Financial Advice needed

Bansh88

Bansh88

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So, I know nothing about money.  I know some of you do.  I do know my 401a is getting brutally raped by Joe Biden.  I'm figuring I've lost $40-60k in the last 2 years.

We are looking to buy a used toy hauler in the next 6 months.  Would it make sense to take a loan on my 401a to make that purchase?  $20k or less (hopefully).  I am able to take a loan on my 401 and it gets paid back automatically each paycheck at a rate I choose.

If I'm consistently losing money and likely for the next 2 years, does this plan make sense?  Rather than say, trying to finance.  I know the right answer is to save and pay with straight up cash but...c'mon.

 
NO, but c'mon

If you can't pay cash without going into investments you can't afford it.... save up and buy

The market has never not recovered, and right now just think of it as everything is on sale.

Dave Ramsey only, here

My .02$ and I have financial PEACE!!

 
BAD IDEA.

While your 401K has gone into the shitter the last two years you have yet to lose a dollar. You don't lose that money until you take it out.  Pull the money out of the 401K it is at today's market, you now have lost money.  Paying it back to yourself while it seems like a good idea isn't because you pay back before you start to re-invest. In other words you have to pay back your loss first then start to buy stuff while it is hopefully still on sale. 

Even though you constantly losing money right now and it seems to be a bad idea the best bet is to double down and max out your 401K right now. Buy low sell high, right now is low. Pray that it is at a high market when it's time to cash out.

I had a 401K go from 30K to 3K in a few years worst feeling in the world.  Then it went back up to around  $5K then to $29K in no time.  Sure it is down a little now  but if I had taken it out when it was $3K It would be worse.

 
MWB isn't wrong but I would say it depends on when your retiring, how much you want to take out, and how fast you plan on paying it back. Also if you do take a 401k loan and move jobs, you have to pay that back within a quick amount of time or you get taxed on it as a distribution. if example if you have say, $400-500k in a 401k and only plan to take say $24k out for the trailer and will pay it back in 2 years I don't think its that big of a deal. Now if you have a smaller retirement account and want to take 60-70k for a really nice brand new unit then i don't think it make as much sense. How old are you, roughly and how much a year do you put in your 401k, the max amount ($18-22k i think)?

 
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You’re going to get a lot of pay cash responses. But I feel your pain…

Your 401 is a long-term investment and depending on how much you have there would be part of the big picture to look at. If you are going to wipe it out to make a purchase. I would not do it.

But…. If you are set on making a purchase, the 401k loan could be a better option because the loan ( Borrowing ) will be at a much lower rate than you would find at a bank.

 
This is a 401(a), not a K.  Thats what my employer has.  No idea what the difference is.  I'm 46 and I've got 23 years in.  Our plan to move out of state has been put on hold.

Just brainstorming here so I appreciate all angles and opinions.

 
Borrowing money from yourself is great, you'll pay yourself like 6%. Better then a loan where your paying interest to someone else...

However the flip side is what this money could have earned for the 5 years you'll take to put it back. Are you ready to have that $400-500 deducted from every paycheck the next 5 years?

Also consider this is a Toy Hauler that will depreciate, a 401 withdrawal is good for something that will go up in value, not down.

Find the cheapest TH you can afford cash and be happy in. 

 
Also remember financial markets will rise and fall. Yes, it's down right now but it will return. You will only lose money if you sell in a down market. The value of the account is what rises and falls but no money is "made or lost" until it is sold, or funds taken out

 
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The last 3 things you should tap for money in my opinion are any retirement savings, the equity in your home, and credit cards. I'm not saying never, they should be your last option and in that order.

I retired at 58 by following these rules, and I'm not sure if I could have if I didn't. 

I would get a loan from a lender with reasonable rates given the current economy. Then when or if rates come down, refinance to the lower rate. I think the days of extremely low interest rates are over, at least for years if ever. I remember when a 4% to 5% mortgage rates were considered low, we got spoiled the last several years.

 
Pulling money out of a 401whatever definitely does not make financial sense. As said, you lock in your losses, especially with the market in the toilet (if you pull 20 out, you might have paid 30 for it depending how much it's down).

That said, if this would mean more great family time that you might not otherwise pull off, how much is that worth? if you save money for a couple years instead you can't get those years back.

Would still try to finance, could always get the 401a loan and pay it off if you had to for some reason.

 
Depending on the year of the proposed toy hauler you may have trouble finding financing. That said, rv financing can be spread out 10, 15, 20 years. That’s a lot of interest going to someone else. Not everyone is baller enough to pay cash for our toys. 
I have pulled from my 401 before to pay off bills. As mentioned you pay the interest to yourself which is reinvested and depending on the market and amount borrowed may make a large or small difference in your overall savings.

there should be a calculator within your 401k website which shows the possible effects to your ending balance if you take the loan. One thing to mention, if you can afford to keep making the same contributions as well as the payment on the loan the impact to the balance at retirement is minimal.

results may vary 

 
Smart investors do NOT pay cash for large investments. There are plenty of investments out there that can make around 10% return. If you had an extra 50k lying around and invested it, and at the same time, financed a whatever at 5%, you could still be making 5%. 

 
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That is not cash in your account that is a dollar value of stocks owned. 
 

so if you bought a stock at $1 and you cash out now to buy an RV that stock is not worth a $1 so you will now take a loss on that stock purchase. 
 

so if you pull out 20k in cash it probably cost you 30k to buy those stocks that you just sold to get your 20k. 
 

a loan on a 20k trailer will be like $175. 
 

which is less than a tank of fuel. So why mess with your retirement over such small amount of money?

 
My judgement has changed lately...

Just lost 2 friends in the last 60 days, one 45 and one 50 - I doubt they are glad they died with a lot of money in the bank, granted they had substantial life insurance policies, so no one is in debt over their passing.

Enjoy life while you are young and still have time to save up for retirement afterward assuming you make it

 
Why not just get a conventional loan? USAA will loan on any year rv or vehicle up to 100% of the value. 

 
Btw; a guy in pine valley has a really nice 2006 attitude 26ak for sale 10k$ not listed anywhere

 
Sausage450r said:
Why not just get a conventional loan? USAA will loan on any year rv or vehicle up to 100% of the value. 
Click to expand...
Conventional loan is an option but it would have to be a newer/way more expensive rig.  USAA is for military which I am not.

 
Well, if it were me I would get an unsecured loan. The rates now are no different than any other secured rates. I use lightstream with great success. Cash in my account within 24hrs. Used them twice already and always payoff early anyway. Check them out. 

 
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