Borrowing against your future

Man borrows from 401k to pay bills
Is he a victim of the times? Or a victim of his own greed?

Trent Charlton knew the risks when he borrowed $10,000 from his 401(k) and cut his retirement savings in half. But Charlton, a 40-year-old account executive at an Irvine, Calif., trucking company, said he had little choice because he and his wife could not keep up with monthly expenses after American Express reduced the limits on three credit cards.

He has three American express cards? He is not the only one, however.

As home prices fall and banks tighten lending standards, more people are doing the same thing: raiding their retirement savings just to get by and spending their nest eggs to gas up SUVs, pay mortgages or put food on the table.

How he got himself into this mess.

Charlton and his wife used the retirement money and $7,000 from savings to pay down their credit card debt. They also cut monthly expenses by pawning a diamond ring and selling camera equipment he owed money on. And he's looking for someone to take over his $550 monthly payment on a gray BMW 335i he leased last April.

I sympathize with the guy, but I do not feel sorry for him. He put himself in this mess, not the lenders, not the banks, nor the car companies. He did it. Too many people seem to think that you don’t have to think about the future, or that some magic fairy will come down and take care of them. We are the first generations that have enough disposable income to truly save for our future and retire in a very comfortable lifestyle, yet we seem not to be able to do it. I am just as guilty of foregoing saving versus a cool new “toy”, but I still save. People just need to exercise a little more discipline and foreclosures and borrowing against your future would only happen to those in truely tragic instances.