Should I raid my 401K to pay my credit cards off?
December 27, 2012 2:45 PM   Subscribe

Can someone talk me out of raiding my 401K to pay off an exorbitant level of credit card debt?

We have ~50K in credit card debt. And 25K in student loan debt. I have a good job, and we pay all our bills monthly, but the fact is we built up a tremendous amount and it never goes down. And the holidays meant the short term laughter and smiles of relatives seemed worth more than undoing a bit of the year's progress.

The reasons for the debt are many, and tired and predictable. However, in the 4 years we've been married it's not grown by any appreciable amount, but also not shrunk.

I'm relatively confident that I could cancel all but 1 card and we'd never build it back up. I won't promise it, because I never pictured myself here to begin with. And I hate lying.

My 401K is ~80K, so I figure after taxes and penalties that would pretty much annihilate the credit card debt. I feel like I could double my contribution and rebuild the base value in a few years. And money never in my hand is not used for 'fun' and rationalized away. (We're in our early 40s)

Is this a dumb idea?
posted by anonymous to Work & Money (40 answers total) 2 users marked this as a favorite
What if you lose your job in six months? Credit card debt can be bankrupted away, but that won't rebuild your 401k.

If you are confident that you would not spend the extra cash because it was an automatic payment, try setting up an automatic payment on the cards first. If you could rebuild an 80k + some 401k in 'a few years', you should be able to at least halve your credit card debt in that time instead, while still contributing to your 401k, right? If you are not reliable enough to say that you could have the cc debt paid off in x years, then you are not reliable enough to say that you would rebuild the 401k at all.

I recommend you try joining the Get Rich Slowly forums, and log your progress and plans there. I haven't been there so much lately, but it's a really supportive community filled with people in your situation or worse, and willing to encourage you (or tell you you're making the wrong choice, if necessary). This kind of support might help you with things like not undoing it over christmas.
posted by jacalata at 2:54 PM on December 27, 2012 [6 favorites]

Have you considered bankruptcy? It wouldn't do anything to your student loan debt, but you could wipe out your CC debt and your 401k would be untouchable.
posted by Oktober at 2:54 PM on December 27, 2012 [1 favorite]

I guess the question is why you wouldn't rather stop contributing to the 401(k) and divert the money into paying down the debt. If you're serious about never building it back up, then this is probably (without knowing your exact rates and timeframe for retirement) the better financial option. And it's probably the better psychological option as well.
posted by thewumpusisdead at 2:54 PM on December 27, 2012 [5 favorites]

On the other hand, reducing - or eliminating - your credit card debt will give you more money to use to rebuild your 401k or invest in other retirement options, as well as give you more disposable income in general. And that debt won't go away when you retire. Odds are, you'll be using that 401k money to pay it off one way or another.

facetious is right that you need to fix whatever habits got you into that situation in the first place, but when I paid off my credit card debt, that act alone (dropping vast amounts of money into an empty void) put me on the straight and narrow. The looming specter of being in debt for the rest of my life was enough to get me to change my habits.
posted by MShades at 2:56 PM on December 27, 2012 [2 favorites]

Speaking as someone who had to consume her 401k to live off of with every intention of building it back once things were better, I wouldn't recommend raiding it. Given a second opportunity, I would guard it as a precious object, not a negotiable resource.

If you absolutely had to, if you MUST erase the shackles of debt, go after only what wouldn't be covered in a bankruptcy (student loans seem to fall into that category a lot).

You never know what the future will bring, and $80k is 2-3yrs of being okay, with bankruptcy available to mitigate your risk on the CC debt, if it came down to it.
posted by batmonkey at 3:00 PM on December 27, 2012 [4 favorites]

If you have the cash on hand, pay off your credit card debt now. Pay off your loans now. Why pay interest on credit card debt? That's money that could be going to your retirement. Instead, you're just throwing it out the window to credit card vultures.

And why the hell would you declare bankruptcy on credit card debt you willingly racked up yourself?
posted by KokuRyu at 3:03 PM on December 27, 2012 [3 favorites]

I should say that I've been laid off twice in the past 8 years and never had the financial cushion of a 401k, but somehow managed to pay the bills. Fear of losing your job is not a good reason to avoid getting out of debt.
posted by KokuRyu at 3:05 PM on December 27, 2012 [1 favorite]

I feel like I could double my contribution and rebuild the base value in a few years. And money never in my hand is not used for 'fun' and rationalized away. (We're in our early 40s)

The same goes for paying down your debt and building a liquid savings. If you can cut into your salary to bulk up your 401(k) then you can cut into your salary to pay down your debt.

What you are suggesting doing doesn't require that you change any habits. Your income stays the same, your spending presumably stays the same, you will spend down a safety net you don't need to raid, and once your debt is gone you'll be unlikely to build your 401(k) up the way you claim you will... you just won't have the habits established to make it happen. Instead, change your habits now, control your spending, develop a budget, give yourself a "salary cut" to pay down your debt, then when your debt is gone you can just switch that salary deduction over from credit card payment to 401(k), which is still fully funded. A good financial planner can help you.
posted by headnsouth at 3:08 PM on December 27, 2012 [4 favorites]

And the holidays meant the short term laughter and smiles of relatives seemed worth more than undoing a bit of the year's progress.

Right there is your reason. You aren't behaving in a way that will allow you live without credit card debt. Credit counselling and a financial planner may be a help to you.

The core of the problem is your pattern of spending. Address that first.
posted by 26.2 at 3:09 PM on December 27, 2012 [18 favorites]

Are you paying more in interest on your credit card debt that you are making in returns on your 401k? If so, then the answer seems obvious to me. You are losing money every day that you have a 401k and credit card debt. If you pay it off and have some kind of hardship, there's nothing stopping you from charging up some debt again.

You'll have your 401k funds back in no time, just by putting all the money you were paying on your debt into your 401k.

Bankruptcy is also an option, but I wouldn't do it with that much money available to pay off debt.

If your student loan interest rates aren't too bad (<6%), you might just want to pay off the credit card debt.
posted by empath at 3:09 PM on December 27, 2012 [1 favorite]

Talk to a qualified bankruptcy attorney in your area. Your state bar association may certify some as specialists, depending on where you live. If you are in Southern Califonia, memail me and I can recommend someone. For another opinion you can talk to a fee-based financial planner to see what she thinks. The $500 dollars those two visits might cost you (combined) is cheap compared to the issues you're looking at.

Depending on what other assets you have beyond the 401k (car, house, etc) a bankruptcy might be able to wipe out the CC debt without impacting your life a lot beyond that.

And why the hell would you declare bankruptcy on credit card debt you willingly racked up yourself?

Because the personal and financial costs of doing so outweigh the personal and financial costs of a bankruptcy.

Fear of losing your job is not a good reason to avoid getting out of debt.

Your future happiness and financial stability are both great reasons to get out of debt, either by paying it off if possible or via a bankruptcy.
posted by Aizkolari at 3:10 PM on December 27, 2012 [2 favorites]

Your future happiness and financial stability are both great reasons to get out of debt

I discharged my credit card debt via bankruptcy about 6 years ago, and it was the best thing I've ever done in my life. You can't imagine how liberating it is -- and I still have 0 debt. It's amazing how much extra money you have when you aren't dropping half your paycheck paying off debt you already racked up.
posted by empath at 3:12 PM on December 27, 2012 [4 favorites]

A close relative of mine was able to tackle this very problem (almost to the dollar) in about 2 years by bucking down and putting debt reduction at job #1. She did not have to touch her 401k at all, but did stop paying into it.

She had to the following things:

Put together a spreadsheet of ALL debts and monthly payments, listing monthly due dates, % APR, etc.. - this includes things like oil bills, insurance, etc..

Keep editing this list EVERY MONTH to keep track

Used the "Snowball" method to clear out debts - she attacked the small ones first to get them off the spreadsheet

She did pay special attention to CRAZY interest rate credit cards - prioritized them first.

Made sure she paid at LEAST the minimum due on every debt - late fees were killing her.

She got rid of recurring payments for things she didn't need - e.g. got a lower level cable plan, stopping eating out so much, stopping buying so many new clothes.

Her problem was simple, she was spending WAY more than then she had, and she felt that her control of where her money went was out of her hands.

Her spending was a form of self medication - made her self feel better, even though she had to hide from creditors and bill collectors. Once she stopped the bleeding and actually took the time to look at the numbers (that she was previously terrified and embarrassed to do)

By bucking down and watching where her money went, she went from having close to $100k in debt and growing, to being debt free (except for mortgage and student loans) in 2 years.

Once she was done you could not imagine how happy she was. She had decades of bad financial decisions that made it seem like an unwinnable battle.

Good luck, you can do it.
posted by bottlebrushtree at 3:14 PM on December 27, 2012 [9 favorites]

There are limits on how much you can contribute to your 401k (and how much you can contribute that's tax-deferred). The basic ones are set by the IRS but your employer or specific 401k may also have a lower limit. Something to consider when you're thinking about how long it will take to rebuild your 401k.
posted by anaelith at 3:25 PM on December 27, 2012

Don't do this. You need to understand where your money is actually going and if that is in line with your real goals in life. Budget, buckle down and pay off the debt.
posted by Riverine at 3:30 PM on December 27, 2012 [3 favorites]

And why the hell would you declare bankruptcy on credit card debt you willingly racked up yourself?

Because people make mistakes. They also learn from these mistakes and need a chance to move past them. Bankruptcy is a legal option that might make financial sense for anon.

It is hardly a free pass. It remains on your credit report for years, which not only affects access to money, but may become an issue in future job hunts (i.e., some employers take credit reports into account in hiring decisions).
posted by she's not there at 3:37 PM on December 27, 2012 [6 favorites]

Don't look at raiding your 401K as losing $80K. Look at is as losing the future value of that money at retirement. So it's not $80K you are giving up, it's X years of compounded growth, which could easily be $250K to $500K at retirement depending on your current age. That is what you are losing if you use the 401K, because no matter how fast you build it back up, you lose the original $80K and all the growth it would have piled up prior to retirement.
posted by COD at 4:14 PM on December 27, 2012 [8 favorites]

i did largely what bottlebrushtree's relative did - i made a spreadsheet of all my credit card debt, and did the snowball deal. paid off my smallest balances first, because seeing cards get dents put in them/get paid off was the only thing that kept me motivated to pay them all off. then applied what i had been paying to that card to my next lowest (along with the minimum i had been paying), and so on and so forth.

after i had (finally! my god, finally.) paid off my credit cards, i put what i was paying that to my car, then to my student loans. i'm not going to lie - doing all this was a slog, and it took forever, and it was hard as hell not to buy all the shiny shit i wanted and go out all the time with my friends and what have you. but being out of debt, and seeing my savings account balance get bigger, and being able to not worry that the bills were coming? totally worth it.

keep at it, you'll get there! but i would not tap your future to erase the mistakes from your past. also, so you don't repeat your current christmas, maybe look into a savings account at ING and put $20 in it every couple weeks for gifts at the end of the year.
posted by koroshiya at 4:27 PM on December 27, 2012 [1 favorite]

Your comment about holiday spending isn't very encouraging about replacing your 401K. You will lose 10% of the money you take out, right off the top, and pay tax on the rest. School loans generally don't have really high interest, so I would certainly not use a 401K for them. It's not all-or-nothing. Sit down and work out a realistic budget that includes paying off loans. See if there's a way to get a 2nd job, or cut expense a lot. Then maybe, maybe, consider paying off 25K of dept with 401K money. Then pay off the rest of the consumer debt by being seriously frugal. Once it's paid off, keep being frugal, and bulk up your pension.
posted by theora55 at 4:36 PM on December 27, 2012 [1 favorite]

I feel like I could double my contribution and rebuild the base value in a few years.

Let me guess, when you were young and you got those fantastic new credit cards, you thought "I'll just charge this stuff I want to the cards - I can just pay them down and get rid of the debt in a few years...."

I see your current idea of raiding your 401k to pay off the debt as an extension of that same "easy fix" mindset - you don't want to face the hard reality of what you'll have to do to pay it down over time, so you raid the 401k and put off until later the idea of building it back up by getting your budget straight.

You admit both that you can't promise you wouldn't build the debt back up, and that you just racked up more debt in the past month or two buying Christmas presents for the family (who probably would have been happier had you gotten them all homemade presents or gift certificates for helping them out with chores, had they known that you needed the money to pay down a huge debt). These are red flags. You need to cut up ALL the cards, if you must keep one, then freeze it in a block of ice for emergencies only (I'm serious).

Yes, if you did a big spreadsheet of calculations you might find that using your 401k to pay off your credit card debt makes financial sense, but only if you can be trusted to fulfill the actions in the future that will require responsibility and fiscal prudence to adhere to.... and that's the part I question. Finances aren't just about math, they're about emotion/illogical human behavior, and that's why this isn't a simple equation to solve, and I think you need to go back to the drawing board...
posted by treehorn+bunny at 4:50 PM on December 27, 2012 [8 favorites]

Talk to a certified financial planner before doing anything rash like dumping ALL of your life savings from a high-liquidity tax shelter.

You say that your debt hasn't gone up significantly, but it also hasn't gone down. So, that's sort of a round-about way of admitting that it's going up, right? You are increasingly acquiring debt, with no end in sight. Either your lifestyle needs to change, or you need to unload some illiquid assets to pay it down, or you need the court to step in and help you get out of this hole. Without any significant change to your financial situation, you are going to continue ratcheting up debt every year, slowly but surely. Dumping your 401k on the debt may make your situation better temporarily, but it only pays down the current debt, it does nothing to prevent your financial situation from continuing on its present trajectory. You want a long-term solution for a long-term problem.

But IANACFP, so go see one.
posted by deathpanels at 4:50 PM on December 27, 2012

If you tap your 401(k), you will pay at least 25% in federal tax and 10% in penalty, a total of 35%. So out of your $80K you will have only $52K or less to apply to debt and $28K will just be gone. Still sound like a good idea?
posted by JackFlash at 5:39 PM on December 27, 2012 [4 favorites]

Assuming you decide it makes the most sense for you given your credit cards' interest rates and the return you're seeing on your 401(k) to use your 401(k) balance to pay off credit cards, why not take a loan from your 401(k) rather than literally cashing it out? You'll pay interest on the loan, but it goes back into your account rather than to some bank and it will almost certainly be a lower rate than what you're paying to your card issuers now.

Even better, the loan payment comes right out of your paycheck, so you never have a chance to spend the money that is going to the repayments. The downsides are that most plans will only let you borrow 50% of the account's value and many of them require nearly repayment in a very short time frame if you leave your job. If you can't/won't/don't repay, the remaining balance is converted into a distribution on which you pay the penalty (and tax).
posted by wierdo at 5:50 PM on December 27, 2012 [1 favorite]

Don't do this. You need to understand where your money is actually going and if that is in line with your real goals in life. Budget, buckle down and pay off the debt.

1- This is the problem, though. The debt isn't growing, so it sounds like the spending problem has been more or less tackled. What keeps the debt from going down is the ~$500 a month going toward interest.

2- Similarly, pulling it out and paying the (at least) 35% to eliminate it still means you are paying 35% in "interest", albeit to the government rather than to the CC company.

3- Consider a 401k loan. Most plans allow them. I did this a year ago and it couldn't have been easier. I paid off the CC debt and the monthly payment back into the 401k is about equal to what I was paying in interest. So I'm in a spot where 4 years from now, everything will be square. On the other hand, if I hadn't done that, I'd still be paying the same amount every month and still have the debt sitting on me.

The downside is that the loan must be paid back if I quit or get fired. I took that as an acceptable risk. Either way, I'd still have a mountain of debt to pay off in that eventuality, and this way I could just pay the outstanding income taxes on the loan and call it even. Out of trouble for thousands rather than tens of thousands.

The key is to not blow up the CC balances again.
posted by gjc at 5:56 PM on December 27, 2012 [2 favorites]

However, in the 4 years we've been married it's not grown by any appreciable amount, but also not shrunk

In other words, your debt is stable. Find a way to pay it down. Doing that is no different than somehow raising your 401k contribution; either way the money has to come from somewhere.

Raiding your 401k for this screams short term thinking.
posted by rr at 6:34 PM on December 27, 2012 [1 favorite]

Consider a 401k loan.

I strongly advise against getting a loan against your 401k. If you have to change jobs, the balance owed will usually become due nearly instantly, which could be a fairly enormous problem. 401k loans should be an option of last resort, not something done to pay down a painful yet manageable debt.
posted by grudgebgon at 6:48 PM on December 27, 2012 [4 favorites]

What was your CC debt used for? Asset purchases? If so, are you done acquiring? Do you have enough TVs, clothes, junk to stop buying for 3 years?

If it was used for expense items, using a liquidated 401k to pay it off just means you'll build the debt back up restarting from 0. If you are eating out every night, travelling every month, wasting money on services, etc. then these will continue at the current levels and run the debt back up. These are harder to control than asset purchases if all your asset needs are presently met.

Using the 401K is suboptimal, as the cost of penalties and taxes has to be high, but then of course, with CC debt being usurious, this assumption has to be evaluated. It may be comparable. If it's comparable, then it may be appropriate to retire extreme rate debt and maybe even wise. A lot depends on your age, on your discipline going forward (questionable) and on luck factors (like not having an emergency needing your depleted emergency fund), on your marginal tax rate, and on next year's tax changes. It CAN be evaluated, but you need specific data, not generalizations.

Whatever you do, the most critical thing is to force control of your outflows, either by living within your means (expenses) or reducing acquisitions. Spending has to moderate. It will take 3 years of reliably saving 2k/month to get back to 75k. Even then, you won't be able to tax defer that contribution, so it will be limited to IRA or 401k rules.

A loan against the IRA may preserve your tax deferral feature, avoid the tax penalty, and let you retire extreme rate debt. I think after reflection, that this might be a good avenue, despite its shortcomings. Still, you gotta balance the flows of in versus out.
posted by FauxScot at 7:12 PM on December 27, 2012 [1 favorite]

Are you sure you re-eeee-eeee-eally have done all you can about your debt? A few years ago, I had a pet with a catastrophic medical emergency that ended up putting me roughly $10K in the hole. When I sat down to go through my spending in hopes of figuring out a way out of the debt - al on credit cards - I came to realize just how much money I'd been wasting on things I didn't really need.

- Do you NEED cable TV? Nope.
- Do you NEED cell phones? Nope.
- How often do you eat out instead of cooking at home?
- Where do you get your hair cut?
- Do you really need dry cleaning?
- How often do you drink alcohol? Seriously. Add up how much it costs.
- Don't count groceries as one expense. Figure out how much you're really spending on food versus filler. It's amazing how much snacks add up.
- What monthly expenses do you have? Even count the little ones.
- Oh please don't tell me you're going to Starbucks for anything other than beans to grind at home.

It's amazing how much money you can come up with if you have to.

Yeah, I went without a cell phone for two years. I didn't allow myself to have one until the debt was paid off. If that sounds shocking to you, then you probably aren't really serious yet about your finances or your debt. Magic solutions aren't going to happen.

"The reasons for the debt are many, and tired and predictable."

The reasons people can't pay off their debt are pretty tired and predictable too.

I wish you the best of luck.
posted by 2oh1 at 7:15 PM on December 27, 2012 [8 favorites]

Using the 401K is suboptimal, as the cost of penalties and taxes has to be high, but then of course, with CC debt being usurious,

If you are paying $500 a month to service your debt, how much could that money earn if it was invested in your 401(k)? I'm not from the States, so I have no idea how this investment scheme works, but is a 401(k) absolutely guaranteed to appreciate in value until you retire, above and beyond the rate of inflation?

My folks invested in a bunch of mutual funds and RRSP's, and lost a significant amount of their capital. The only thing that saved them in retirement was my mother's indexed pension, some last-minute major projects my dad worked on before retiring at 68 (he was self-employed) and my grandmother's death and the sale of her house, exactly 2 weeks before housing prices cooled where they were in 2010.

But RRSP's (which I suspect are similar to 401k's) never worked for them, so I'd be interested to hear if it's a sure thing, protecting this chunk of change while continuing to pay $500 to Visa.
posted by KokuRyu at 7:30 PM on December 27, 2012

Finances aren't just about math, they're about emotion/illogical human behavior, and that's why this isn't a simple equation to solve, and I think you need to go back to the drawing board...

As a math person who sucks with money, man do I agree with this.
posted by DigDoug at 8:22 PM on December 27, 2012

Chapter 7 bankruptcy. Way better. But if you can't do that, being out of debt is pretty awesome.
posted by the young rope-rider at 9:55 PM on December 27, 2012 [1 favorite]

I vanquished my credit card debt (about half of yours, but so is my income) by taking out personal loan to pay it. The loan, unlike credit cards, was a nice, reasonable, stable, uncomplicated, set interest rate. Mine was through Discover, actually, though many banks offer such loans. I repeat, this was NOT a balance transfer or otherwise offered via a credit card, it was a personal loan.

I set a schedule with them that made my monthly payment something that I could handle -- it wasn't fun to have that payment every month for three years, but it wasn't so punishingly steep that I had no room to spend a dime beyond absolute life-or-death necessities.

Don't cash out your 401K. There's no good reason to throw away so much of your money in fees.
posted by desuetude at 10:17 PM on December 27, 2012

My relative ended up taking out personal loan after personal loan thinking it would solve their credit card debt problem. It may work for some people, but if you do not solve the reason why you are spending so much, you will find yourself in the same situation but now with double you debt and nothing to show for it.

Get off the ride.
posted by bottlebrushtree at 11:19 PM on December 27, 2012 [1 favorite]

A very good resource for figuring out how to build a budget that includes debt repayment without going crazy and/or having to cut your own hair with the Flowbee, scrub your toilet with homemade vinegar-and-bleach concoctions or only eat three times a week is Gail Vaz-Oxlade, the Canadian personal finance consultant who hosted the show "Til Debt Do Us Part".

Try the budget worksheet, and take a look at the other tools, and at her blog posts. Very useful (I used them when I paid off my 50K in student loans.

DON'T throw savings after consumer debt.
posted by jrochest at 12:03 AM on December 28, 2012 [1 favorite]

Nthing the "please do not do this" sentiment. You'll be throwing away thousands upon thousands of dollars (are you really in the mood to give $30k of money to the Government?), and if the spending problem isn't fixed, you will be back in the same boat in another couple years (without the security of a 401(k) to save you).

I had about $40k in debt - CCs and about $6k to the IRS. At the time, that was not much less than I made in one year. I was young and stupid and into rewarding myself for things and thinking, "I'll always make more money later so I can pay this off then." I also had a husband who didn't like to work.

I signed up for CCCS in 2005, after I dumped said husband (who stuck me with all the debt). I joined their Credit Counseling, which made me stop using the cards. They got my interest rates down from 26-28% to as low as 6-8%, and the debt was ALL paid off within 4 years. (They claim 5, I paid it down more quickly)

Some random miscellany:
1) We (new husband and I) didn't eat out or go on vacations
2) Because we didn't go to the movies much, we kept cable, but it was just the base package, and we also had cheap internet at home
3) Cheap, cheap cell phones or Vonage
4) We looked for deals on *everything*
5) Because I had a Discover card in the program, I am still unable to get a Discover card, even though my credit is recovered
6) We were able to buy a house while I was in the program

You can get out of debt without raiding your future. Pretend that 401(k) isn't there unless it's an emergency. This isn't an emergency.

It's not fun to have to stop spending money, but you have to do it either way (whether you raid your retirement or not), so do it now, and leave that money alone.
posted by getawaysticks at 5:28 AM on December 28, 2012 [1 favorite]

I ground through this after my divorce. The only answer is to stop borrowing from your future and start borrowing from your present: tighten the belt today. Take advantage of balance transfer interest rate bargains if possible; reducing interest rates is key. Then pay off little debts (for the satisfaction) and high interest debts (to reduce future payments) in some combination. Always be looking for ways to combine balances and reduce interest. Taking money out of your 401K is not going to reduce your interest with all the penalties, so it is not a good deal.

Present-you is paying for the past-you's foolish profligacy; don't make future-you any more miserable now, just tighten the belt and pay shit off.

It's amazing, by the way, how much farther a budget stretches when you aren't spending hundreds of dollars a month on interest payments any more. It's like getting a huge raise!
posted by seanmpuckett at 5:58 AM on December 28, 2012

File bankruptcy if you qualify. Rich people do it all the time; in fact regularly when the 7 years rolls around. Don't let people shame you into paying off that kind of debt, which is too huge to ever actually pay off given your income and likely future income potential.

Bankruptcy isn't fun but it serves a function, which is to place the responsibility back onto the credit card companies who took a gamble, and lost, oh well.
posted by waving at 6:57 AM on December 28, 2012 [1 favorite]

Can you get a loan from your 401K? In some instances the loan interest is often cheaper than paying penalties and taxes. Ask the company who handles the 401k or ask HR.
posted by Gungho at 9:41 AM on December 28, 2012

This isn't unbeatable and people have paid off more than you owe.

This isn't a money issue so much as it is a behavior issue. Breaking open the 401k may or may not be the thing that snaps you out of it.

Dave Ramsey's Total Money Makeover (and to a lesser extent, Financial Peace) is written for people in just your position. People have paid off over 100k, you can pay off your 75k. Read the book with another person if possible.

Know that it may take a month to formulate a good plan.
Right now: stop contributing to your 401k and push it to your debt. Auto-draft it from your bank account so you don't even think about it.
Replace your credit card with a debit card. Literally cut up your credit cards. Literally. If for some reason that leads to you eating ramen with hotdogs in it for the entire month of January, so be it.
posted by jander03 at 4:48 PM on December 28, 2012

Here's an alternative idea for you: if you have a good credit score, refinance your credit card debt on a site like LendingClub. Most of their peer-to-peer loans are actually for credit card debt financing, and they apparently save debtors something like 2-3 percent.
posted by Dansaman at 10:37 PM on December 30, 2012

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