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molybend t1_ja9eh7j wrote

Reply to comment by Soggy_Celebration814 in Drowning in debt and just lost my job. Need stern advice. by opmeTK

401K accts often come with an employer match that makes it worth doing as long as you can pay the minimums on your cc. Also, if you are still employed, you can often take out a loan from the 401K balance. Doesn't help OP now, but those are reasons people do 401K and have cc debt.

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Soggy_Celebration814 t1_jaaldsf wrote

I see. Then suppose you put x dollars into 401k, they match another x dollars. Can you withdraw the 2x dollars to pay your cc first?

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molybend t1_jaamv4l wrote

Early withdrawals on 401k accounts are subject to a ten percent penalty in most cases, so no. The flowchart says make the minimum debt payments as part of step 0, then get the 401k match (step 2), then pay off high interest debt (step 3) before going back to 401k (step 5). There are other steps, but in this case those are the relevant ones.

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