Cares Act and 401K

[lickin_starfish 1,349]

Someone talk me out of taking a withdrawal from my 401K to pay off my mortgage. Right now, my only bills are the mortgage and utilities, with 7 years left to pay on it.

Anybody else taking advantage of the CARES Act for this?

 

[Alias Detective 1,085]

1 minute ago, lickin_starfish said:

Someone talk me out of taking a withdrawal from my 401K to pay off my mortgage. Right now, my only bills are the mortgage and utilities, with 7 years left to pay on it.

Anybody else taking advantage of the CARES Act for this?

 

The return on yoru money should out-way the interest on your mortgage. The question is, will it over the next 7 years.  I say yes.

[TBayXXXVII 1,960]

I rent, I don't want to do yard work, but don't you get to write off your mortgage interest from your taxes?  Would losing that write off decrease any benefit you get from taking this route?  Also, won't the return only come if you sell your house?  As I said, I've never thought about this because I've never owned, so I'm not talking from a standpoint that "I'm right you're wrong", I'm really asking questions.

[lickin_starfish 1,349]

I can't write off the taxes anymore, since they changed the tax laws. I know I shouldn't do it, but the thought of being debt-free at 47 years old is too tempting.

[FlyinHeadlock 458]

When a mortgage gets within 7 years there should not be that much interests in there. I paid off mine making double and triple payments. Think it removed like 90K in interests but towards the end there was almost no interest built into the house payment. 

I personally would not touch a 401K. Can't you just make additional payments and get it down to a few years. Every advisor I have ever listed to always said to never touch that 401K, even in an emergency.  

[lickin_starfish 1,349]

Thanks for the input, guys. I won't give in to the temptation.

[TBayXXXVII 1,960]

3 minutes ago, FlyinHeadlock said:

When a mortgage gets within 7 years there should not be that much interests in there. I paid off mine making double and triple payments. Think it removed like 90K in interests but towards the end there was almost no interest built into the house payment. 

I personally would not touch a 401K. Can't you just make additional payments and get it down to a few years. Every advisor I have ever listed to always said to never touch that 401K, even in an emergency.  

If the interest isn't all that high or you can't write it off, paying extra (if you have it), does sound like good advice.

 

I've heard the same about 401's.

[IGotWorms 2,863]

Yeah I think it was really irresponsible of the federal government to encourage people to raid their retirement accounts. You cannot think of it as a current source of money, it’s for retirement only.

[FlyinHeadlock 458]

1 minute ago, lickin_starfish said:

Thanks for the input, guys. I won't give in to the temptation.

I will honor, being debt free is amazing. Paid ours off at 44. We had been double and tripling payments for years so this huge weight got lifted off us. We really started enjoying life, taking trips, buying things we always wanted. Not wasteful spending either. Just enjoying life, saving some of it but we felt we sacrificed enough.

[Patriotsfatboy1 1,432]

Who CARES? 

[NorthernVike 2,078]

23 minutes ago, lickin_starfish said:

I can't write off the taxes anymore, since they changed the tax laws. I know I shouldn't do it, but the thought of being debt-free at 47 years old is too tempting.

I paid off my home just before I turned 40.  All I'll tell you is that it's a great focking feeing going home and knowing that I own it. 

[Strike 3,631]

1 minute ago, NorthernVike said:

I paid off my home just before I turned 40.  All I'll tell you is that it's a great focking feeing going home and knowing that I own it. 

Yup.  You can do the math and it will tell you not to pay off the house, but there is value to the piece of mind of not having a mortgage payment, and no one can define that value except the person making the decision.

[FlyinHeadlock 458]

1 minute ago, Strike said:

Yup.  You can do the math and it will tell you not to pay off the house, but there is value to the piece of mind of not having a mortgage payment, and no one can define that value except the person making the decision.

Great point on what one values more. Some people don't value being debt free. My brother in law is a high dollar investment banker and doesn't value it at all but that's because for him, it makes no sense to pay things off when he's making more interest not doing so. He doesn't own anything because paying it off he loses money. Not many people in that scenario.

[Cdub100 3,134]

Thought about taking money out and buying a couple rentals. 

[Alias Detective 1,085]

45 minutes ago, IGotWorms said:

Yeah I think it was really irresponsible of the federal government to encourage people to raid their retirement accounts. You cannot think of it as a current source of money, it’s for retirement only.

As opposed to raiding their money more with an additional 10% wack?  Fake lawyer and fake money guy too.  You suck at the game of life.

[BufordT 365]

1 hour ago, lickin_starfish said:

Someone talk me out of taking a withdrawal from my 401K to pay off my mortgage. Right now, my only bills are the mortgage and utilities, with 7 years left to pay on it.

Anybody else taking advantage of the CARES Act for this?

 

I wouldn't mind pulling out a few thousand but I haven't really been affected by the covid.  You need to be adversely affected in some way by the covid to pull the money out to avoid the 10% penalty.  And don't forget you still have to pay income taxes on whatever you take out....you can spread it out over the next 3 years though.

[FlyinHeadlock 458]

58 minutes ago, Cdub100 said:

Thought about taking money out and buying a couple rentals. 

Man, if you are thinking about being a slumb lord I behoove you not to do it unless you truly know what you're getting into. If you do disregard, no disrespect but gotta have the thickest of skin. I did it. Thought I had thick skin being an old Marine. I do not. Awful. Some good tennants but also bad. Like total shitheads of the planet bad that clean up nice to get what they want then morphed into the fvcking Ridley Scott Alien family.

[Cdub100 3,134]

2 hours ago, FlyinHeadlock said:

Man, if you are thinking about being a slumb lord I behoove you not to do it unless you truly know what you're getting into. If you do disregard, no disrespect but gotta have the thickest of skin. I did it. Thought I had thick skin being an old Marine. I do not. Awful. Some good tennants but also bad. Like total shitheads of the planet bad that clean up nice to get what they want then morphed into the fvcking Ridley Scott Alien family.

I use a property management company. I would never manage the property myself.

[Cdub100 3,134]

2 hours ago, BufordT said:

I wouldn't mind pulling out a few thousand but I haven't really been affected by the covid.  You need to be adversely affected in some way by the covid to pull the money out to avoid the 10% penalty.  And don't forget you still have to pay income taxes on whatever you take out....you can spread it out over the next 3 years though.

You have to self certify. So I wouldn't worry about the 10% penalty. 

[NorthernVike 2,078]

4 hours ago, Strike said:

Yup.  You can do the math and it will tell you not to pay off the house, but there is value to the piece of mind of not having a mortgage payment, and no one can define that value except the person making the decision.

This is fact.  

It does however free up cash to over spend on toys.  

[FlyinHeadlock 458]

1 hour ago, Cdub100 said:

I use a property management company. I would never manage the property myself.

But they don't go to court for you. I read the fine details on those companies. If it hits the fan you are on your own. Still going to need a lawyer. All they do is collect and inspect.

[Cdub100 3,134]

Just now, FlyinHeadlock said:

But they don't go to court for you. I read the fine details on those companies. If it hits the fan you are on your own. Still going to need a lawyer. All they do is collect and inspect.

They do a lot more than collect and inspect.

[FlyinHeadlock 458]

Some do I guess..meh. I was going to hire one but I read through a bunch of them and that's all they did for like 1K a month.

[Cdub100 3,134]

5 minutes ago, FlyinHeadlock said:

Some do I guess..meh. I was going to hire one but I read through a bunch of them and that's all they did for like 1K a month.

1k is a lot most take 8-10% of rent. 

[IGotWorms 2,863]

14 minutes ago, Cdub100 said:

They do a lot more than collect and inspect.

None that I’ve ever seen

[Cdub100 3,134]

1 minute ago, IGotWorms said:

None that I’ve ever seen

I guess I have a good one.

[IGotWorms 2,863]

1 minute ago, Cdub100 said:

I guess I have a good one.

You must. A lot of the ones I’ve seen it’s basically a racket. Not a horrible one since you don’t have to deal with all the administrative crap and record keeping, but at the end of the day they don’t really DO much.

Could be regional too I suppose.

[Cdub100 3,134]

Just now, IGotWorms said:

You must. A lot of the ones I’ve seen it’s basically a racket. Not a horrible one since you don’t have to deal with all the administrative crap and record keeping, but at the end of the day they don’t really DO much.

Could be regional too I suppose.

Mine finds renter, takes care of repairs, collects rent, deal with pretty much all the issues to include minor maintenance. I get calls for major repairs

He takes half of the first month's rent and 10% of the monthly rent.

[FlyinHeadlock 458]

I guess I just had worse case scenario. Never again. Could have made a Annabelle fvcking horror movie out of it. I even screened them through a police officer, did a credit check, ref check last employer. I was actually pleasantly surprised when I did not find body parts in the fridge.