My installment loan helped me repair my water heater. Mary - Cleveland, OH. I used my installment loan to fix my car. Grace - Dallas, TX. I got my rent in on time thanks to my installment loan. Jose - Chicago, IL. My loan helped me during a medical emergency. Julie - Madison, WI.
The big difference is that with an IRA withdrawal, you dont have to pay the money back. With a payday loan, you have to come up with 1,150 to pay the loan back by your next payday.
With a withdrawal, by contrast, you can just pay the 250 in taxes and penalties and have 750 left to pay your bills. You lose the money from your retirement savings, but at least you dont get stuck in a cycle of debt. Borrow From Your 401k. Borrowing from your retirement plan is different from making a withdrawal.
If you have 50,000 in your plan and you withdraw 5,000, your balance drops to 45,000. The other 5,000 goes into your pocket, you pay taxes on it, and you dont have to pay it back. When you take out a loan, by contrast, the balance in your plan stays at living benefits cash values and loan provisions.
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Late Payments Hurt Your Credit Score. Please be aware that missing a payment or making a late payment can negatively impact your credit score.