3 Ways You May Be Throwing away money without realizing - Article about taking from retirement accounts

Just saw this article and thought of the thread the other day where Ave said not to take from a retirement account.

http://finance.yahoo.com/news/3-ways-may-throwing-money-175718513.html

Message edited 9/29/2013 11:20:57 AM.

3 Ways You May Be Throwing away money without realizing - Article about taking from retirement accounts

like!

Re: 3 Ways You May Be Throwing away money without realizing - Article about taking from retirement accounts

You have to do whats best for you.

For DW and I, this is the second time doing this. The first time we took the the tax. It was a small amount (couple of grand), put us over the hump. We were young and needed help.

Second time around (6 months ago) we took money out to take advantage of the lowest interest rate we will ever see 3.25%, live in a nice area and we borrowed (basically 0% loan) on the 401k and we are monthly, paying our account back.

The article assumes (and Ave) you taking the plenty and tax hit. We are not lucky to make enough to spend money on retirement and were living for now. Even we purchase our house, the house has equity already as we got a short sale. As of now, our house is our largest asset + we are paying our loan on the 401k. Could we have made better choices when we were younger...of course sure but now that I have to worry about tomorrow, we are making very informed decisions.

Re: 3 Ways You May Be Throwing away money without realizing - Article about taking from retirement accounts

Re: 3 Ways You May Be Throwing away money without realizing - Article about taking from retirement accounts

When I worked they would also have financial planning classes for us and this was a big no-no. Even though you are paying yourself interest, the gains you lose in the market are much greater than the interest you pay yourself.

Re: 3 Ways You May Be Throwing away money without realizing - Article about taking from retirement accounts

As a homeowner, I also think it's important to do a lot of thinking before even getting involved in buying a house.

It's not the same as just renting, even if the mortgage payment is close, which I feel is often people's financial justification.

Personally, I often think we ended up buying a house when we did, because everyone else was doing it and it was the next expected thing in our relationship.

In retrospect, I bet we would've gotten a much better deal if we had waited.

With that said, I too question if people know what they are getting themselves into if they have to borrow down payments from retirement or similar.

I also see lots of threads where people bought a house but can't afford simple upkeep (I'm NOT talking major renos) and lately even feel like the previous owner "owes them" if something normal goes wrong in the house.

Buying a home is not an emergency situation to take from retirement IMHO.

I also don't always understand the "you have to do the best thing for you financially" argument. I get it when applied to certain not-necessarily house purchase situations, but frequently, I feel like it's still being used as a justification for people who are in over their heads.

Disclaimer: this isn't directed at the person who said this, but I am thinking more of people I know IRL who ARE over their heads and say this stuff all.the.time.

Message edited 10/30/2013 5:29:10 AM.