Losing My Job, Should I Pay Off Debt With my 401k?

open to my hotel room hotel room oh this is kind of special huh it’s going buddy jeff rose goodfinancialcents.com you’re actually in my hotel room I am in a business trip I’m in shot town Chicago and I just could not come here and not do a video and actually I don’t have any videos in the queue for next week so yes I want to get a dollars and cents in so today’s question comes from Chrissy Chrissy as I have recently found that our plant will be closing in about 12 months ouch that’s not cool not cool at all I currently have $18,000 of credit card debt I already have a 401k and a proper sharing for me my previous job that’s over $100,000 I’ve left it there because of low admin fees good call good cause and saving on cost I have about $30,000 in my 401k at my current job here’s the question the question is should she take out the eighteen thousand dollars of her current 401k and pay off her debt that’s your first question and then she also asked should I also bump up my current 401k contribution so that I have more in my savings whatever I end up losing my job so Christie first bad bad bad situation I’m sorry that you’re there it’s just unfortunate I’ve been with layoffs before they’re not fun especially had a job for a long time it’s hard to let go she also mentions that you know bankruptcy is not an option for her so she wants to pay off that debt so I appreciate you stepping up stepping up and taking responsibility for your actions but here’s the thing should you take out money to pay off out of your 401k to pay off your debt and I’m gonna sit here and tell you absolutely not no do not do it I hope you know that 401ks are protected from bankruptcy I know you said that’s not option but just in case what if you know there’s so many what-ifs in the world what if you can’t get a job and bankruptcy is the only option now you’ve cashed in a huge chunk of your retirement savings that would’ve been protected in case of bankruptcy so no you should not and the questions should you bump up your 401k while you still have your job no no do not do that in fact now check this how long how many financial advisors would tell you to do this but I would advise you to stop putting money in your 401k the last thing that you want to do right now is focus on a retirement retirement is this is an afterthought right now right now it’s putting out the fire and that fire is building up your cash flow and then paying off your debt so you didn’t mention how much you have in cash savings I want to make sure that you’ve got enough because what happens if it takes six months nine months twelve months to get a job you know how are you gonna pay for your monthly expenses so you need cash cash cash cash cash cash and the second thing you know don’t pump up your 401k you want to use that 401k money that you’re currently putting in to pay off your debt so those are your two main priorities right now and for anyone else is in this similar situation boost up your savings pay off your debt don’t worry about retirement I know it’s probably weird me saying that kind of cuckoo but you’re fighting so am i you’re saying don’t worry about retirement but listen that’s that is that is retirement is years away right now you got focus on today today is getting you prepared while you look for your next job so you need cash need to pay off this debt immediately so that is my advice to you and once again I apologize for the situation I looks like you’re doing your best keeping your chin up up and I appreciate your question and if anyone else has any more questions this is Jeff rose with dollars and cents I want to answer your question so email me contact me be the blog hit me up on Facebook how do you get ahold of me do it just do it do it all right this is jeff rose goodfinancialcents.com