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My family of six is struggling to cope with rising costs and inflation.
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We borrowed from our 401(k) and retirement savings to pay the bills.
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Despite multiple income streams, saving money has become almost impossible.
In Maine, where I am raising my family, the cost of electricity has skyrocketed. The average Mainer spends just $175 a month on this bill — just to keep the lights on.
My average electric bill is $300 a month. Along with gas and groceries, the price of oil has also increased. Middle-class families across the country face similar financial challenges. Prices continue to outpace wages.
For my family of six, this has brought some changes, and none of them positive. Not only is it harder to pay the bills, but the rising cost of living makes saving and saving impossible.
While our savings ebb and flow, we always have something going on. Having four children, money had to be allocated. I was able to keep a certain amount and deposit it into my savings account every month.
However, after the increase in prices, our savings have gone in the opposite direction. If I manage to sneak a little money out, within weeks, our account will be empty. Whether it’s a pricey trip to the grocery store, increased gas and oil prices, an unexpected expense, or an emergency, the savings don’t last long.
Financially, we struggle year-round, often relying on retirement savings to pay for regular expenses. Last year, we borrowed from my husband’s 401(k) to cover Christmas for our four children. Expenses are also covered by retirement money. Despite our jobs as teachers and electrical shift workers—and with more overtime, freelance writing, and summer teaching work—we still can’t quite make ends meet.
So, now we are not only worried about operating paycheck to paycheck and without a safety net, but my husband will have to repay the 401(k) loan through paycheck deductions. The scariest part is that this may not be the last time we use this strategy, nor was it the first.
I also took money out of my retirement annuity to pay for my daughter’s car. We have limited access to public transportation where we live. It was also necessary to have another driver in the family. So, I took $3,500 for the car and added that to the $1,000 he saved. I took an additional $2,000 to cover the expenses we were behind on.
Pulling this money out had a significant impact on our taxes. Unlike my husband’s 401(k) we weren’t taking out a loan. We were pulling in money that was considered taxable income — and it hurt — which led us to the decision. Going forward, if there are any smart moves to make in these uncertain financial times, borrowing against my husband’s 401(k) would be a smart move. That’s what we did.
