Am I crazy ...?

[RobJob]

:o for considering borrowing what's left in my 401K and spending it on something that helps me be more self- reliant and paying myself back at 7.5%. We're not talking a huge amount of money here. I could pay my few little bills and maybe put in a good irrigation system with some solar assit or something. With all the talk about coming inflation it seems to me that puting that money to work now and paying it back with inflated dollars makes some sense, doesn't it? Obviously, I'm no finacial genius but some of you seem pretty astute.

[johnjmw]

RobJob, you do know that if you leave the job for ANY reason the total outstanding loan has to be paid in full or it is considered a withdrawal and taxed accordingly. (usually about 50% after taxes and penalties) If you were to get laid of or quit or get injured and not be able to work would the bill be able to be paid. I went to a finance seminar and they said this is usually a mistake to do. Though it is very tempting after seeing it drop as hard as they have.
John

[Michael32170]

The early withdrawal penelty is 10%. If you use the money to pay offyour house, the interest you save will pay the penelty with 1.5 years.

But, you always need to keep a reserve. That's what the 401(k) is good for. Unless the democrats succeed at taking your 401(k) ( as they are talking about) and mold it into social security.

One thing to remember, ( as statement I predictded 10 years ago) your retirement savings is way too big of a pile of money for the government to leave it alone. Eventually, they will figure out a way to get their hands in that pocket, too.

[gump]

The early withdrawal penelty is 10%. If you use the money to pay offyour house, the interest you save will pay the penelty with 1.5 years.

But, you always need to keep a reserve. That's what the 401(k) is good for. Unless the democrats succeed at taking your 401(k) ( as they are talking about) and mold it into social security.

One thing to remember, ( as statement I predictded 10 years ago) your retirement savings is way too big of a pile of money for the government to leave it alone. Eventually, they will figure out a way to get their hands in that pocket, too.

I agree with that statement.

Robjob -

I would pass on the idea. Get a second job and use the money from that to fund self-reliant purchases and to pay off bills.

Besides, your thesis is based on a surge in inflation in years to come. The current environment is deflationary in which case a consumer would delay purchases as prices erode. In other words, you say put $ to work now but prices are coming down.

[RobJob]

Thanks for your comments. I will probably just let it ride. I have actually borrowed against it before and paid it back with no problems. After all, I was paying myself the interest. Usually when I borrowed against it the economy would take off and I was stuck making only the interest I was paying back. I have a pretty secure job and not worried about being able to pay it back. Saying that, we just got word that we will all have to take five days unpaid leave during the next six months. After that who knows.

I think I will wait till things bottom out before making any great leaps. Who knows what deals may be had for those that have some cash. Thanks again for your sound advice.

[jdqtrhorse]

But, you always need to keep a reserve. That's what the 401(k) is good for. Unless the democrats succeed at taking your 401(k) ( as they are talking about) and mold it into social security.

Has anyone heard if they are including IRA's too?

[gump]

Has anyone heard if they are including IRA's too?

Not to my knowledge. I think if they go after anything it will be 401ks. Roth IRA, my funding priority, are after tax dollars contributions so you have already paid the man.

[bassntrout]

Don't borrow-- lower contributions or suspend them. The taxes and penalties just aren't worth it . . .