Author Topic: Need living expenses without withdrawing from 401k. Advice?  (Read 1830 times)

casual34

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I'm in between jobs and want to have $8-10K to cover living expenses as I deal with car issues and look for my next job.  This can be lower but I want to have a healthy cushion and also to use as a poker bankroll to supplement my income. My emergency fund is running dangerously low and I have $80k in a 401K.  Obviously I don't want to withdraw from that account as I'll probably only get 50 cents on the dollar after taxes and penalties. 

What are my options at this point?  Should I open a 0% APR credit card, transfer my balance there and put everything on that for the next few months?  If so, what features should I be looking for?  I've only had a few credit cards in my life and have always just paid them off in full so I'm pretty inexperienced.  I could ask parents or friends for a loan but I really don't want to do that because I've always been self-sufficient and would rather not involve others, plus the humiliation factor.   I'm embarrassingly ignorant about personal finance (probably why I'm in this position to begin with), so any advice or comments would be really appreciated.

zurich78

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Re: Need living expenses without withdrawing from 401k. Advice?
« Reply #1 on: April 22, 2014, 09:25:53 AM »
Do you have a Roth IRA?  You can withdraw from that with no penalty or taxes (contributions only). 

I would assume borrowing against your 401K is not an option since you aren't employed but that might an option and none of that money you withdraw if you borrow against it is taxable).  I hate to suggest it because you're essentially hit with double taxation (putting post tax dollars back in to pay yourself back and then taxed again on withdrawal in retirement).

I'm sure some math wizards would know whether financially it makes more sense to put it on a CC would be a  better option.  I'm kinda leaning that way.

My only other suggestion is .... have you pared down your expenses as much as possible?  Are there things you can sell?  Can you downgrade your car perhaps?

Michread

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Re: Need living expenses without withdrawing from 401k. Advice?
« Reply #2 on: April 22, 2014, 09:46:43 AM »
Cut living expenses, asap:
Move in with parents
Get a roommate
Apply for a temp job
Apply for unemployment
Get a side hustle

Borrow from yourself before you borrow from others, imho.  Don't borrow using a credit card unless you KNOW that you can pay it back before it comes due.

bogart

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Re: Need living expenses without withdrawing from 401k. Advice?
« Reply #3 on: April 22, 2014, 10:05:40 AM »
If you are TRULY between jobs -- one ended and another one for which you have a signed contract is starting soon, then I believe you can pull funds out of a 401K as long as you put them ALL back within 60 days, with no penalty, tax, or anything else.  You certainly can for a Roth, though you can only do so once in any given 12-month period.

If you are not truly between certain jobs, or have to wait more than about a month for your next job to start (bearing in mind that the relevant interval here isn't when the job starts, but when you will get your next paycheck, not to mention how big it will or won't be), then the cutting expenses advice others have offered is the way to go.

Spork

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Re: Need living expenses without withdrawing from 401k. Advice?
« Reply #4 on: April 22, 2014, 10:26:01 AM »

caveat: I am not a gambler in any way.  I cannot say I fully understand the risks of playing poker.

That said: You seem to be presenting a cash flow emergency.  In my very limited experience, gambling is probably not a good thing for the "short term todo list."  I know some people do manage to make a living with poker, so I could be way off base here... but it seems like a risky thing to do in a cash poor situation.