Q: I have a question from a reader who wanted to know what she should do from a loan she received from her job.

“I requested and received a loan from my 403(b) plan to payoff credit cards. It was for $12, 800. I was told it would take 90 days to process, but the money actually came in five days. Now I am panicked. Should I send it back or use it?

Unfortunately the funds would have to be invested or re-invested at today’s market. I have a school loan too.

I would have to pay back the loan to myself quarterly, which would reduce my $180 interest payments on the card. Please help. I know I should get rid off, or at least get rid off one debt. But what should I do?”

A: Well, first let me say, that you already had the loan processed. So no I don’t think you should go ahead and send it back.

For my readers who don’t know, a 403(b) is essentially an equivalent of a 401k but the 403(b) plan is offered to others not in a corporate world but in a non-profit world.

This individual didn’t tell me where she works. She might even work for a hospital, or some government agency, but those are the entities that typically offer a 403(b) plans.

But essentially, they are employer’s sponsored retirement savings plan. Just like a traditional 401k plan is. Just like the 401k also, the 403(b) is plan where you pay yourself back the loan.

The challenge of course is that if you should leave your job for any reason, if you get fired, if you quit, when you have a loan outstanding, you are suppose to pay the loan back in 90 days or less.

If you don’t, that money that you received, that will be dispersed to you, will be considered taxable income.

So, as long as you are not planning to leave and go anywhere and hopefully you won’t get axed or a pink slip, I wouldn’t worry so much about having taken the money out now to have to go pay off those presumably higher interest rate credit cards.

Pay the stuff off, save yourself the $180 interest payments on those credit cards, and then just get about the business of re-paying yourself.

You mentioned having school loans too. That’s a whole different ball game  with regard to your student loans, but what I will say to you is that, there are a number of options available to individuals that have federal or private school loans.

And those options mostly deal with deferments, forbearance or loan cancellation.