We're in a really tight spot right now, and DH keeps bringing up the "option" of cashing out his 401 k.
His reasons for it are
1. Quick money that we need NOW in order to ensure a better financial future
2. His employer stopped matching contributions after one year and although he pays into it every paycheck, its not "making any money" and therefore "its not worth anything"
3. He wants us to save for retirement on our own because of the economy, govt, wall st, etc
4. He cant think of any other options.
I don't know a THING about retirement accounts other than the story passed around in our family ...... "Did ya hear about so and so cashing his retirement out to pay for his sons rehab and 6 mos later he's back on smack? Now he has no retirement and he's still a junkie. Never ever, cash out your 401k!"
I don't know what to do. I'm really stressed out and worried about money. About freezing or starving to death, being homeless. We have not been able to increase our income and any job leads in the last 2 year have always fizzled out due to requiring significant pay cuts. DH has decided that his best option is a complete career change, and is depending on being hired right out of school, making what he makes now, and perhaps, a few dollars more. According to our research and talking to others who have made the same career change in the last few years, SEEING their pay-stubs, this career has opportunities for advancement/more money, AND if we continued our frugal lifestyle, we could *potentially* pay off our house in 8 years rather than scrape by in our current situation, where our housing is 42% of our income and we choose groceries over paying the electric bill.
He's taking every last cent we have to pay for his training, but this will leave us no money for oil, birthdays, holidays, winter clothes, winter car repairs, emergencies, etc after he takes it all for this class. Financial aid is unavailable as it is a career training and not degree acquiring. No scholarships or grants available that we've found. This stash of $$ isn't something that can be replaced. I suppose we could "replace" it with next yrs tax return. (We get an earned income credit and child tax credit) In the meantime his paycheck is only enough to cover basic necessities. housing, food, electric, a phone, and gas for the old falling apart car. That's it. We've already been living super frugally. We don't buy anything other than food and the occasional second hand clothes, we don't have cable, use paper products etc. All the "standard ways" to nip/tuck the budget have been in effect for YEARS. If you think you have one I haven't heard or tried, bring it! I'm open to all ideas
If he starts a new career, making what he's making now, the knowledge that he will triple our income in 2-3 years wont keep us warm or clothed come December. This is where the 401k idea tempts me. Its quick money, that i didn't know existed, in a sense, and I'm not sure there are other options. I could get a job fairly easily in the medical field but I'd have to sacrifice our lifestyle(my studies/training, unschooling our kids, working towards sustainability on the homestead), and after childcare costs I'd only bring home $45 a week. I cant convince myself that $45 a week is worth it. Im still looking for other options.
So, what are we really in for? How does this 401k thing work...what do we need to know to make a wise decision? And suggestions or alternate advice?