Borrowing against your 401K is rarely a good idea. But of course there are some cases where it may make sense. Let’s take a look at the good, the bad, and the ugly.
But first let’s talk about some reasons that you may want to borrow. Let’s say you want a new boat, or maybe a plasma TV. Don’t even think about it. Your future is much more important than the pleasure that you may get from those items. But let’s say you are renting a house and a great buy on a dream house comes on the market. You know that you will be walking away from the table with equity. You and your spouse have secure jobs and plenty of savings, and you are on a solid financial plan. But you don’t have the down payment required to get the house. In this case I would say that it is a no brainer. Jump on it. Buying a house is normally a great investment. You will be buying a future for yourself instead of someone else. When you rent, you are actually paying for someone else’s house and you leave with nothing.
