My husband started short-term disability in order to address addiction issues. He is the sole provider for our family. Recently, he moved $100,000 from his 401k to cover our debt and bills while he seeks to get well. Do you think paying off all debt is wise (except for our mortgage), or do you have a better suggestion?
Supporting My Addict
Dear Supporting My Addict,
I am so sorry for your difficult circumstances; yet, I am grateful you have some options to help you while your husband recovers. Lord willing, he will shake his addiction and begin to rebuild your financial reserves.
It would help to know your age and overall financial picture; regardless, I will provide some information and advice that I believe will help you navigate this.
Addiction in America
Unfortunately, your painful circumstances are not unique. The National Survey on Drug Use and Health (NSDUH) reported that 19.7 million American adults (ages 12 and up) battled a substance use disorder in 2017. The American Psychological Association reports a rise in abuse because of the stress Covid-19 has brought upon many. Statistics can be found here. The 2019 National Survey on Drug Use and Health reports findings here. Tobacco, alcohol, drug abuse, mental illness, and treatment statistics are presented within the PDF. These problems not only have the capacity to ruin lives, but they can also ruin entire families. There are a number of support groups for families going through this trial. Celebrate Recovery is one I have heard many good things about.
Managing Through It
Your husband obviously wants to make sure you are taken care of during this time. Thankfully, he had money set aside in a 401(k). It is generally advised to take out the bare minimum needed because of the penalty and taxes involved. If you are under 5912, you will have to pay a 10% penalty plus taxes on that income. If you were approved for a hardship withdrawal, you may still face taxes and penalties. Do your research so you will not be caught off guard. Keep records of all transactions. There are other options for withdrawing funds, and those can be found here.
Should you pay off all debt? It can reduce stress and improve your credit score. Make sure you can keep up with your mortgage and have the ability to cover repairs and maintenance. The same goes for a car. An emergency fund can prevent the need to borrow in the future. Pay off debt that has high interest and is costing you in penalties. Live frugally during this time so you can reinvest the money borrowed from the 401(k).
While encouraging your husband during this time, it is important to consider the following:
If you are overwhelmed with the burden of financial difficulties, check out our Budget Coaching program. It can match you with one of our certified coaches to analyze your situation and develop a personalized spending plan and debt-elimination strategy. If other families reading this do not have the financial cushion your husband and you have and are experiencing problems managing debt, check out Christian Credit Counselors.
Praying for your husband to recover and for you and the family as you manage your finances and circumstances well. Stay strong. May God sustain you in and through your pain.
This article was originally published on The Christian Post on August 27, 2021.
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