On Wed, 11 Apr 2007 17:02:42 -0500, Douglas Johnson
<johnson[at]classtech.NOTPARTOFADDRESS.com> wrote:

- quote -

Thanks for the good advice.

By "perhaps eliminate," I mean, that I cannot see myself ever having
enough disposable cash to buy a vehicle or a home outright. OTOH,
these are non-issues as long as my work truck keeps running strong and
I don't have to relocate for my job.

I also foresee having to cosign student loans for my younger children
- but fortunately that's more than a decade away. I just graduated
the oldest from college so at least one acorn's off the tree.

I don't confuse those larger necessities with revolving credit, or
small installment loans - both of which have proven to be my Achilles'
heel. Your concern is unfounded - I get the point.

On Wed, 11 Apr 2007 17:02:42 -0500, Douglas Johnson
<johnson[at]classtech.NOTPARTOFADDRESS.com> wrote:

- quote -

He doesn't need to do any of those things. A 401k loan would be
appropriate in this case.
Thumper

The Raven <raven[at]quoth.com> wrote:

- quote -

No "perhaps" about it. You have stop credit spending cold. Cash only from now
on. Turn off the cell phone, cable, and Internet. No meals out. Start
taking lunch to work. Learn to like red beans and rice. Get clothes from
Goodwill (you can actually find some good stuff there). Trade your car for a 5
year old econobox or sell it and take the bus. Sell a bunch of stuff on ebay.

I don't know much about how you got in this shape, so the above may not all
apply. But the principle does.

You need to get *REAL SERIOUS* about controlling spending or you will dig
yourself an even deeper hole. I thought maybe you had got the point until you
wrote "perhaps eliminate credit spending".

-- Doug

On Wed, 11 Apr 2007 15:22:24 -0500, "PeterL" <po.ning[at]gmail.comwrote:

- quote -

It's my own fault, of course, but no way would I qualify for anything.

On Apr 11, 11:36 am, The Raven <r...[at]quoth.com> wrote:
- quote -

How about transferring your account balance to another credit card
company? I keep hearing these touts on TV about a teaser interest
rate if you transfer your account.

On Wed, 11 Apr 2007 10:27:48 -0500, BreadWithSpam[at]fractious.net wrote:

- quote -

Yes, of course, thank you :
- quote -

In my current situation there seem to be 3 ways to go...borrow at a
lower rate and buy out the debts, enter into a DMP and negotiate lower
interest or, finally, pursue bankruptcy.

I don't grok the "new" bankruptcy code, so I could be grossly over-
or under-estimating the applicability of bankruptcy to my situation.
I'd appreciate input, if at all possible, given the medium.

Going on my limited knowledge, the only reason I'd attempt 13 would be
if there was no other way to reduce the interest to a reasonable rate.

Given the choices, it looks like a combination of a big buyout plus a
DMP is the best way to go. I'll still have the same debt load, but at
more tolerable interest rates. Then, the same monthly payments will
serve to lower my outstanding balances, instead of paying interest.

And, as yourself and others have noted, I have to learn to curtail,
perhaps eliminate, credit spending to realize long-term benefit.

Thanks...

The Raven <raven[at]quoth.com> writes:

[re taking 401k loan to pay down 32% debt]

- quote -

First, you probably don't mean Chap 11 - that's a business
reorganization. US Chap 13 is restructuring with a payment
plan for individuals. (Chap 7 is liquidation for either
individuals or businesses).

Second, if you are really are close to a bankruptcy,
then *absolutely* do not touch that 401k. Thanks to
a change in the law in 2005, repayment of 401k loans
is permitted to be included in a Chap 13 plan, but
I'd probably want to leave that to folks who *already*
have the 401k loan. Do NOT take out a new one just
before Chap 13. If you are seriously considering this,
talk to a lawyer and soon.


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

On Wed, 11 Apr 2007 03:56:20 -0500, "PeterL" <po.ning[at]gmail.comwrote:

- quote -

I agree with you wholeheartedly. I'm going to get my spending habit
under control and keep it under control.

At the risk of derailing my own thread, I think there are other
options worth considering. Two of those are debt management and
Chapter 11.

I tried to pursue debt management with Clearpoint in January, but the
specialist assigned to me was of little help, and after stringing me
out over 6 weeks of emails, simply told me, and I quote, to "seek
other legal aid in my area."

I took that to mean that I would have a difficult time setting up a
DMP, and that I should pursue Chapter 11. But I never understood why
she said to go elsewhere - isn't Clearpoint able to help with DMP as
well as Chapter 11?

"PeterL" <po.ning[at]gmail.com> writes:
- quote -

There are other considerations, though. If for some reason the OP
leaves his employer (whether to change jobs or if he is fired or
let go for any reason!) that loan against the 401k is due immediately.
If it's not repaid at that time, the amount borrowed against it is
considered an early withdrawal - on which the OP suddenly owes both
taxes *and* penalty. And he loses the long-term benefit of the
tax-deferred growth - a lot of us look awfully hard to find
opportunities to increase that, not reduce it.

I'd say that a 401k loan is a last resort. In most circumstances
I'd say no way, but then, 32% interest is kind of extreme. At
that rate, I'd look to just about any other alternatives to get
rid of that rate - sell a car, rent a room in the house out,
something. Maybe even that 401k loan.

- quote -

Absolutely - bail that debt out by whacking your 401k and
then find that a year or two down the line you've rebuilt
that debt and this time no 401k to bail it out? Don't
mess with any of this until you are sure your spending is
under control.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

On Apr 10, 2:11 pm, The Raven <r...[at]quoth.com> wrote:
- quote -


Technically of course if you can borrow at 9% interest to pay off a
loan at 32% interest, it's a no brainer.

But if you don't address the structural issue that led you to this
point in time, it's all going to be pointless.

On Apr 10, 2:11 pm, The Raven <r...[at]quoth.com> wrote:
- quote -

another option you can look into is prosper.com, a peer-to-peer online
lending market. I wouldn't recommend it for lenders, but borrowers
don't have anything to lose.

On Apr 10, 2:11 pm, The Raven <r...[at]quoth.com> wrote:
- quote -

I would do it in a flash. Your 401k program may or may
not let you do any regular contributions while you have
a load out, but any money you can invest should be put
to the guaranteed 32% rate you'll effectively be getting
by paying down those usurious rates.
Joe W.

Please, will someone share their opinions about using a 401(k) loan to
pay down high-interest debt?

I've built up $12k each on two revolving lines. I've mismanaged them
horribly, and they are now sitting at 32% interest. It's all I can do
to keep up with the monthly minimums. I've need relief from the
interest so that I can pay down the balance.

The banks have said that if I can make timely minimum payments for 6
months, they'll consider a lower interest rate. I'll drown by
then...and there's no guarantee that they'll drop my rate if I stay
afloat. I need a better solution.

I can pull a $28k loan against my 401(k) at 9%. The infusion would
pay off my high-interest debt and a few smaller lines, all of which
are above 15%. Payments would be around $580/month over 5 years. Note
that the monthly loan payments would be less than my creditor's
monthly minimums.

9% interest owed is always better than 32%, correct?

And what if I change employers before the end of the loan? If I can't
pay back the loan by the due date, it will be converted to a
withdrawal, subject to penalties and income tax. It's a forgone
conclusion that it will push me into the next tax bracket. I don't
even know how to begin to calculate the risk -- but in my situation,
is this scenario preferable to perpetually carrying around $24k at 32%
interest?