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Sleez
Posted on Thursday, December 04, 2008 - 07:11 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

ok, as some of you may know, i was laid off in april. my 6 years of 401k is just over $6000.00. i didn't put much into it, i was hoping to start adding to it after my child support obligation was through. oh well.

here is the question; if i cash it out now, to help with some buell purchases and xmas, i will have taxes witheld from it, and would get some sort of adjustment as well. but since i can no longer add to this, does it make sense to cash it out and bite those bullets, or wait until i am employed somewhere and roll it over?? ideas?? anything i am not considering??

thanks.
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Rpm4x4
Posted on Thursday, December 04, 2008 - 07:23 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

You are too young to cash it out. leave it in.
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Rah7777777
Posted on Thursday, December 04, 2008 - 07:47 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

ROLL IT OVER!!!!

if you cash out you will get about 60% of that in your pocket and to add, the economy will pick up, so when you do retire down the road it will be worth much more then what you have now.

Only cash out if

#1 you know your are not going to be around at retirement age
(but be damn sure, haha)

#2 you have TONS of money with your name on it already (but then again, it wouldnt be a big deal to leave 6k in an account if that was the case)

just my 2 cents!
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Sleez
Posted on Thursday, December 04, 2008 - 08:00 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

thanks, my understanding from the forms they sent me is that it is subject to 20% fed tax and another 10% since i am under 59.5 years old. so i would see like 4500.00.
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Slaughter
Posted on Thursday, December 04, 2008 - 08:42 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

IF you really MUST have the $$$ - consider borrowing against it. Interest rates should be STUPIDLY low right now. Don't know how much they'd let you borrow - but it might be worth considering.
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Krassh
Posted on Thursday, December 04, 2008 - 09:21 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

He can't borrow against it as he is no longer employed by the company.
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Barker
Posted on Thursday, December 04, 2008 - 09:44 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

roll into an IRA w/ some good mutual funds.

my 2¢
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Cochise
Posted on Thursday, December 04, 2008 - 09:54 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Take some sleeping pills or get hypnotized and forget you have the money in there and just "let it ride". When it matures you will be happy that you didn't take it out. Cashing out is probably the worst thing to do.
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Court
Posted on Thursday, December 04, 2008 - 10:13 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Do NOT cash it out.

You'd be better off to borrow from the shylocks in Brooklyn. That is YOUR $6,000. It's invested. If you pull it out the taxes are the least of your problem. The penalties will mean you get very little of it.

Forestall the purchases.

There is no motorcycle or xmas gift worth what that would cost you. Be mindful, depending out how old you are, you can turn that $6,000 into a heap of money.
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Sleez
Posted on Thursday, December 04, 2008 - 10:40 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

thanks all, i believe you have made me see the "light", even though i don't know at the moment how $6k will be worth anything in 20 years, when gas will be like 50.00/gallon!!

i guess i'll put off my ideas for now.
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Ft_bstrd
Posted on Thursday, December 04, 2008 - 10:44 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Good decision.

It only appears like "easy money" right now.

Unless you have an impending foreclosure or repossession, leave it alone!
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Bcordb3
Posted on Thursday, December 04, 2008 - 11:34 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

I made the mistake of taking some money from my IRA when was still working and under 59.5. I had to pay about $2500.00 in penalties, and the income tax on the amount I withdrew. That money was added to my W-2 as income, which raised my tax liability for that year and cost even more. I ended paying the feds a fortune.

To make a long story short, don't do it, it is expensive. The only reason I would it again if I was under 59.5 was life threatening emergency.
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Bcordb3
Posted on Thursday, December 04, 2008 - 11:39 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Somebody mentioned ROLL IT OVER! The best advise you can get. If you work for a company that gives you matching funds go for the max. Adjust your life style to your net income. It really doesn't take long for your IRA to add up to some big money.
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Sleez
Posted on Thursday, December 04, 2008 - 11:55 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

as soon as i become employed again, i will roll it over into something.

my thought was that if i am not currently working, the income wouldn't hurt me too much since i am going to be in a pretty low bracket this year versus previous.

but like you all say, as long as it's not an emergency, i should just leave it!!!

thank you all.
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Skinstains
Posted on Friday, December 05, 2008 - 01:39 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Hey Sleez, CASH THAT BABY OUT !!! I just cashed one out and used the money to buy the coolest stuff that will certainly be gone long before I'm 65. I'm using it for the down payment on my new Uly, I just spent like $2500 on Uly upgrades I don't even need. This is the second one I cashed in. I spent all that money on dumb $hit too. Oh yeah did I mention I'm unemployed ? They were telling me how much tax and penalties but I told them I don't care I want a Uly dammit and I'm gonna get one. If I'm fortunate enough to get another job with a 401 I will cash that one in too one day. You only go through this place one time, may as well make the best of it. Plus, what if you die at 59 years and 179 days ??? SPEND THAT LOOT !!!
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Court
Posted on Friday, December 05, 2008 - 07:16 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

>>>even though i don't know at the moment how $6k will be worth anything in 20 years

My suggestion would be to sit tight on the $6,000 and vow to learn.

I you save $1.00 per hour worked over a 10 year period from age 20 to age 30 . . . . . and I start saving $1.00 per hour worked at age 30 and save the REST OF MY life . . I will never approach the amount you'll have at age 65 from saving early.

Make a vow to yourself to study compound interest and a bit if simple investing. You, just talking out loud, could do what my youngest son did when he got a $5,000 gift from a philanthropist in CA at age 10. He, against my advise (I kept telling him not to put all his eggs in one basket) bought stock in a company he'd heard about in his 6th grade class called Microsoft . . . by the time he was in college . . . well, he could have retired.

My Dad retired in 1983 and when I bought my first HD in 1987 he bought 100,000 shares of Harley-Davidson . . I'll let you do the math but it worked out nicely.

In fact, if you took that $6,000 and hit an decent fund an d forgot it it could do you some REAL good.

If you need help . . . ASK.
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Us_uly
Posted on Friday, December 05, 2008 - 08:56 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Roll it into an IRA, NOW! Right now that money is "controlled" by your ex-employer and your ex-employer is charging you fees.

It is very easy to roll it into a brokerage account traditional IRA like E-trade or Fidelity. Their web sites make it easy. Once you get the money transferred you can invest in an ETF, Mutual Fund or stocks and you have total control of your money. Keep in mind that it must be a direct transfer between your 401k and your traditional IRA.

Another option is an IRA at a bank. They have CDs that get around 5% APR.
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Sleez
Posted on Friday, December 05, 2008 - 11:20 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

it's in a fidelity fund that is not charging me any fees at the moment.
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Court
Posted on Friday, December 05, 2008 - 12:36 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

The power of compounding can have an astonishing effect on the accumulation of wealth. This table shows the results of making a one-time investment of $10,000 for 30 years using 12% simple interest, and 12% interest compounded yearly and quarterly.

Type of Interest Principal Plus Interest Earned
Simple
$46.000.00
Compounded Yearly
$299.599.22
Compounded Quarterly
$347.109.87


SIMPLE VERSION:

If you want to retire a millionaire simply make a one-time deposit of $13,719.21 at 10 per cent interest at age 20 and you'll be a millionaire at age 65.

If you need help ASK.
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Sleez
Posted on Friday, December 05, 2008 - 12:49 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

thanks Court,

sometimes i just feel very pessimistic, i am 42 (tomorrow) with no assets to speak of, no houses, land or savings. having 4 ex wives and 2 children, one who i am still supporting via child support, i tend to feel at a loss. i end up thinking, "what the hell, i may not be around long enough to need retirement! might as well spend it all now!" i know that is a stupid fatalistic attitude, just some of my own demons to fight with.

i am not looking for any sympathy, i made my own bed, i am just trying to figure out the best way to lie in it, comfortably!?

i will start receiving my disability payments from the VA in a year or two, at 10%, it will only be 1 or 2 hundred a month, and i am hoping to put that straight into some investment. maybe i need to seek out a financial psychologist?

thanks everyone. midlife is hell!!!!
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Jerry_haughton
Posted on Friday, December 05, 2008 - 01:04 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

S.LeeZ., first off...HAPPY BIRTHDAY TOMORROW!

secondly, ya think ya feel old now? wait 'til you get to be Court's age!!

third? re-invest the dough, my friend. do NOT spend it now. put it to work for you, and then forget you even have it for about 20 years.

then..........throw a huge frikkin' all-expenses-paid no-expense-spared bash for all your brilliant BadWeB financial advisors at the Playboy Mansion!!!

miss ya, bud. :-)

FB
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Froggy
Posted on Friday, December 05, 2008 - 01:04 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Court, do you know of good resource for more info on the topics mentioned here? I am 22, and most of the stuff discussed means nothing to me. Based on your comments I need to do some research and start saving.
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Sleez
Posted on Friday, December 05, 2008 - 01:09 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Jerry,

thanks my friend, i am hoping to be invited to the mansion just due to my faithful years of support!!! hasn't happened yet though!! damnit!!

give D a big juicy hug for me, will ya'? no doubt you will!

thanks again!
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Rde48
Posted on Friday, December 05, 2008 - 01:12 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

12% interest, I would love to get that rate but banks these days rarely have rates over 5%.
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Zane
Posted on Friday, December 05, 2008 - 02:16 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

Sleez,

I'm very much in the same boat you are yet I'm excited about the future.

I'm 54, my wife emptied the bank when she left and right now have less than $500 in savings. I am $25,000 in hock to the lawyers and tax man. But I'm still able to work and can now manage my own money my way. I finally have a way to live within my means and very soon will be saving again. I feel like a kid again just starting out. We're in America for cryin' out loud.

I started out life as poor white trash. I know what it is not to have electric lights, running water and to eat out of a dumpster. Through hard work, some good decisions today I own a house eat regular have paid for vehicles and know these problems are only temporary. I also know that life is good.

Am I where I want to be? No, 54 and freshly divorced isn't how I had planned it. But I've done it once, I can do it again. This time, I'm not starting so far in the hole and I won't make a lot of the mistakes I made the first time around.

Hang in there dude, we have motorcycles. How bad can life be?


(Message edited by Zane on December 05, 2008)
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Court
Posted on Friday, December 05, 2008 - 02:19 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

>>>secondly, ya think ya feel old now? wait 'til you get to be Court's age!!


That . . . woeful as it may be, is an accurate statement.

Let me scare up some resources. The key word I'm seeing in common in some of the posts is "feeling". Simply "feeling" helpless does not make you helpless but it's damn easy to be convinced you are.

There's a bit of a science of taking and being in control of your own situation. Look at it this way . . regardless of interest rates or the economy you have $6,000 you have EARNED.

I need to confess that I am not the world's best at this stuff but I am married to one of the keenest financial minds I've ever met who, for 25 years, has been bringing common sense to places like Hedge Funds.

Tomorrow you can celebrate TWO things . . make that THREE. . .that you are 42, that you are working on a plan rather than acting haphazardly and that you have a kid to pay child support too.

Your blessings may exceed your personal inventory of them.

Happy Birthday.

Court
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Sleez
Posted on Friday, December 05, 2008 - 02:26 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

thanks Zane, keep on truckin'

thanks Court, i respect yours, and everyones suggestions!

"Your blessings may exceed your personal inventory of them."

i am sure that is true!

thanks again.
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Reepicheep
Posted on Friday, December 05, 2008 - 02:40 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)


quote:

If you need help ASK




Yeah! Tell me where I can put my money that will return 12% interest! : )


I move a chunk of money from an old rollover account out of cash and into the stock market the first time the Dow average went under 8200.

The result? I made $10,000 6 times in the last month!

(on the other hand, I lost $10,000 6 times in the last month... ; ) )

Froggy (and others), I am by no means an expert, but here are rules of thumb that serve me OK.

1) Invest at *least* as much as your employer will match into a 401k plan. I put in 2%, they put in 2%, so right out of the chute I made a 100% profit. Never walk away from that money, even if it means you are eating ramen noodles.

2) A better target for retirement is really closer to 10%. That sounds bad, but it is usually pre tax money, so in terms of what you would have in your pocket, its really closer to 5%. That's a $5 out of every $100 you make. You can do that.

3) Be a boring investor. Big "no load" mutual funds, or even just "indexed funds" (that do nothing then follow the average market movements). Put your money in, and leave it in. *Don't* be a day trader, don't chase stock tips.

4) As Court says, the best time to start is when you are young. The longer it appreciates, the more it explodes (in a good way) as you reach retirement.

Money market funds (you are making loans to banks) look safer (especially these days), but the interest you make is not much better then what you loose to inflation. They have their place (like when the market looks insanely over valued, which it did last year) but I don't think we will see that again for at least a decade.
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Court
Posted on Friday, December 05, 2008 - 03:06 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

All great ideas.

My company give me a share of stock for every 10 I buy . . . again "free" money.

A similar (I know it's not QUITE true) can be said of the compound interest that Sleeze is currently making on the $6,000.

Never, never, never walk away from free money.

Never, never, never give up.

Cool stuff. . . ahh . . to be 42, have Jerry's looks and a Road King. . . Hey, I can dream!

: )
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Jerry_haughton
Posted on Friday, December 05, 2008 - 05:07 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only)

it's been like since last century that i was 42, but by God i got my looks (Mel Gibson, Harrison Ford and Sean Connery, eat your collective hearts out), and i got my Road King.

now all i need is Court's charm, charisma, Einstein-like IQ and vast financial holdings (oh, and his guitars), and i'd be set.

hey, i can dream, too.

:-)
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