This article says 401k loans are up. After thinking about it many times I finally came to the decision that it's ALWAYS a mistake except for a couple of situations I can think of.
#1 Paying off your house IF it's the house you plan to die in. Otherwise you are foolish because inevitably you will "move up" and blow any savings/security you had from a paid off mortgage.
#2 College degree. I hesitate to say it because I've seen people waste money on education so many times. I'm sorry but the purpose of a DEGREE is to help make more money. The purpose of education is to be educated. Borrowing to get a degree and make more money is ok but still needs to be considered in depth before you do it.
That's all I can think of. Really #1 and #2 won't happen to most frugal people because when they are old enough (40-45) to have a paid off mortgage they will have paid it off thru savings. #2 in general (education vs. degrees) is a pet peeve of mine anyway. In the past I've seen people blow huge amounts on school loans to be social workers.....18-20k to start. Just work your way thru school for crying out loud. Teaching degrees are only one notch above this. Don't borrow money if you are going into a field that sucks in pay. Really, it's probably a good thing they don't teach money management in schools. The vast majority don't know beans about money or financial management anyway.
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1 comment:
You know I understand where a lot of people come from having loans for school, I am one of those people, however there are TONS of no payback loans out there. The problem is people are lazy and don't want to research for them. I have never understood taking out 20k in loans, when you will only make 24k a yr or even cashing out a 401k for such.
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