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The Friend With 401K Loan

March 21st, 2010 at 04:28 pm

Several months ago, my friend and her husband took out a loan from his 401K. She called to ask my opinion on how to make ends meet. It was getting difficult to manage the minimum payments on several debts.

The 401K loan was their idea. Mine was to look at expenses they could cut back on or sell something. Both would give them some wiggle room. They already have a home equity loan. I highly advised against the 401K loan, obviously.

They are living beyond their means and have for quite some time. It is catching up with them. I never heard how the 401k loan was working out for them financially. Until a few days ago.

They have bats in their attic! Not the first time either. This time there seems to be more bats. The minimum to have someone remove them is $150. Which may or may not work since they are attacted to bat droppings. Most likely they will be back. Just find a new crevice and their back in. To really get rid of them, they need to remove the attic isulation, have the attic cleaned and all the crevices sealed and add additional insulation. Only $2000!

They are going to check with their homeowner's insurance. I hope that works. She said she can't afford either amount. She can't afford $150. So, I guess the 401k loan didn't bring the financial peace she was looking for. I wonder where the deductible will come from if the insurance pays.

I really hate to say I told you so. And I won't because she is a good friend. But it is getting frustrating to watch a friend make so many mistakes with money. One of the first being a lack of an emergency fund. It would be easy to find $150 or $2000 if they had an emergency fund.

Ugh!

3 Responses to “The Friend With 401K Loan”

  1. Ima saver Says:

    I totally agree! I have friends just like that, and it is so frustrating!!

  2. minnie1928 Says:

    I have friends like that too, they just can't seem to see what's right in front of them!

  3. dmontngrey Says:

    My own mother is like this! Ugh!

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