Good news for a change (housing)

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IRA's can be used for down payments but NOT for mortgage payments. So, unless the owner has hit 59.5% years of age and can start pulling money out, the biggest reason not to use an IRA for this purpose is the 10% off the top haircut. (NOT a CPA but coming closer to 59.5 years old)
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wrote:

about now as I have not checked) you could borrow money out of it and while you payed interist, it was back to you.
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On Fri, 25 May 2012 09:51:47 -0400, "Ralph Mowery"

Yup. I pulled about 20k out of mine to pay down the mortgage. I never quite figured out if the paid back interest also allowed more than "max" untaxed contributions. That's also something that needs thought and a back-up plan. If the investment is earning less than the mortgage is costing, like the lousy money market fund my employer had, it works. But if you leave the employer for any reason, it has to be paid back pretty quick (30-60 days?) or you'll pay the early withdrawal penalty, and taxes. My backup plan was to open a home equity line of credit for the loan amount, so I could cover it if I got fired/laid off.
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On Fri, 25 May 2012 09:39:47 -0500, Vic Smith

You can only borrow from the 401k if you're still working for the same company.

I borrowed 10K, once, just before I was laid off, as a buffer. I wasn't 59-1/2, so would have had to pay the 10% stupid tax if I'd withdrawn the money. This way, I had access to it but didn't have to pay any tax. I've left the rest sit there because the charges are incredibly low (like zero, for most instruments).

AFAIK, loan pay-back is completely separate from contributions. It depends on how the 401k is set up, whether you get the interest, or not.

I have a hundred or so choices of investment instruments. Currently I'm in some pretty good bond funds. They've been really solid for the past seven or so years.

Not true, at least not an IRS rule. I did it (see above) with no penalty at all. If I hadn't paid the loan on schedule, I would have had to pay the penalty.

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On Sat, 26 May 2012 01:13:17 -0400, " snipped-for-privacy@att.bizzzzzzzzzzzz"

You're correct. Looking it up, that's a "rare" case, so everybody has to look up the rules for their 401k. Since mine said it had to be paid back in total in 60 days, I opened the line of credit. Probably would have done that even if I could pay back on schedule, as you could. I took the shortest term loan possible, and the payback took a good chunk out of my paycheck. Without a paycheck, and no backup plan, a good chance I would default, and have to pay the penalty and taxes. You always need a backup plan for any action where no plan can screw you. Unless you're okay with getting screwed, which works for some people. Look at all those people carrying a credit card balance. I know plenty, and they're living happy. I never tell anybody how to live their life. And even the best laid plans......
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On Sat, 26 May 2012 11:13:32 -0500, Vic Smith

I took the five years to pay it back (interest going into my account), so it wasn't a big deal. I did take nine months off (had a six month severance package + retirement), before I went back to work. I ended up taking a three-month contracting gig for big bux. ;-) A year later I quit that for a real job (at less than half the money) because contracting was otherwise too limiting.

I'm kinda out on a limb now. I'm a little nervous about having two mortgages, but I can afford it.

I wasn't (happy about carrying a balance) and won't any longer. I do borrow money, when it's free but I can pay it back immediately, if necessary.

Nope. Too Democratic. ;-)

That's the truth.
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One of the best deals I had was on a car. I had the money to buy one for cash, but did not really want to use that money. At the time my credit union was paying 4.5% on a money market account if you had so much money in it. At the same place a car loan was 3.8%. so I was making .7% by having them pay for the car out of the money market account and I did not have to do a thing.
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On Sat, 26 May 2012 15:06:07 -0400, "Ralph Mowery"

now. ;-)
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In some ways. In others, we're right back there, without the inflation but that's coming.
When we were looking for our first house, the interest rates were 18%. *Scary*. By the time we found a place, the rates had "crashed" to 14.5% and we were tickled pink. We refinanced at 10% and thought they would never again drop lower than that.
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On 5/23/2012 6:42 AM, Doug wrote:

I'm more of the accountant here and I can't come close to a payoff. I wish my wife had the financial sense yours does. We could be well on our way to that type of independence. It's just not important to her.
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On Wed, 23 May 2012 08:17:39 -0500, gonjah <gonjah.net> wrote:

Well, we were pretty thrifty then considering our salaries. I still think we live modest tho not as much as then but we had good reason then... 2 daughters in day care and who eventually went to college.
Try to teach your wife the importance of your later years. I can tell you that you won't believe how important it is when you retire and have no job and that's assuming you're still in good health. SS benefits aren't enough, in my opinion, to live comfortable. I speak from experience because my wife and I are about to retire and I wrote up a detailed spreadsheet on our income and expenses (based on actual banking not my guesses) and I have a good picture of what it will take for us to live the same lifestyle including paying for our health insurance. Personally speaking, the spreadsheet took me a long time to write because I had to read a lot of banking statements, etc.. but once I had it written, it has saved me a lot of time with questions that arose later.
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On 5/23/2012 1:16 PM, Doug wrote:

Good advice for anyone.
We do have a retirement plan and, IMO, we're planning much better than most. She wants to enjoy life now while she's still young. I really can't argue too much with that because she makes good money and does have a sizable 401k.
She does appreciate the basic things I've done to keep us out of debt like no credit cards etc...
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"gonjah" <gonjah.net> wrote in message >

If you can handle it, credit cards from some banks are the way to go now. I charge almost all that I can. Then pay it off at the end of the month.
The way I keep up with it is that when I buy something on a credit card, I put that down in the check book just as if I had written a check.
The reason is I get back 1% on everything and up to 5 % on some things, plus I can buy store gift cards from the bank at a discount.
Some stores give discounts if you charge using their credit cards. I think it is Lowes that gives 5% off now.
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-- X-No-Archive: Yes On 5/23/2012 1:43 PM, Ralph Mowery wrote:

I VERY reluctantly agreed to an American Express card because we travel. It gets paid off monthly but it still scares me. I have *one* card and it's in my possession. That's the agreement. We get 1, 2 0r 3% back at Costco in addition to the 2% back for exec membership.
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On 5/23/2012 2:43 PM, Ralph Mowery wrote:

I only use a single credit card but my wife has a dozen. Does not matter as we pay off all at the end of the month. Do it for the benefits and need not to have to carry lots of cash.
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On Wed, 23 May 2012 15:18:29 -0400, Frank

For years I carried only one like yourself until after 20+ years, the card screwed me over. Long story short, they sent me 2 letters of apology for their errors but while they did, I got a 2nd card from another bank just in case this ever happened again. It hasn't but I don't want to go thru that again. I wish I could tell you all the details but it would take 3 or 4 paragraphs but you get the point.
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On 5/23/2012 4:40 PM, Doug wrote:

I do have my name on some of the cards my wife carries but I only carry the one, but you are right, it happened to us out of town that one card the wife had was not accepted while another one was. If by yourself, out of town, it probably is good to have two cards with you.
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On Wed, 23 May 2012 18:41:19 -0400, Frank

Ok, let me say a little.... we (my family) were going to Hollywood, Ca. and because of all the past mistakes, I decided to tell my CC people my vacation itinerary (which I normally would not do) and they assured me everything was going to be okay. I got screwed right at the front desk of the hotel upon check-in and this was the hotel right next door to the Kodak Theatre so it was no cheapee. Talk about being a bit embarrassed, I had two choices, call the CC to fix or use my daughter's card who was in college. She wanted the points so I let her use her card. When I got up to the room, I called the CC and really laid it on them (everything short of cursing) and I threatened them that if it happened one more time even after 20+ years with them, I would just drop them immediately. They and I knew my credit was excellent and they knew up to that point I had been very patient with all their past mistakes and reassurances it was fixed only not to be. I even said I hope you "are" taping this conversation and take it to your supervisor. After that threat, they got their act together with 2 written apologies mailed to my house. I learned my lesson tho about only having one card.
Its funny too because right after I returned home, I went to my bank and told them the story what happened to me and that I wanted their CC as a replacement. I also told them that if they didn't give me the credit limit I wanted, don't bother giving me the card as it would be no use to me and that I already had this limit on the old one. Guess what, the banker told the guy on the phone I was ok and I walked out with the credit limit I wanted.... no questions asked. I never had such an easy time getting a CC. I never actually got rid of the first card (both Visa) and now added a 3rd card (MasterCard) for places like Sam's Club that don't allow Visa.
Sorry for the long story.
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On 5/23/2012 2:43 PM, Ralph Mowery wrote:

I do this. But I pay the card off at the end of the week. Save all the receipts then whack it every Friday or Saturday. And just like you, I keep a ledger book with all transactions.
We use a credit card that gives us 2% of everything back towards a car purchase. Since it can be used for used cars, and is redeemed AFTER you purchase the vehicle, dealer knows nothing about it.
Before the credit crises they used to offer interest free cash advances, with the interest free period being 6 months. So I'd write a cheque to myself for $10 000 on that charge card then invest in a 4% (annual) certificate then pocket the $200 and pay the credit card on the last day of the 6th month. I don't think it was as high as $10 000, but most certainly $7500 or higher. Now the credit card companies don't do that anymore.
You have to research your cards of course and the only way you win is to NEVER pay a cent in interest.
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You sound like my brother in law as he did stuff like this. I never had the patience to get into it that much so I just watched him in envy. But I didn't do so bad as I got cash back which was enough to pay 2 CC bills couple years ago and I always paid my CC bill before it was due so I never had to pay interest. So maybe I wasn't as good as my brother in law but I think I did okay.
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