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Message
re: Little brother in a predicament
Posted on 5/23/22 at 3:06 pm to TorchtheFlyingTiger
Posted on 5/23/22 at 3:06 pm to TorchtheFlyingTiger
Good on you for seeking a second opinion for tour little bro. It's a compliment that he came to you for advice but you probably ought to let him know you mean well but aren't financially savvy. Perhaps you can both use this as an opportunity to get better informed so you can keep up the dialogue and use each other as a sounding board in the future. Fortunately, there are plenty of online resources. Or you can start with a book like JL Collins Simple Path to Wealth. If you/bro havent fully kicked the credit card habit yet, Dave Ramsey may be a better start just take his investment advice with a massive grain of salt. Goodsign that he has the right idea in mind considering he is funding 401k and Roth IRA in 20s juast need to improve tactical executiin moving forward and avoid consumer debt like the plague.
0
Posted on 5/23/22 at 3:35 pm to Newrow
Why would he do that. The penalties are ridiculous just so that people won’t do this. The Roth has already been taxed that basically free money. He needs to consult a professional
Posted on 5/23/22 at 3:36 pm to TorchtheFlyingTiger
quote:
I think REB BEER meant paying 30% tax & penalty is similar to borrowing at 30%. If you think that's dumb then dont liquidate 401k either. No one is suggesting a 401k loan.
You're right, I definitely read that wrong
Posted on 5/23/22 at 3:36 pm to Newrow
Tell him do not do this. If he wants to pay off c/c balance, I recommend getting a personal loan and consolidate his debts into one account.
Posted on 5/23/22 at 3:46 pm to hellsu
I thought the age to avoid penalties on 401k withdrawal was 59.5
Posted on 5/23/22 at 3:52 pm to Newrow
Buy high, sell low sounds legit.
Posted on 5/23/22 at 3:55 pm to Newrow
How much debt we talking here?
Posted on 5/23/22 at 3:57 pm to Legion of Doom
quote:
I thought the age to avoid penalties on 401k withdrawal was 59.5
My bad it is 59.5 I got in a rush to post before the op made a rash decision. This would be a terrible time to empty his 401-k.
Posted on 5/23/22 at 4:02 pm to Newrow
quote:
cashing out 401k, PTO, and an alternate Roth Account he started
Terrible advice. The money he will have to pay in taxes and penalties will probably eat half of everything
Posted on 5/23/22 at 4:05 pm to Cotten
quote:
How much are we talking in 401k and Roth? $100 or $100,000+?
I bet it's not as much as it was a few months ago, but after 5 years...he's not going to have that much in it.
Posted on 5/23/22 at 4:07 pm to Dawgwithnoname
quote:
Buy high, sell low sounds legit.
This. Cashing out a 401k is a poor financial idea, but cashing it out when the market dips 20% is an even dumber idea.
Posted on 5/23/22 at 4:09 pm to Newrow
Foregoing the high potential return on those 401ks is likely a greater cost than the debt.
That is the thinking that you/he need to do.
Foregoing 401k return of ___%
vs
Debt of ___%
Good luck!
That is the thinking that you/he need to do.
Foregoing 401k return of ___%
vs
Debt of ___%
Good luck!
Posted on 5/23/22 at 4:18 pm to Newrow
Cash out everything in a bear market. It's the right thing to do.
Posted on 5/23/22 at 4:22 pm to Newrow
Sounds like a solid plan. It’s always smart to cash in retirement for short time solution. Carry on and report back. 
Posted on 5/23/22 at 4:25 pm to Weekend Warrior79
I know. I was talking about the taxes and penalties he'll pay if he takes it out. They come out to around 30% if I recall correctly.
Posted on 5/23/22 at 4:33 pm to REB BEER
Still think it’s a good idea. Less stress and no debt sounds better to me. There is still money to be made and saved.
Posted on 5/23/22 at 4:42 pm to Newrow
It’s never a good idea to freely give the fedgov 40% at one time.
This post was edited on 5/23/22 at 4:44 pm
Posted on 5/23/22 at 4:44 pm to Newrow
Pay the student loan debt off first. That way we have one less leech when Brandon decides to forgive it.
Posted on 5/23/22 at 4:45 pm to Newrow
quote:
Still think it’s a good idea. Less stress and no debt sounds better to me. There is still money to be made and saved.
Then you must be completely financially illiterate
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