Looking for serious advice.. Should I sell my Truck? Struggling.....

I don't care what the Dow closed at today. Historically, he should safely expect a 7% return on his 401k.

Let's say for the sake of argument that he takes out $20k from his 401k today. Assuming he's in a 15% federal tax bracket (assumption that he's not in a high income bracket, and has 2 children currently), he'll be paying out almost $7k in taxes and fees, and is left with $13k.

Now the kicker... Let's assume he has 30 years until retirement. That measly $13k he walks away with today is over $150k he would have had when he withdrew his 401k at retirement. If he has 35 years left, that's almost $215k he's not retiring with.

No, I don't need an MBA, nor do I care about the current state of the stock market. Taking out of your 401k in a non-emergency situation is DUMB.

 

My few thoughts

• Pulling (self loan) from 401 isn't necessarily a bad idea based on differential interest rates. This is a loan you pay back, not a withdrawal.
• Last option ever is to stop contribution to a match program from employer.
• If student loan interest is stupid low, i.e. 3% or lower, carrrying it may be better than paying it. Consolidate it to a 10 yr low interest and pay at the higher rate as you can. You can lower your monthly bills by pulling back if necessary.
• If the Tacoma works for you for the next few years as a family vehicle, tough it out and it'll be paid for and you can then work on the wife's vehicle as the primary family car.
• If the Tacoma interest rate is over 5%, check refi options. Between 2 and 5 you won't gain much by refi unless you really extend the note. If lower than 2, you aren't going to beat that used.
• If the Tacoma doesn't work for you as a family vehicle, then swap out for another reliable family vehicle and take the $5k equity hit.
• Keep that cash handy and when the Taco gets to a lower number, i.e. 5-8k, pay it off as long as you have cash left. I'd much rather see you pay off the last 10k with cash than the middle 10k with cash.

 

This 7% is averaged over a very great timeline, we’ve had swings in the 30%’s in both directions from YoY results in recent history. What I’m saying is that it doesn’t take much insight to see that we’re riding another wave. Does that mean irresponsibly pull from your 401k to buy dumb shit? Of course not.

You’re more than welcome to bump this thread on March 9th 2019 and if the DOW is above 25,335 then I’ll gladly PayPal you $100.

Also, a little bit of understanding there is a difference between 401k loan vs a withdrawal goes a long way.

To repeat, I do not suggest pulling money out of retirement to buy bullshit. But the pinch he’s in is enough to where he’s not even taking an employer match. So yes, take from your 401 when the market is at a screaming high. He’ll not only be able to capture gains but come out on top due to accelerated re-investment from self-loan replacements and by getting his employer contribution fired up again.

Let’s be honest with ourselves, this isn’t ferrarichat.com or rennlist.com, it’s a fucking Tacoma forum. This is the epitome of the most fiscally responsible vehicle one can purchase. It sounds like the OP isn’t a dummy at all, what he’s in is a temporary and minor hump, the fix actions he suggested may be stepping over a dollar to get a time.

 

So OP. @Kamille.bidan

Thoughts?

Or are you going to leave us hanging?

 

My fault for half-ass reading the original post and comments. That's what I get for having a few drinks after work and then reading through this post.

Rereading it, and seeing your comment, I understand your point. Agreed that we could see the stock market continue this path up, but I think you're right that it's well overdue for a correction.

I don't know the tax implications on borrowing against a 401k vs pulling money out. I thought you had to pay a percentage of tax on the loan money you get, but I'd be guessing at how the math worked out (10%, maybe?).

Sorry for the confusion, and yes, I see the logic with your argument.

 

pay off that student loan.. Thanks to AGENT ORANGE no more deductions on student loans. get back in the 401k Company matching is GOLDEN. you will be surprised how fast senioritous creeps up on you

 

IMO this thread is off the rails, I'm subscribing to wait and see some guy attempt to give justification for an early withdrawal from the OPs 401k for a lift kit or a nice set of wheels while he's already behind...

 

Fair enough, sorry for digging in so hard (also many beers deep). But I’ve never heard of a 401k self loan that has tax implications and typically even the interest paid is returned back to the fund minus some nominal admin fees.

If we were in a market slump I would highly advise against lowering positions as losses are immediately realized of course.

But yes, you are correct that early withdraws from a 401 are a bad move. Early penalties and the tax implications aren’t good at all.

 

Park it under the bridge with keys left in it. Problem solved.

 

"If you're going to take out 25k may as well take 30k"

 

The student loan interest adjustment remains in the new tax law.

 

40k, F it

I'm out of this thread....OP, do what you know is right. Good luck to you.

On a personal note, I had a vasectomy after two kids. Everything works as it should, feels the same, and all is right in the world.

 

You bought one of the most common trucks on the road. There will always be more. Sell the truck, pay off the student loan.

Debt and taxes are the killers of wealth.

Get what fits your family and budget. Once you have okay money, you buy another truck.

Coming from a guy that has more money in savings than the value of his play truck and has the title to Tacoma.

Also the same guy that paid off $12,000 of student loans and $10,000 of overdue and delinquent credit cards but they don’t teach financial management in high school. Free beach towel? Sure, I’ll sign up for a discover card at 15% interest.

 

I would sell my taco 10 times before I gave up my employer’s 401k contributions... especially at a younger age, that (small) amount of money your employer matches every pay period reallly turns into a nice nest egg come retirement...

 

dude. you are doing fine. At 35 you are doing better than most at 55. When you get that money pay off student loan asap then any left over put on truck. Do not stop paying into 401k if company is 50% match. max that out. After you pay down with the cash you talked about and no student loan keep paying normal monthly n truck and it should be paid in 2 years. then you have great transportation paid for and still pretty new.

 

I never understood the whole Uber or Lyft thing. If you need a side hustle McDonald's is always hiring and you won't have to worry about drunks barfing in your truck

 

I'm about the same age, I know people with way less than what you have in retirement savings and some with 10x as much. All you can do is keep going and as everyone else has said always max out your employer contributions.

As far as type of vehicle. We also have 3 kids. We have had the Honda Odyssey for 6.5 years. During that time our 2nd vehicle, the one I primary use to get to work and back has changed many times. This included a Tundra and now a Tacoma. They both don't come close to how nice and easy a van is to deal with 3 seats. I've had 3 in my Tacoma now and it's doable, but I wouldn't want that as our primary 3 kid vehicle unless absolutely had to.

 

True but if he got it not long ago rate was probably good. When I was in school raters were stupid high. And I know a lot of people who didn't realize they could refinance for a lower rate

 

I agree, my truck loan is 1.9%, student loans are for sure higher.

But again OP, if you want true advice, then please give us more info.

Tax laws did change, but it's my understanding the student loan deduction did not get removed. Al, you folks telling to pay off the student loans, do not know enough information t make the s suggestion.

?s to be answered
1-rate of truck loan
2-rate of student loan
3-what would you replace the taco with.
4-what is the financial loss of dumping the taco? (Trade versus private sale)

My opinion, if the wife's ride is good enough for the growing family, keep the truck and figure out the best way to make your money work. Maybe refinance the truck, maybe refinance the student loan (becameful with this, you might loose the tax benifits)

 

Caveat: we need to know your income to give better advice

If I were you:

• unload the truck and pay cash for you next ride ($5-7k old used Honda Accord )
• Pay off the student loan $6k then keep the rest of your savings in place. You got a kid on the way.

That should free up $1000+ in cashflow. That's a lot of wiggle room. That can absorb a household appliances failure, an emergency room visit copay, an unexpected vehicle repair, school supplies and new clothes for the school year, etc...without touching what you currently make.

You can save all of that and buy a new Tacoma outright in a couple years if you wanted.

What I am saying is, your vehicle shouldnt make you feel squeezed financially. It's a depreciating asset that you are spending a lot of money on. No one can afford to spend their money on things that drop in value and expect to get ahead or get wealthy.


(Side note: didn't you have issues with your truck? Maybe I'm confusing you with someone else. If you have a problem truck, thats costing you $550 a month which is straining you financially. Maybe the better question is why HAVEN'T you unloaded the thing.)