made so far since the interest on these accounts compounds exponentially.
Furthermore, if you leave your company you’ll only be offered a short window of time to cover the loan balance, so that’s another thing you should consider before taking this step.
