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)
People thought cybersex was a safe alternative,
until patients started presenting with sexually
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,
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.
You can only borrow from the 401k if you're still working for the same
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59-1/2, so would have had to pay the 10% stupid tax if I'd withdrawn the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
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
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
On Sat, 26 May 2012 01:13:17 -0400, " firstname.lastname@example.org"
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
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......
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
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.
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.
In some ways. In others, we're right back there, without the inflation but
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.
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.
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.
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...
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.
-- 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.
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.
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.
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.
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
You have to research your cards of course and the only way you win is to
NEVER pay a cent in interest.
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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