Your 401k is for your retirement, you know, the time where you no longer work and need capital to support your life. By borrowing from your 401K, you are robbing your future self in the hopes of having a better life now. This is completely backwards thinking. Instead, you should be squirreling away your income now so that you can live a more comfortable life when you are less able.
Who is going to take care of you when you are old? The government? Doubtful. Your kids? Hahaha! Only you can rely on yourself. If all my wealth disappears now at age 35, I have the energy to find a new job, work on a new idea, and survive. If I have nothing at the age of 70, I’m screwed and will become a burden on society, thank you very much.
So many people who borrow or want to borrow from their 401K think they are smarter than they are. They argue that they’ve either found a better investment, or they just absolutely need to have that new car or house. This inability to delay gratification is one of the main reasons why we got into this economic mess in the first place!
Unless you have some serious type of life-threatening emergency and for some reason don’t have any savings, do not borrow from the 401K. Treat your 401K like a sacred hippopotamus. Let’s talk about various reasons why some borrow from their 401K.