Juice, at this point I think it would be risky for your parents to tap into their 401k. It seems like you’re trying to fix their debt immediately, then are hoping that they’ll change their lifestyle afterwards. The problem is that if they don’t fix their lifestyle, they’ll be even worse off.
So maybe they should change their lifestlye first. Once they train themselves to live within a reasonable budget, it will be safer for them to use their 401k.
When I first moved to California (and wasn’t making too much money), the key for me was having a budget plan. It was pretty simple plan (rent+utilities+household items, car+gas, food, presents, and vacations+entertainment). The rent and car related paymets were basically fixed every month. So the only thing I had to concentrate on was limiting my food, presents, and entertainment. It wasn’t hard to do because I always knew what I could and couldn’t afford. Following this budget allowed me to pay off my credit cards every month.
I would suggest that you work with your parents to come up with a budget plan and see if they can stick to it. If so, then they’ll have plenty of options for reducing their debt.
