Dollars and Cents: Should I Use Old 401k to Pay off Credit Card?

Welcome to the first installment of “Dollars and Cents“. This is a new segment where I’ll be answering reader questions using video with a bit of humor.

It’s part of my life mission of making personal finance fun. :)

If you have a question that you want answered, be sure to use our contact form here.

Here’s the first reader question:

So I am currently in college and working full-time. I took out student loans to cover the cost of tuition however, I had about $1300 in expenses that were not covered by that and had only a few days to come up with the funds. I put the charges on my credit card.

I have a 401K from my previous employer that I was planning to rollover into a Roth Ira. However, I am wondering if it would be better to cash out the 401K to pay down the credit card and then put the remaining balance in the IRA. I know that the fees/taxes are probably ridiculous. I just don’t know if it is better to do that or to leave the balance on the credit card and pay it down over several months.


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Online Tools That Help You Pay Off Debt

best tools getting out of debtGetting into debt is so easy.

Just a swipe of the card, a late payment, and suddenly your interest rate is 30%.

Climbing out of this hole in the past meant grabbing a calculator and a notepad.

The tools to get out of debt just weren’t readily available, and understanding exactly how much financial damage you were doing to yourself was complicated.

You knew a big chunk of each payment was going to interest, but you couldn’t figure out how long it would take to pay off the debt.

Now you have so many tools to help you pay off debt that the simple task of deciding which tool to use can be overwhelming.

It’s the opposite problem.

But at least the tools are available. A majority of them even have smartphone or iPad apps so you can take your debt payoff calculations with you.

Not sure which debt reduction and debt payoff tool is best? Here are a few to get you started.
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The 11 Best Personal Finance Software to Get Your Money Swag On

Long gone are the days of grabbing a legal pad, a calculator, and a pen to handle big personal finance tasks.

You can now manage your budget, monitor your investments, execute your debt payoff plan, and build for a better future with technology.

We’re highlighting some of the best personal finance software available whether you need to manage your money on your smartphone or at a computer.

Most of these personal software options are free (yeah baby!) and are compatible for most Mac’s and PC’s.

Are you ready to get your personal finance swag on?

best free personal finance software

Let’s take a look at some of the best (and mostly free) personal finance software to help manage your money.
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How You Can Avoid Falling for the Latest Identity Theft Scam

Identity Theft is increasingly becoming a common crime because of unassuming people who take little care of their personal information.

It is easier for Identity thieves to assume one’s life, especially now with all the new technologies readily available to them to commit the crime.

IMG - How to avoid identity theft

Once an ID thief possesses your personal and financial information, even from a simple source like a bill or a driver’s license, your identity can successfully be stolen.

For people victimized by the crime, it will be extremely difficult to recover because of the repercussions that it causes to other aspects of their lives. Stolen money can be earned back in time.

Reputation is harder to restore.

The ID thief can commit other criminal acts while pretending to be you; it can cause problems with your personal relationships, financial institutions, or worse, the government.
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Credit Score Scale: What is a Good Credit Score?

Credit Score Range You know that your credit score is one of the most important bits of financial information about you.

Where you fall on the credit score scale is often considered to be a way of determining what kind of person you are when it comes to managing your money.

Lenders — and plenty of others — use your position on the credit score scale to make decisions about how they will treat you in money matters.

The only problem is that many of us don’t know what our credit score is.

And when you head to one of those sites to get your “free credit score” it’s really not free AND it’s not your real credit score.

I found this out the hard way when I was trying to find my real FICO credit score.

If you’re just as confused as I, here’s a quick look at determining your credit score scale.

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