<prompt> Human: Obviously its better to just save up for a large purchase, but if someone wanted money for something quickly, wouldnt it be financially better to borrow from their own Emergency Fund or 401k to pay for it, rather than a bank?Advantages that I can see to this approach: You pay interest back to yourself if you even pay interest at all It does not impact your credit score borrowing from your own 401k is not a reportable event If you are unable to pay the loan back, you have the option of just defaulting without having creditors come after you in the case of a 401k loan, you will need to pay taxesfees on the amount defaulted upon, but this is only a fraction of what you defaulted on and not the entire amountAdvantages to borrowing from the bank instead: Leaving your money in your 401kE-Fund means the money that would have been borrowed can theoretically grow. I cant really think of any other advantages?The reason Im asking, is: that I have a large E-fund, and a very large 401k balance. While I dont have any immediate large purchases planned, Im asking myself why borrow money from the bank, when I can borrow it from myself? If I needed a new 35K boat and didnt want to wait the 2-3 years to save for it, why not just borrow it from my 401k or my Emergency fund and pay myself back instead of the bank for those 3-4 years?Im not sure I want to borrow money from banks anymore, when I can self-fund my loans.I know this is probably crazy talk, so what am I missing?Assistant: If I needed a new 35K boat and didnt want to wait the 2-3 years to save for it, why not just borrow it from my 401k or my Emergency fund and pay myself back instead of the bank for those 3-4 yearsIn short, because this is in general a terrible attitude to have towards finance and money management. Youre losing potential growth of funds Youre shooting your future self in the foot sorry MrMs. Future PF_throwaway23, you cant retire because you spent your retirement money already You do pay interest, and if you default you pay tax early withdrawal penalty You dont know where youll be in the next 2-5 years. Maybe youll be working, maybe youll be hit by a bus and lose your job. Dont count your chickens before theyre hatched.what am I missing?Retirement accounts are not large-purchase savings accounts, theyre for retirement.Human: Oh, and to address the losing potential growth of funds: My 401k is diversified between BondsDomestic StocksInternational stocks. Wouldnt a loan to myself just be another form of diversification? One that provides a guaranteed return of whatever the 401k loan interest rate is 3-4 I think? I mean there is a slight risk that I default on myself, but since I control that risk its far different from regular stocks whos risk I do not control.  <response>: Wouldnt a loan to myself just be another form of diversification?Ha! Not even a little bit. Paying a debt does not equal returns 