How to pay it off?

Question: Steven borrowed $20,000 against his 401k, and is taking a new job. Should he take a loan out and pay it off the 401k loan, or let it cash him out? Dave is heavily in favor of the first option, or maybe something even better.

Dave Ramsey's advice: If you let it go, the IRS will consider it an early withdrawal, and it will cost you 10% plus your tax rate, so that will be about 40%. Get a loan and pay it off, or see if your new company will advance you that much as a signing bonus.

Hear Dave talk

Download Dave's show, commercial free, right here!