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Help w/Personal Finance Options


2talltim

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Ok so i decided to sell a few things and now have $5000 at my disposal and im trying to figure out what it the best thing to do to accomplish what i want to do. I think i already know the answer but i wanted to see what yall had to say.

 

Things that will happen in the next 9 months.

 

*Pay off car $2200 left (low interest loan 3.99%)$246 a month payment 

*Pay of credit cards(again) around $5300 right now  APR 14.99%(was a little sloppy this year)

*Build a garage $14,000

*Pay off current 401k loan. $1100 (4% interest that is paid to myself)(when i bought my 4 wheeler)

 

 

Money situation

*I will have the $5000 cash (maybe $5500)

*Will be borrowing(not withdrawing) $10,000 from 401K for the garage (ive weighed all options and this is the only one that makes sense)

* And minus Christmas shopping coming up and any unforeseen emergencies we bring in about $1000 to $1500 a month more than our bills and spending require(maybe more but thats a safe number).

*should get around $2000-$3000 on tax returns

 

Options...

*Pay off credit card with cash, use exrta income in the next 3 or 4 months to knock out the other 2 loans, then save up for the remainder of the garage money and hopefully build  mid to late summer.

 

*Use cash and 401k loan NOW and build the garage NOW, and just make the payments on the other stuff and try to pay them off in the next 9 to 12 months.

 

*Pay off Car and 401k loan now with cash, slam all extra cash on credit card over next several months and do garage in the summer.

 

* $5000 worth of Hookers and Blow in someone else's garage

 

Option one is obviously the smartest way togo in my opinion but i REALLY REALLY REALLY want that garage. I also plan on purchasing another 4 wheeler when all these goals are accomplished but that will be next winter Im guessing. The wife and I have already decided to put any more trips, cruises and large purchases on hold till atleast the 3 items are paid off. 

 

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You realize that unless your 401 is giving you a less than 14% return it's smarter to use a credit card than borrow from 401k...yes you only pay 4% on it and it's back to yourself, but if your 401 gives you even 5% return a year your fucking yourself over because you're losing the 5% that money would be earning you.

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You realize that unless your 401 is giving you a less than 14% return it's smarter to use a credit card than borrow from 401k...yes you only pay 4% on it and it's back to yourself, but if your 401 gives you even 5% return a year your fucking yourself over because you're losing the 5% that money would be earning you.

The only part of my 401k that i can borrow from is my company stock options and yea they have not been doing so well in the last couple of years and i can't roll them over till 36month maturity. So it's a almost break even deal maybe losing a little bit but it saves the hassle of having to get a loan and pay a bank. Even m friends dad that works for EdwardJones said that's what he would do too.

Edited by 2talltim
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You realize that unless your 401 is giving you a less than 14% return it's smarter to use a credit card than borrow from 401k...yes you only pay 4% on it and it's back to yourself, but if your 401 gives you even 5% return a year your fucking yourself over because you're losing the 5% that money would be earning you.

 

 

The only part of my 401k that i can borrow from is my company stock options and yea they have not been doing so well in the last couple of years and i can roll them over till 36month maturity. So it's a almost brake even deal maybe losing a little bit but it saves the hassle of having to get a loan and pay a bank. Even m friends dad that works for EdwardJones said that's what he would do too.

Just checked and rate of return on stock options was only 8.3% rate if return on total 401k 18.8% over 5 years. Stock options are only 30% of my bank roll. I could borrow up to $20,000 but im not going to, that would be stupid.

Edited by 2talltim
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Pay off whatever has the highest interest rate you're being charged. 401k borrowing is a gamble of MAYBE it will gain possibly 5%. Base it against a Loan with a guarantee of xyz% and decide from there.

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Depending on how dedicated you are to getting rid of debt... I used the "snowball" concept a few years ago, and got out of just under $15,000 debt (stupid debt like credit cards, short term loans, along with an upside down car loan, etc)

 

2 ways to look at it...pay off the easiest thing to pay off now, and use the monthly pmnt from that to pay off the next easiest thing, keep adding the monthly payments together to "snowball" the debt payoff...

 

OR the way I did it...

Use the supplemental cash, plush monthly payment, to pay off the most expensive debt that the cash allowed me to pay off in full, then snowball it from most expensive to least expensive...

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Pay off CC and resolve to never carry a balance again!!

Don't close accounts. Let them age and have low average balance both helps credit score.

That usually the way i operate just too many vacations and time off work this year. It creeped up on me. I use CC for EVERYTHING so i can get my reward points and usually pay it off every 2 weeks. Need to get back to that

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Depending on how dedicated you are to getting rid of debt... I used the "snowball" concept a few years ago, and got out of just under $15,000 debt (stupid debt like credit cards, short term loans, along with an upside down car loan, etc)

 

2 ways to look at it...pay off the easiest thing to pay off now, and use the monthly pmnt from that to pay off the next easiest thing, keep adding the monthly payments together to "snowball" the debt payoff...

 

OR the way I did it...

Use the supplemental cash, plush monthly payment, to pay off the most expensive debt that the cash allowed me to pay off in full, then snowball it from most expensive to least expensive...

Yup  ive it that way a few times, if i build my garage next year..The house, the garage, any vehicle we but in the next 2 year will be all paid off at theexact same time in about 6 to 7 years, PLUS the youngest will be graduated and out from under my income. That is the ultimate goal, no kids, no debt by the time im 45.

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^^ Didn't see your last post, lol ^^

 

Credit cards now

Car with 2014 tax return

Make payments back to 401k

Savings and the 2015 tax return to build garage

I see what your saying but I dont think i want to wait any longer on a garage, been putting it off for a few years now. Plus i think the 2015 tax return will be down payment on another car for 2 reasons. #1 the current car already has 135,000 miles on it and the wife puts 750+ miles a week on it. and #2 the oldest will be driving so the current car will go to her to drive.

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I wouldn't take money from your 401k. Why? If you fail to make payment for 90 days say something happens.(sickness/accident, need a new roof etc.) The money is considered a distribution and taxed as income, plus a 10% penalty if under 59 1/2. And, if you leave or get let go from your job, you must repay the entire loan within 60 days or get hit with the same penalties. Could you do that?

 

Glad you paid your credit cards first,  sound advice to never carry a balance with them. (The best way to cut the blood loss) My rule is to never spend more on a cc than I can pay off. If I cannot afford it I don't need it.

 

Pay off the car next even if its just extra cash on the payment you have. What you save is money you could be spending on your garage.

 After all your debt is taken care of go for the garage. If you want the garage so bad find a way to earn more money not borrow it and screw yourself harder.

 

Finally your friend's dad who is a financial adviser gave you the wrong advice. IMO Also what company stock is it?

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Pay off the card and stop spending money. You don't need to spend money on Christmas or build a garage.

A forum consisting of people who have motorcycles and the time to post stuff on their I-phones tells me that this particular demographic would not be prone to follow such advice.

My dad died at 56 of pancreatic cancer. Live life now. Don't be foolish, but don't necesarily hoard it until fantasy retirement.

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A forum consisting of people who have motorcycles and the time to post stuff on their I-phones tells me that this particular demographic would not be prone to follow such advice.

My dad died at 56 of pancreatic cancer. Live life now. Don't be foolish, but don't necesarily hoard it until fantasy retirement.

I'd rather live like I'm poor than actually be poor. But that's just me.

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Pay off those credit card debts, and once you are caught up.....DO NOT get into that hole again! If the cash is not in the bank account, do not use a credit card for purchases. Pay off that house, best asset you can have......build that garage, pay off your house. ;) 

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