Don't ever take out a loan on a 401! They will give you a punishment fee more than a CC would. Keep building it up! 13% or more contribution could make you a millionaire or a whole lot more when you retire if you never touch it.

If you have $1K left over after all your bills, you should be putting that on those credit cards. Throw everything at the highest interest rate credit card, while paying minimum payments on the rest. When the highest interest rate card is paid off, move to the next till they are all paid off.

At $1750 per month, you'll have that credit card debt paid off within 6 months. Much smarter than shifting that credit card debt to a 401K loan.

401K is a long term investment. Even if the value of the fund you invest in is down, you are still purchasing more shares. Shares you are buying at a cheaper price. When the value starts increasing again, you'll have more shares and a bigger nest egg.

Typically the 5 year overall return on investment is much, much better than that 6.5% interest you pay yourself. And if it isn't, you are in the wrong funds and should get some advice on better investments.

since you said taht you intend to pay the 401k loan off in 1 year I'd say go ahead and do it. Negatives for taking 401k loans is potential for default (you've minimized it by lowering your loan period to 1 year) and loss of income (also minimized by poor performance in equity markets these days).

Don't extend the loan period and don't refinance before it's paid off. Also, if possible I'd try to not get the lowest interest rate...if you're going to pay it off you may as well get extra $$ in the plan. Most importantly...do not stop your contributions. Continue to make them.

If anything, you should be increasing the amount you put into your 401k. Why do I say this? Since the stock market has tanked so much in the past year, if you start putting in more money now, you will be able to buy more for your money.

I have a 401k. When I started to contribute to this one fund, each share in that fund was $200. Now each share is $75 dollars. Yes, I have lost money, but as I have contributed more money, I have been able to buy more shares than I was before. Just this week, the fund increased back to $120, so I have made a profit on the shares that I bought at $75 which has helped to offset the losses from what you've lost before.

I would not borrow from you 401k. Chances are, you'll have to cease contributions until the loan is paid off. Many plans do not allow you to make contributions during the loan pay off period. If you can't continue to make contributions, you won't be able to enjoy the tax savings that you get from the 401k.

I suggest that you keep everything as it is and try to contribute more to your 401k. The more you contribute to your 401k, the less taxes you will pay. You might also consider adjusting your exemptions -- that is, how much is withheld. If you usually get a large return, you might want to adjust your exemptions so that you get a smaller refund or break even. That way, you get more gross pay which can be used to fund things like a 401k, IRA's and the like.

So, my advice - increase your 401k to the maximum if you can and use a bit of your left over cash each month to pay off more of your debt and possibly fund an IRA.

Good luck! :)

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