i am a little skepticle with the economy ...wife had over 100,000 in her 401k she rolled it into an ira
then the crap hit the fan and it hit in the low 40's... it came up a little no more contributions during this time..i have one that i did the same to 36k went to 15k,,and now it is in the 30k zone....
You will have a new 401k with the new employer ..or some other type of retirement account....
I claimed 9 dependants when i first started working for the faa i paid in 2-3k each year on taxes...but i got more on my check to take home.....
look at it like this ....i paid my house off with the extra i took home ..so i actually made the money work for me....now if you have a high intrest rate bill that you will be paying off, then i say by all means cash out. make the money work for you
you never know what the economy has in store for you.... it really is not that much to begin with.... if i would have cashed my funds out i would probably own another house...
Your house is the number 1 investment...not actually the updates.. but actually paying it off.... You might think Tile instead of carpet,,as most cheaper and midrange carpets today do not last like they did 20 years ago.
and the warranties suck.....i do mechanic work for my neighbor and he does my carpet work....and he will tell the same story...tile will be there for 10 times longer than carpet...and the price is about the same ..if you get good carpet that will make it 8 years...my houses are now worth 2x what i paid,,there is your investment
then the crap hit the fan and it hit in the low 40's... it came up a little no more contributions during this time..i have one that i did the same to 36k went to 15k,,and now it is in the 30k zone....
You will have a new 401k with the new employer ..or some other type of retirement account....
I claimed 9 dependants when i first started working for the faa i paid in 2-3k each year on taxes...but i got more on my check to take home.....
look at it like this ....i paid my house off with the extra i took home ..so i actually made the money work for me....now if you have a high intrest rate bill that you will be paying off, then i say by all means cash out. make the money work for you
you never know what the economy has in store for you.... it really is not that much to begin with.... if i would have cashed my funds out i would probably own another house...
Your house is the number 1 investment...not actually the updates.. but actually paying it off.... You might think Tile instead of carpet,,as most cheaper and midrange carpets today do not last like they did 20 years ago.
and the warranties suck.....i do mechanic work for my neighbor and he does my carpet work....and he will tell the same story...tile will be there for 10 times longer than carpet...and the price is about the same ..if you get good carpet that will make it 8 years...my houses are now worth 2x what i paid,,there is your investment
This is the mindset my wife and I have taken. I could easily put back quite a pretty penny every year if I saved what I drop on my house payment each month. Plus, if the house is paid off and I lose my job - I can pretty much pay my bills working part time. Huge load off my mind.
Eliminating that burden would bring a much larger amount of flexibility, freedom, and options, so that's the road we're taking.
Back in the day, we started making an additional payment on our house mortgage every month; never less than $50 and up to an extra payment. The result was that we paid our house off several years early and saved many thousands of dollars as a result. Highly recommended. 15 year mortgages are also a way to go.
Kinda getting away from the OP's beginning, but it is related.
Having said that, if I were to give only one piece of financial advice to a younger person, in addition to saving, it would be to buy land out in the country and sit on it. You'll need it some day. Lease it out to hunters to pay the taxes.
Kinda getting away from the OP's beginning, but it is related.
Having said that, if I were to give only one piece of financial advice to a younger person, in addition to saving, it would be to buy land out in the country and sit on it. You'll need it some day. Lease it out to hunters to pay the taxes.
Or farmers......
My wife wants wooded acres, so that won't work for us.
I want both - some meadow area, a few smaller hills (earth sheltered house possibility), and some wooded - preferably with a creek.
I would only take out what I needed to pay off my debt. Being debt free is the way to go. THen take the extra 200 a month and start saving to put new carpet in in less than a year. Steal someone else's iPhone.
Lets do some math on cashing out. I believe this is the way the IRS would handle your early withdrawal.
$14,442 Cash value of 401K
$ 3,822 Loan value that must be repaid with after tax and early withdrawal penalty dollars
$18,264 Total taxable and penalty value of 401K
$14,442 Cash value
($1,826) -10% early withdrawal tax penalty on $18,264
$12,616
($7,306) -40% (minimum) of the $18,264 tax withholding for federal and state taxes. Could be closer to 50%
$5,310
($3,822) pay back the loan with after tax dollars taken above.
$1,488
Net cash you will end with should be around $1,488. However, when you file your 2011 taxes, you could recoup some of the overpayment of taxes if your marginal tax rate is lower.
I would definitely get a written estimate from your HR/401k provider before you make the decision to cash out.
$14,442 Cash value of 401K
$ 3,822 Loan value that must be repaid with after tax and early withdrawal penalty dollars
$18,264 Total taxable and penalty value of 401K
$14,442 Cash value
($1,826) -10% early withdrawal tax penalty on $18,264
$12,616
($7,306) -40% (minimum) of the $18,264 tax withholding for federal and state taxes. Could be closer to 50%
$5,310
($3,822) pay back the loan with after tax dollars taken above.
$1,488
Net cash you will end with should be around $1,488. However, when you file your 2011 taxes, you could recoup some of the overpayment of taxes if your marginal tax rate is lower.
I would definitely get a written estimate from your HR/401k provider before you make the decision to cash out.
Roll it over
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