Most of us know the uncomfortable feeling of sinking ever more deeply into debt. The average American household carries more than $90,000 in mortgage, credit card, student loan, personal loan and other forms of debt, according to one recent report.
At some point, those obligations can become overwhelming.
If debts are keeping you awake at night, you may be looking for debt relief options like debt consolidation or taking a loan from your 401(k) plan to wipe the slate clean. While the latter might seem like an attractive option, is it ever wise?
“Borrowing from a 401(k) plan is risky, especially given the challenge that many people face of saving enough money for retirement,” says Matthew Imes, an assistant professor of finance in the School of Business at Stetson University.
However, there still may be situations where tapping a 401(k) loan makes sense.