23-year-old with $97,000 debt considers cashing out 401(k) to pay $66,000 car loan, advised against it.

From Yahoo Finance: 2025-04-07 08:30:00

A 23-year-old train operator turned to Reddit’s r/debtfree community with the question of pulling from his 401(k) to pay off his $97,000 debt, mostly from a $66,000 car loan for a used 2019 Dodge Challenger. Redditors advised selling the car and not touching the 401(k) to avoid long-term financial consequences.

The overwhelming majority of responses warned against touching the 401(k) and advised selling the car to get a more reasonable one. Withdrawing $8,000 from the 401(k) could result in only $6,000 after taxes and penalties, potentially costing the poster $200,000 in the long run if left untouched.

The issue of the car loan was seen as a visible symptom of a broader spending problem. Redditors encouraged the original poster to take responsibility, sell the car, get side jobs, and start rebuilding financially.

Some responses were more direct, urging the poster to show the situation to his parents and take drastic steps like moving back in with them to get through the tough financial situation.



Read more at Yahoo Finance: Buried In Nearly $100K Of Debt, A 23-Year-Old Train Driver Wonders If Cashing Out His 401(k) Is The Answer To His $66K Car Loan