Comments on: More on 401(k) Borrowing

By: erin

erin — Thu, 31 Mar 2005 00:52:38 +0000

I agree! Just another reason we all should save three-six months of living expenses.

erin

By: Flexo

Flexo — Wed, 30 Mar 2005 23:42:32 +0000

I won’t deny that in many cases borrowing from a 401(k) loan is a better option, and that assumptions can be played with in order to get any result you want. The best option is never to have to borrow money in the first place. Wouldn’t that be nice?

By: Personal Finance Blog

Personal Finance Blog — Wed, 30 Mar 2005 22:28:24 +0000

I agree with Erin. If Prime rate increase 1% 12 months from now, which is very possible, the comparison will be up side down.

By: erin

erin — Wed, 30 Mar 2005 20:15:49 +0000

Makes sense, but the chart is assuming a couple things…

1. That the borrower has a home. I see from the article that this is the case.
2. That there are no closing costs or fees with the HELOC. In this case, the borrower already had one.
3. Interest rates stay relatively low. The interest rate on the HELOC was prime minus .25, while the 401(k) loan was fixed.

401(k) loans aren’t great, but they aren’t the evil “double-tax” loans that people like Suze Orman make them out to be.

erin
http://frugalgirl.blogspot.com/