<prompt> Human: OverviewWeve made the mistake of pushing off student loans for as long as we could, but now they need to start up and will be about 500mo for each of us. My wife is in a line of work that could merit forgiveness after 10 years of good payments, but it would still be about 500mo for her, 150k current balance. Im not in such a position, however I only have 60k in loans and 500mo over 10 years would settle the debt fully. The trouble is we dont have 1,000mo that we can allocate to the loans since out of our monthly net income, 6,600, our monthly bill are 5,000 which does not include gas, groceries, etc.DetailsIm 31, my wife is 34. We make 83k and 35k respectively and I have only 14k in my 401k. Ive only been putting in about 2-3 over the last 2 years and if this plan works out, Ill up my contribution to make up for losses. So here is the situation. We have 16k in credit card debt 28 interest, and have 2 personal loans at 20k to pay off at 900mo fixed 10 interest with 2 and 3 years remaining. 2 car loans for a total of 80k 1,300mo and the remaining balance of out mortgage is 119k 1,000mo. We owe my mother-in-law 6,500 for covering getting us a new AC unit when the old one died at the start of this summer. Our monthly utilities are about 1,000mo and our other miscellaneous monthly bills tuition, medial bills, etc. are about 600mo. My daughters tuition, 450mo, will go down to zero next year when she gets into kindergarten. My wife budgeted an envelope system that has only left us with 150week to cover gas, groceries, and fun.Proposed SolutionMy wife is proposing that we cash out our 401k now to pay off as much credit debt as possible. Minus taxes and a 10 penalty, we should clear about 10-12k. If we reduce our credit card balances, our debt to income ratio and our credit scores, currently 700 and 600 according to credit karma, should improve enough for us to refinance our mortgage and maybe even cash out some of the equity to clear more debt, as well as drop the PMI. Our house should appraise for about 170k and we could cash out upwards of 25k, but might only take 10k. Our monthly payment should also drop without the PMI, but maybe only about 100-200mo. Were young enough that Im sure we can make up for the lost money from cashing out, but Im interested in your opinion.Edit1 - There are many comments that we should sell the cars. This was my first thought when we were faced with out budget crisis. However, both cars are upside down. The truck might sell for 33-35k and the van for a little less, but each balance is about 40k each. How would trading them in for a cheaper car work in my benefit? I dont have the cash to cover the difference.2 - A leak is for sure what we have. My wife got her financial skills from her father who would spend it if he had it. Shes facing some cold facts now and we need to turn this around.Assistant: You guys need to get rid of the cars you bought but have no business having, your incomes are fine for the area you live in, judging by the value of your house. Freeing up a thousand dollars a month would let you make serous headway on the loans you have with terrible interest rates, I wouldnt touch retirement savings unless it was to stave off homelessness.Human: My first thought was to sell the cars, but my truck would sell for 33-35 at best and Id still be on the hook for the remaining balance. I knew Id be upside down getting it, but it was supposed to be my forever car. Same for the van.  <response>: You have 80k of car debt. Even if you sell both cars for 70k, then you would only have 10k to cover. Combined with two used, but reasonable, cars at 6k each, you would then only have 22k of car debt. That will reduce your monthly outflow to car debt by almost 75! Car insurance will also go down considerably, as well as registration fees. You can then use the savings to pay off your debt. Start with the cars instead of raising the small retirement you have. 