401k loan

[LivingAlmostLarge]

My friend that we loaned $5k to was told by her lawyer to borrow money from friends and family. She has no access to the family money. No credit cards, bad credit now, and no money.

She has her 401k with $300k in it. I don't know how long the divorce will take but I'm debating suggesting she borrow the $50k. I never would suggest this but do you guys think this is a bad idea? Sounds nuts but I don't think she can make it.

We drew up a budget and it's not pretty. She just needs sometime to get reoriented to the new norm and get started on new life.

[Rachael777]

I think considering her situation and lack of family or other funds it makes sense. I would recommend looking at her budget and timeline of the divorce, being out on her own, costs etc to set the right amount to take out. Also exploring income opportunities etc.

Perhaps taking out less at first to allow for other income sources to appear may make more sense

[creditcardfree]

There are times where it makes sense, but she needs to know that paying it back will reduce her paycheck. And if she is laid off from her job, that loan is automatically due in full within 60 days. If she then is unable to pay it back it becomes a withdrawal and is considered taxable.