June 23, 2015
Dear Cathy:
I am currently living on my 401K money. I was laid off and is waiting on my
unemployment benefits. I do have the
option of moving back in with my parents because their health is
deteriorating. Many of my friends used
their 401K to start a business but they said they wasted a lot of these
funds. I am thinking about using my 401K
to start a business so what advice would you give me? Living Off 401K, Oklahoma
Dear Living Off 401K:
First of all you want to make sure you pay only your necessary
bills such as your rent/mortgage, food, and utilities with your 401K. Don’t pay off credit cards or other expenses
with your 401K.
Many people who get laid off, live off their 401K money for a year
then run out and get a minimum wage job, which is crazy. Remember this money is only going to last you
so long so you should not use it as an ATM machine. It should be your goal to make this money
last as long as possible while you are building and growing your business.
When your unemployment benefits are approved, use these funds
instead to start a business or try to get another job – even if it is part-time
and use those funds to fund your business.
Most business owners underestimate the time it will take for them
to start receiving money in a business.
Sometimes it might take anywhere from 2 to 3 years to make money in
certain businesses so you certainly want to conduct the proper research and be
prepared.
That’s why it’s a good idea to work with people smarter than you –
such as coaches and consultants. They
will help you save some of your money by helping you avoid many financial
mistakes that most new business owners make.
To learn more about how business works read “How To Take Control of Your Own Life: A Self-Help Guide To Starting Your Own Business” (Series 2) – which is
available as an e-book and paperback.
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