About Chris G. Expertise I am a financial counselor that can answer consumers' personal finance questions in following areas: - Beating & Reducing Debt - Budgeting - Building Savings - Careers & Extra Jobs - Dealing with Collectors - Identity Theft - Money & Marriage - Personal Insurance.
Experience The past four years in the banking field have given me a heart for helping families with their finances to better their financial future.
Question Chris: I have discovered that my wife was unfaithful to me; while this was happening, she simply told me one night that she has given up on paying our bills and I am now in charge for the first time-after 17 yrs of marriage,(she has "generally" paid on time in all that time). During that time, we did have to go through consumer credit counseling about 7 yrs ago because she got overwhelmed handling the bills during pregnancy etc. and refused my help on numerous occasions. It didnt break us, but it has taken that long to bring my Fico scores up about 100 points to about 690.(at the time, she had very little credit, now she has gone back to her old ways by opening up charge cards at many fine retail establishments and has now put us behind in payments on the essentials in life by 2-3 months!) I am faced with negotiating where I can, and in other cases it is simply not possible. I will have to take a loan out against my 401k in order to remain solvent. Keep in mind that we will be divorcing once these bills are up to speed and we can afford to sell our home despite 3 kids!...Is this a good angle from your view, to use the 401k?
Answer Dear Greg,
Thanks for the email. It seems like you guys are in quite a mess. To answer your short question, I would not recommend that you take a loan out on your 401K unless it is your last resort. The reason for this is because if you're investing the 401K in good mutual funds, your money is probably making you around 12% average. The loan that you will take out will have a much lower interest rate than that, so you won't be making as much towards your retirement.
What I would recommend is that the two of you get on a strict budget and start telling every dollar of your income where to go. You or your wife might need to work an extra job to temporarly get your income up until you get out of this mess.
I understand that your wife and you will probably get a divorce once the financial matters are sorted out, but you need to be working together right now to fix this financial crisis.
Pick up a copy of "The Total Money Makeover" by Dave Ramsey. It will show you how to budget, get out of debt, save and build some real wealth. You should be able to get it at most bookstores.
I hope this helped. Sorry you're going through this. Let me know if I can help you in the future.
