Comments on: Don’t Treat Your 401(k) Like a Savings Account

By: Benjamin

Benjamin — Fri, 29 Jul 2011 00:59:18 +0000

I fell into this trap early on in my career and was fortunate to escape my selfishness without too much financial damage.

In my most embarrasing case, I leased an expensive Toyota 4Runner right out of college (I was 21 and driving a nearly $40,000) vehicle.

About 2 and a half years into my lease, I wanted to trade the 4Runner in on a new vehicle (a fancy Volvo S40). But…I was too far “upside down” in my lease. In order to break it and maintain enough equity to finance the new flashy Volvo, I learned that I could “borrow” the money from my 401K savings account.

Little did I know the disadvantages and risks of doing such a thing…

By: George P Burdell

George P Burdell — Wed, 06 Jul 2011 01:46:19 +0000

An advantage of a Roth IRA is that you can withdraw the principal at any time, penalty free. You can’t put the money back though like a 401k loan. I wouldn’t use this as a primary emergency fund, but it’s another good reason to contribute to a Roth.

By: J @ Your Own Retirement

J @ Your Own Retirement — Wed, 04 May 2011 19:56:19 +0000

It is all great on paper but for some people filling up an emergency savings account with cash is not that easy especially when a fixed income is in place. It is a great idea to have an emergency account for unwanted surprises but sometimes it is easier said than done.

By: Josh

Josh — Sun, 19 Sep 2010 23:32:19 +0000

Great article. Another problem is that people are getting fired and, in this economy, they can’t make ends meet, so they end up taking money out of their 401(k) and thrashing their retirement plan. It’s unfortunate but sometimes it is your last option.
Many americans are rethinking their strategy. There are other ways to plan for retirement besides your 401(k). It’s hard to have a savings strategy that doesn’t leave your money liquid for emergencies.

By: Target2025.com

Target2025.com — Fri, 23 Apr 2010 21:39:23 +0000

Good advice Jeremy. And I was encouraged by the title of your article. But I was disappointed when you kept referring to what I believe is investing as savings. I think that this simple change of verbiage could get folks wrapped around the idea that this sort of plan is not savings (usually protected and insured) but investing (involves risk).

Once we do that, when market dips, it won’t seem as bad (a buying opportunity for investors) and when it does well, we won’t gaze longingly at the balance as something you might like to spend.