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Thread: Money

  1. #1
    Join Date
    Jul 2004
    Location
    Victoria,Tx
    Posts
    6,680

    Hmm

    I invested $42,000 in a 401k in October of 2003. Now in July of 2005 it is up to $98,000. I have been putting about $300 a month into the plan. I still have to pay taxes on all the money. The wife wants to take $38,000 and pay the house note, $800 a month off. And yes guys after 45 or 50 years old, you will see some money left over after you pay your bills. If you are not foolish. Roy

  2. #2
    I just want to put in first call for the 60K remaining!

  3. #3
    Join Date
    May 2004
    Posts
    12,294
    http://www.clarkhoward.com

    This is the Atlanta radio money guru.

    Take a peek and check out what he has to say.


  4. #4
    Join Date
    Jun 2001
    Location
    Michigan
    Posts
    12,077
    Clark Howard is awesome. I like to listen to Suze Orman too.

  5. #5
    Join Date
    Feb 2003
    Location
    S.W. PA
    Posts
    3,298
    would you put the 800 a month that would be free back into 401k? seems like if you did that it would be a good idea cause the interest on the house has to be higher than the interest on the 401k

  6. #6
    Join Date
    Oct 2004
    Location
    OZ Aka SW Florida
    Posts
    1,830
    Ok .....Explain The Math.....$42,000.00...10/2003.......$98,000.00......07/2005......$56,000.00 Profit In 21 Months?.....At $300.00 A Month, That Is $6,300.00?.....Must Have a Good Investment!!
    Refrigeration...Finding the Wright Wrench to pound in the correct..Screw

  7. #7
    Join Date
    Mar 2003
    Location
    Cincinnati
    Posts
    7,977
    Originally posted by cracker
    Must Have a Good Investment!!
    Roy is one of the original Goodfellas.

  8. #8
    Join Date
    Jun 2004
    Location
    Richmond Virginia
    Posts
    1,078
    I don't think you'll be able to just grab the money. I believe that you have to have one of the following reasons to pull money out early: 1. Financial Hardship 2. First Time Homebuyer 3. Medical Neccessity (really the same as 1). Even then there is a stiff IRS penalty.
    When counting the home mortage money for comparison you should only count the principal portion as you should be deducting the interest and taxes each year also.

    Many banks and credit unions offer free financial planning help with these things, check yours out.

  9. #9
    Join Date
    Jul 2004
    Location
    Victoria,Tx
    Posts
    6,680
    I was talking about borrowing the money from my self and paying it back into my 401k with the interest paid to me. The problem is the balance left in the account would leave only 60,000 to gamble in the market. Remember no taxes have been paid on any of this money. That would make my take home pay 1500 a month.

  10. #10
    Join Date
    Jun 2001
    Location
    Michigan
    Posts
    12,077
    Let the money grow. Leave it alone.

  11. #11
    Join Date
    Feb 2004
    Location
    Maine
    Posts
    483
    Originally posted by Dowadudda
    Let the money grow. Leave it alone.
    Couldn't agree more Dow. Oroy, did you know that if you take that loan out and god forbid something happens and you can't work, ie illness etc, you still have to pay that money back on time. If your not working then that is a bad time to have to pay something like that back, especially if you end up having to pay for your own health insurance at the same time. Probably wouldn't hurt you to see a good financial planner on this matter, that way you know what you are getting yourself into. If you really want to get your mortgage paid off sooner than you may want to reduce your contributions to your 401K and apply that money towards the principal on your mortgage. JMHO

  12. #12
    Join Date
    Mar 2004
    Location
    NJ
    Posts
    1,214
    Originally posted by jdenyer
    Originally posted by Dowadudda
    Let the money grow. Leave it alone.
    Couldn't agree more Dow. Oroy, did you know that if you take that loan out and god forbid something happens and you can't work, ie illness etc, you still have to pay that money back on time. If your not working then that is a bad time to have to pay something like that back, especially if you end up having to pay for your own health insurance at the same time. Probably wouldn't hurt you to see a good financial planner on this matter, that way you know what you are getting yourself into. If you really want to get your mortgage paid off sooner than you may want to reduce your contributions to your 401K and apply that money towards the principal on your mortgage. JMHO
    Definitely talk to a financial pro. But most of these disagreements do not hold water. Paying offf your house especially if you have a higher interest rate can be agood thing. You need a pro to calculate the difference between your gains if you leave it and let it grow and the difference if you pay off the mortgage at whatever rate you have. if you pay 10% interest on your mortgage and your return on your 401 k is 5% it may be worth it or their maybe a breakpoint where you can pay 1/2 of whats left and refinance at an even lower rate of interest.

    As for the having to pay the money back on time if you get sick that is true whether it is your mortgage or a loan to yourself on your 401k so it does not really matter. Either way you have a safety net if you get sick or hurt you can borrow against the 401k if you leave it there and if you pay off the home and get sick or hurt you can always get a new mortgage on the home since you own it outright.

  13. #13
    Join Date
    Mar 2003
    Posts
    7,326
    your current financial situation dictates the outcome, but in general you are better off leaving it there. there are tax ramifications for early withdrawal, there are interest payments if you borrow against it, there are repayment terms if it for a first time home purchase. right now the mortgage can be used in income tax strategy which specifically forces the fed to pay a bit of your monthly mortgage through itemized deduction, AND a property that is paid off with no martgage is much easier to be lost in judgement against you than if it has an existing mortgage.

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