Dave Ramsey says to think twice if you if you ever think that using your 401(k) money to pay off your home is a good idea

Using your 401(k) for purposes outside of retirement can jeopardize your financial future due to high penalties and taxes. Financial expert Dave Ramsey warns that accessing these funds can result in losing around 40% of the withdrawn amount. This significant reduction, combined with the general risk of not having enough saved for retirement, suggests that individuals should avoid tapping into their 401(k) for immediate financial needs like buying a home or paying off debts.

It’s easy to see why the caller would be interested in cashing out her 401(k), but any money removed is taxed and incurs a penalty.

Dave Ramsey warns that if she withdraws from her 401(k) before 59 and a half, she risks losing 40% in taxes and penalties.

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