Bad move probably.

Discussion in 'The Okie Corral' started by Budqweiser, Oct 10, 2020.

  1. 45caldan

    45caldan

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    So I am now 59 1/2.
    I have been thinking about pulling 10G out of my 401k to eliminate all my debt.
    CCs are about 17%.
    I know I will be taxed on my withdrawal but no penalty as I am old enough now....
     
  2. MurrayNevada

    MurrayNevada USMC (MOS 0369) (RVN 69-70)

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    Instead of pulling it out take a loan from your 401(k) if possible. It will be about 4% vs 10% CC. Just put the card away when you do. Folks here will tell you to eat Ramen Noodles until you pay off the CC and there is nothing wrong with that. But I find the loan more appealing and you can pay that off sooner too if you work at it.
     
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  3. hd67xlch

    hd67xlch

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    Im retired now, but a few years ago, I did a $4k 401k loan to pay off a debt, to me it was worth it the 401k loan was only a 2% loan plus some fees for a couple of years. You might be wise to take the loan and pay off what your wanting to, just in case Trump loses, if he loses the market may lose 20-30% and what your putting in your 401k will get more bang for your buck if that happens,jmo.
     
  4. Bren

    Bren NRA Life Member

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    The loan should certainly accumulate less interest than the credit cards, so it would increase less as you are paying it off. That makes sense to me.

    Keep in mind that many Glocktalkers lived through the great depression, so their advice on loans will always be "just put you money in a coffee can and by the time you die you'll be able to pay cash for your funeral."
     
  5. Jon_R

    Jon_R

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    If you lose your job then the balance on the loan would be a withdrawal and you would owe tax and 10% penalty. Only you can say the probability of that happening. The other is how much of your 401K is 5K. Don't need the number but if 5K is 25% is a different than if 5K is 1% of you 401K. This deals with possible lost opportunity. If the market goes up you are not making money on the 5K that is not in there. If that is 25% of your 401K then that is significant if it is 1% then not significant. I do 401K loans at times for home improvement projects. My employment is stable been there 20 years. When I do a 401K loan the amount is ~3-4% of my balance. I pay myself back at 7% interest.
     
  6. Jonesee

    Jonesee

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    Wasn't this the same OP in another open thread that was also wanting to buy a new car and asking advice on whether he should?
     
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  7. ray9898

    ray9898

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    You said in the other thread you drink a fifth of liquor a day plus beer. That is an expensive habit. Cut it out and you will have it paid off in less than a year with no changes to your finances.
     
  8. Budqweiser

    Budqweiser

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    Yeah I should probably cut back some.
     
  9. ray9898

    ray9898

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    ....but reading more into your situation. It is a great thing you are doing helping a friend in need. But paying off the debt so he can presumably continue to add more is a non-starter. You are going to find things out of control before long and it is going to put you in the hole for years. This type of debt snowballs.

    I know it is a tough situation but you may need to really set some ground rules. You can't do this forever if you can't afford it.
     
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  10. snappy

    snappy

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    By your post on several threads you seem like a good dude. I’d like to buy you a beer or two someday. :cheers:
     
  11. Budqweiser

    Budqweiser

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    I have had a few serious discussions with him and I explained that it can’t go on much longer. I will do everything I can but I only make so much. He understands. I don’t know what he’s going to do but I made it very clear that he has to come up with a plan. I’m back to living check to check and I hate that with a passion.
     
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  12. Budqweiser

    Budqweiser

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    Yes. It looks like I could “save” about $100 a month if I went with a new car with the current promotion. I haven’t looked further into it yet and it’s likely smoke and mirrors but I will get the lowdown one of these days. Lower interest rate and smaller payment would be nice if it’s a car I actually want.