The Jalopy Journal
Discussion in 'The Hokey Ass Message Board' started by low budget, Oct 27, 2019.
Speaking from experience here.....thats the best money you will ever spend.
Start a new life.
Robert Kiyosaki wrote simply, "An asset puts money in your pocket. A liability takes money out of your pocket."
I had never heard it quite explained to me that and honestly it changed my entire financial view. I had always heard "your home is an asset". But when I thought about what Kiyosaki wrote, it all made a lot more sense. I owned a home, cars, tools, guitars.... but it was costing me money. None of those are assets. They're all liabilities.
As a general rule, borrowing from a 401(k) or Roth IRA is a terrible idea because of the tax implications and any penalties. But there are obviously exceptions to that rule and different circumstances present themselves. It's not a decision that should be made lightly, and frankly, should be made only after speaking to a knowledgable financial expert regarding the implications.
That said, typically speaking, hot rods make for terrible investments. They don't naturally appreciate in significant amounts. Second, if they can be rehabbed and sold for profit, what is the value of the labor for which it took to get it there? It's not really an investment if it's technically a second job. Third, even if they do appreciate, what is the percentage yield over what could have been done with the money in a different investment class? Not all of the wealthy people I know have collector cars. But all of the wealthy people I know own stock and real estate.
Now 80, been drawing from it since I was 70-1/2 never before. I can't advise you because I have no idea what your financial situation is.
I can tell you however what my thoughts were when I was tempted to draw some for a car.
Only do so, if the car should have to sell in the future, and will bring at least what you pay for it. My experience is, that you do not know what the future holds for you and your wife in the health field. I know from recent experience how costly even with medicare and AARP supplement ins. can be.
Make sure if you go ahead with the sale that the car is a desirable one, not some off the wall thing, but one that will sell fast. Also consider your wife may be left here while you go meet your maker. She may end up having to sell also, and may need help in getting what the car is worth. (at times for many she may be of limited mind.
For me at the time the decision was, no, the unknown far out weighs the desire for another car. My financial future belongs to my entire family, wife, daughters, & brother. I simply can not jeopardize their well being with a selfish desire for another car.
^^^^^ well said!!
My wife and I retired 2 years ago. We are both 66 years old. we are both drawing SS and I have a 35 year pension that equals our SS and has full medical, dental and vision included. we were able to invest in iras (both of us) all along and have a substantial nest egg that we haven't needed to touch at all...all that being said, im fixin to draw about $35,000 out soon to pick up another car. then prob sell my tudor....
Interesting....all kinds of different approaches to life and priorities here. I'll keep my business to myself but reading this may possibly open up some avenues I hadn't thought about.
But I will second those who advise that you can't take it with you, so enjoy the ride (of life). I'm sure all of us who are past 65 have been shocked by the rising number of friends and relatives who have been taken out too soon, usually by the dreaded Big C.
You plan for living into your 90's, but the odds are not in your favor, regardless of what you think . . .
Here's some of my thoughts, You only live once and if you want a Hot Rod or Whatever, go buy it as life is a one shot deal. If you can spend some money on what you want without losing the farm, Buy it, Enjoy it, You Earned it. I have seen this all too many times, man works hard, saves, invests, sacrifices his interests/passion for wife/family and then he dies early and I'm betting on his deathbed lays there thinking/talking about what he woulda/coulda/shoulda done. DO Not be that man. Almost without exception I have seen the wife spend it on her next boyfriend/husband, the kids spend it on their interests and hopefully they all will say, Husband/Dad was a good man. IMO that's about all any of us can hope for as life goes on, the Sun will rise and set without us. Whatever we have accomplished, love, family, enjoyed, memories is all during one's life, It's not just about money, the scorecard when you check out. When your Ashes are cold or they throw that last shovel of dirt over you it doesn't matter if you had a dollar, spent a dollar, owed a dollar. It's The Trip/Adventure not the Final Destination.
Couldn’t of said it better myself
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I agree to a certain degree that the mantra of "you can't take it with you", but the reality is none of us know when we're going to go, whether it be early or very late. My wife is an elder law attorney and time and again we have seen clients who didn't properly plan for retirement or long term care lose big time, usually with the government or nursing homes taking their life's savings. While I can understand the notion of spending in retirement without concern as to the value of the estate being left upon your passing, I think we can all agree we don't want everything we worked for in life to go to the IRS upon our death.
That being said, I think we all know at least a few people who despite having good jobs and earning a decent salary somehow don't have a pot to piss in or a window to throw it out of, where you ask yourself when you see them, "where did all the money go?". I think this conversation more falls in line with that sentiment. Can you draw from a 401(k), IRA or Roth IRA to buy a car? Sure you can. Is it a good idea? More likely than not, no, it's a really dumb idea. For the most part, we're all a couple stupid ass financial decisions away from the bread line, so the conversation is worth having here.
If a truly smoking deal came along where I needed to raise capital real fast to make a deal happen, I'd sooner take a HELOC than take an early draw on a 401(k). I watched a person I know take an early draw on a 401(k) to put a Whipple supercharger on his new Mustang. So let's do some math; Supercharger was $8000. He's now being taxed at roughly 30% for the income, so $2400. Then he takes an additional 10% penalty for withdrawing early, or $800. So the $8000 supercharger wound up actually costing $11,200 because of how he funded the deal. Then he traded the car in a year later for the same price as it would have gotten if it was bone stock because dealerships don't give a shit about your mods. That's not dumb, that's fucking asinine.
If you have a tax-deferred IRA and you make any kind of substantial automotive purchase, the draw is going to put you into a higher tax bracket in the years of your life when the IRA was designed to keep you in the lower bracket. That's counterintuitive.
Unless you have a really strong understanding of economics and most importantly, the tax code, this is not a decision you should make without consulting a professional. The couple hundred bucks you spend for sound advice may save you thousands.
Asbestos Traveler's Checks - I'm still working on the details...
Any one know how to make my traditional crystal ball work. It would really help.
I replied earlier, but having read all this, I've reconsidered, I have two cars, I've always financed them out of my pocket, and my nicest car (truck) has taken 20 years to get to the state its in now. But had I borrowed to complete it, I'd have had the high buck treasure I got much sooner, my rpu is my fuck around, modify as I see fit car, and I'd still have my health to enjoy it. HOWEVER, I did not know that would be the case, and wasn't willing to gamble on it at the time.
BUT, this year we did take a whole raft out of savings and bought Mrs Troll a new Wrangler, and both of us a new travel trailer, to the tune of 80 grand. Because now, I know that time is limited, I don't want the gov't to get my money and waste it, my kids can work for theirs just like I did.
I suppose in the end, it don't matter, I got enough to last me, but got a friend who don't and he lives it like there is no tomorrow, credit cards maxed, robs from peter to pay paul, and has a good time doing it. He says when the dirt nap comes, none of it will be his problem, and he's bent on the here and now. I envy his lack of responsibility, but I'd not like to live his life. After reading all this, I'd say there is no good answer, the right choice is yours to make.
Travel trailer and Jeep Wrangler are both for sure depreciating assets. A sure way to lose your ass. Your money your choice on how you spend it.
A hot rod is not something you can buy cheap to retire wealthy someday.
A hot rod is something you spend the cash your heirs are counting on so they can inherit just the hot rod and sell it for half what you put in it.
I hope it's clear now. This is not rocket surgery.
Very well stated IMHO!
I think it actually depends on personal situation.
Age, income, savings ,health....depends.
When I had some health issues, I was old enough that withdrawal didn't come with penalties and it was nice to have enough to supplement short term disability w/o raising taxes as to what I'd normally pay.
When the ins wouldn't cover needed surgery for my wife, it was nice to have it available, while a rod in the driveway wouldn't have done any good.
Now that I've retired, all my saving and investing has paid off, I'm comfortable,debt-free, and am looking to use some for purchases I want. Oh Yea, I had a good time through the years also
Only each person knows their own situation.
Your dad's plan is how you get gobs of money. Then, you don't need to hit the 401K
Let me finish my thought completely before you tune me out...
If a friend asks me to borrow him/her money and I do, in my mind I consider it a gift. There is a good chance I will never see that money again. Remember I said in my mind it is a gift, that's not part of the agreement we made.
Withdrawing from your retirement account is, in my mind, the same as borrowing to a friend. That is gone money.
You can try to justify it by saying you will pay it back or the car is an investment. If you have to talk yourself into it then it is probably not a good idea. If you have to ask here it is probably not a good idea.
Taking a loan against your TSP or 401k is something completely different.
I turn 60 next year, 2020. I have been retired for 3 years and have not touched any of my investments, yet. My house is paid off. My needs are few and met. I am living, good, OK, on my little pension. All I have to fall back on is my retirement savings and I will not go back to work for anyone else, ever again...
If I dig into my retirement savings I will consider it pissed away money, never to return. I will have no one but myself to blame if I end up needing that money and it is gone.
There is no one size fits all to this question...
Rods and customs are the exact opposite of an investment.
Save for a few boutique vehicles, which only a very few on this board can afford, buying, or building one, is a money losing proposition.
Even owing a car business is likely to be a money losing experience, save for a select few.
After reading some of these posts, it appears that 401k plans differ quite a bit. I only know about mine. We have the option to borrow a certain percentage for any reason, they set the interest rate that you pay to yourself, you can vary the duration. The payments are deducted from your paycheck the same as your contribution. There are no tax considerations but there is a small fee. You may lose some earning potential but you do minimize that with the interest that you pay. It's not the best idea but not the financial disaster that others describe.
What's a 401k? I look at my car and parts collection as my financial plan.
Most of those plans demand 100% immediate payment if you leave the employer for ANY reason including layoffs, terminations, etc. That is one form of "financial disaster" for which you should plan.
Very true, but I've got one of those jobs that you don't voluntarily leave before retirement. I may be wrong but i dont think layoff counts for my plan. I've got 25 years in and you would have drag me out of here with a team of mules!
Terribly good bad idea.
Give yourself some credit for the desire to want a better ride but now work smart and get it!
Then you are probably in more trouble than you know.
What if your company closes on you? Big manufacturer here closed shop suddenly-hadn't paid people's health care premiums, people couldn't access their retirement accts., zip. Upstanding owners who belonged to boards like the hospital and United way-turnefout to be not so upstanding. Unless you've got a six or seven figure retirement package, I'd leave it alone.
The OP is talking taking a cash out or withdrawl...
Like I said not a good idea.
I definitely wouldn't do that.
I was wondering the same thing what is a 401K- must be a highway but I've never been on it??
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