New York man wants to borrow from 401(k) to pay $33K debt. Dave Ramsey is against it — but here's when it makes sense

Core Insights - The article discusses the debate between Dave Ramsey and a caller, Dave, regarding debt management strategies, particularly the idea of borrowing from a 401(k) to pay off high-interest debt [1][2][3]. Group 1: Debt Management Strategies - Dave Ramsey advises against borrowing from a 401(k) to pay off debt, suggesting instead that the caller focus on budgeting and paying off debts using a structured approach [1][2]. - The caller's debt amounts to approximately $33,000, with a significant portion attributed to high-interest credit card debt, which has an APR of around 27.8% [2][3]. - Ramsey emphasizes the importance of prioritizing debt repayment, recommending starting with IRS debt and using the snowball method to tackle smaller debts first [4]. Group 2: 401(k) Loan Considerations - The article outlines the potential benefits of a 401(k) loan, such as lower interest rates compared to credit cards, but also highlights the risks involved, including the loss of investment growth and tax implications if the loan is not repaid [5][6][8]. - Statistics indicate that at the end of 2024, 13% of 401(k) participants had outstanding loans, with an average loan amount of $11,067, suggesting that while common, these loans may not be the best choice for everyone [9]. - The article suggests that a 401(k) loan could be a viable option for stable employment situations or emergency expenses, but it is advisable to consult a financial advisor for alternative debt consolidation methods [10][11].