If you rob Peter to pay Paul... but Peter's interest rates are lower and his payment arrangement is more convenient, does that make it OK in the long run?

This week my 401k loan check was deposited to my checking account (thanks to Jen since I am out of town). Within 2 or 3 days, the money is all gone already.

  • $3400 to Toyota to pay off my car
  • $1000 to Citibank to pay down my card
  • $xxxx to my bank account to cover other spending

And just like that... it's gone. 'Tis OK though... I no longer have a $315 car payment and my Citi balance is down $1k (so the min payment should reflect that next month). The cost for this 401k loan? About $136/month out of my paycheck. But if I try to do a rough estimate of my savings, I still come out on top...

$315 (car) + $20 (est, citibank) - $136 (payment) = ~$200/month savings.

Of course it kind of goes without saying that a chunk of that $200 will now end up going into the two remaining credit cards to hopefully get them paid down a bit more. Still probably going to take a couple years to get to a "good place" financially, but things are still moving. Hopefully this works out as well as I've planned.

Even if it doesn't move as quickly as I'd like, I should still have that $200 as a little bit of a cushion each month now. That will be kind of nice. Now I would just need to wait for my credit score to catch up.

Some possibly related posts...