Albert doesn’t say *never* file bankruptcy –

he says never file it until you’ve exhausted all your other options and never file based on what *might* happen. But if they’re about to send the trucks to get your furniture, it may be time.

So sorry to hear about the medical stuff and hope everyone’s health is recovered.

Breaking out a 401k is always a *terrible* idea. Between taxes and penalties you’ll lose something like 40% of your money right off the top, PLUS you lose everything that’s accumulating towards retirement. And retirement may seem far away but you don’t want to be working as a Wal-mart greeter at 80, so you need that money to stay there.

You’re better off *not* putting away 15% towards retirement than you are taking money out and moving *backwards*.

Thank you …and nice to “meet” you

I have been lurking for a while now but figured I should go ahead and introduce myself. I am mom to 4 children, wife to a wonderful husband and a DR enthusiast. We live in Florida where we have 4 seasons, Hot, Hotter, Hotter than Heck and Hurricanes.

I take care of the tedious part of our finances in our house but DH is involved in decisions. We have been followers of DR for a while and we had completed step 1 ($1000 baby EF). We were working on our snowball and making good progress. We were able to pay off $17,000 of $28,000 before we ran into a couple of snags.

In the past year we have experienced a reduction in pay for the same 60 hours DH works every week and we had a major medical crisis that sent us over the edge. It put us into a hole so deep that there would never be a way out. Our bills totaled over $400,000. Add that amount to an already stretched budget and plenty of debt and you have a recipe for disaster.

We had no other choice but to file bankruptcy to survive. We are losing our house in this process as well. I know how Dave feels about BK but seriously there was no other way to deal with this. We tried, we tried REAL HARD. Even though none of this is pleasant I feel blessed. We will be fine.

Now I am starting to try to deal with the future and how we should best approach all things financial . Since we won’t have a house we were thinking of taking our remaining 401K money to buy a very very modest house. ( we used almost all of the 401k to pay bills until we realized we were not going to get anywhere) We won’t be able to get a mortgage anytime soon because of the BK and renting is very hard to do as we need a handicap accessible home.

We live in Florida and live in a house ( for a little while longer) that would have gone for about $475,000 at the height of things and now we want to spend about $40,000 for a house and about $10,000 for making it right for our needs. We are certainly changing our lifestyle so that we can live within our means. We need a place to live anyway and our 401k isn’t earning anything right now.

I know that Dave recommends paying off house as one of the last steps but we feel that we will be able to fund our 3-6 months of expenses, contribute 15% to retirement and save for kids college at a much faster pace without a mortgage.

Now I am curious to see what other DR followers think of buying a house with 401k money without working all of the steps in order. Is is a horrible idea ? Is there a better way to deal with things? Will there be some consequences that I am not thinking of right now? I want to hear your thoughts on this but please don’t slam our decision to file for bankruptcy. It was a very hard decision to make especially after trying so hard and making some really great progress toward paying off our debts prior to our medical crisis.