I was looking at what the stock market is doing, and what inflation (devaluation of our dollar) is doing, and decided to take a hardship withdraw from my TSP (401K).

The transaction cost $6000.00 in tax and early withdraw penalty, but I used the funds to pay off my only car loan, my mortgage, and a credit card. I also made a purchase which is a business expense of a medium format digital camera body and lens.

It is freeing to know I won't have a house payment. I will split what was my house payment and put half in an interest bearing account to cover property taxes, homeowner's insurance, and any income tax increase, and the other half I will put toward my final credit debt.

I figured this was a good choice as my employment is hanging in the balance of court decisions regarding what is erroneously being called a covid vaccine..

I hope you all have a great week

Dave

Good for you. It is nice to not have to worry about your mortgage. I hope to be there in a couple more years.

Congratulations on a wise decision.

I paid my last car payment in January of 1979

I paid my last credit card off in 1990

I paid my house off in 1994 (I was 48)

All that money I was paying in monthly payments has gone into investments and this allows me a lot of freedom.

You'll find it's true for you also.

Tough call but glad it worked out for you

I hope the company you work for gets unstupid

Congrats!

It would have to take some convincing that paying a 6k tax penalty to the IRS and losing the opportunity cost of deferred growth is better than a tax favored mortgage.

I sincerely hope the math works in your favor.

Congrats!!! Does the grass feel different?

Congrats.

I did the same thing and paid mine off at age 39 or 40.
Had the mortgage for 13 years (30yr mortgage) and never looked back.
I still use CCards and used a loan for Computer School way back when but after that I pay off at the end of the month and have been for many years.

Overall it is a great lesson on debt.

Congrats ... it is a great feeling isn't it?

My wife and I worked hard to payoff our home a few years before we retired. This made all the difference in the world with our post retirement cash flow. Good luck with your decision.

Given your situation with the company, I think you'll be happy not having the debt. Don't look back and don't second guess.

Congratulations!

As Dave Ramsey (personal finance guy) says, "the grass feels different when it's paid for"

quote:

Originally posted by ElToro:
It would have to take some convincing that paying a 6k tax penalty to the IRS and losing the opportunity cost of deferred growth is better than a tax favored mortgage.

That was my thinking. I realize our situation is probably quite different from that of the OP, and conditions now aren't the same as they were when I retired five years ago, but...

A little over four years ago I bought the most expensive vehicle I had in my entire life. I almost withdrew the entire amount from our retirement account to pay for it, then thought: Our retirement account has averaged 13%/year over it's lifetime. A loan for the Jeep would cost me... 5%, I think it was? So instead I increased our monthly disbursement by the loan payment amount.

We did take a "big" withdrawal to pay off the mortgage when I finally decided to move the remainder of my 401k into the retirement account. But it was only about 3% of the combined value of the retirement account plus the 401k balance.

We took a somewhat bigger withdrawal at the end of 2021, in advance of anticipated home improvement projects in 2022. We did it then because I'd read there will be tax increases in 2022.

We've left the vast bulk of our retirement account invested.

I understand the stock market jitters, but our account has lost only 3% over the last... couple months or so? It lost that 3% early on and has sat there, bobbling around the same value, ever since.

quote:

Originally posted by ElToro:
I sincerely hope the math works in your favor.

I do, too, but, obviously, it's not what I would have done.

Then again: Our investments are very conservative and very diversified. Same when everything was still in my 401k. Same results, too. When others, more aggressively invested, were pulling their hair out, I've watched our investments take a hit, but nothing over which to lose sleep.

Maybe that will hold. Maybe it won't. Our "guy" is confident it will.

On big difference between the OP and us: We're retired. But, and correct me if I'm wrong, is this not a seller's market, vis-a-vis employment? Aren't employers crying for good people to fill job positions?

Bought a new air compressor, yesterday. Talking to the people at the tool store, I said "I tried to stop by yesterday, after we saw our tax guy, but you're not open on Sunday anymore." "We don't have enough staff," they replied. "We can't find people."

I'm kinda sorta halfway entertaining the thought of taking a part-time job there. I don't need the money, but it might be kind of cool to work in a tool store

Congrats! I did the same with my house about 8 years ago and truck several years after purchase. It's a great feeling. Astoundingly my credit rating took a hit but it recovered after a while. Probably next year I'll begin renovating my house with some of the funds put back.

I'm 61,paid my house off ten years ago. I was putting 8 percent of my pay
into 401K. The last ten years, put 20 percent into 401K. No house payment,
no car payment, Employer fired me a couple weeks ago. Was there 35 years,
Got a letter yesterday,they want me to come back. Screw em. I,m done.

quote:

Originally posted by ensigmatic:

Bought a new air compressor, yesterday. Talking to the people at the tool store, I said "I tried to stop by yesterday, after we saw our tax guy, but you're not open on Sunday anymore." "We don't have enough staff," they replied. "We can't find people."

I'm kinda sorta halfway entertaining the thought of taking a part-time job there. I don't need the money, but it might be kind of cool to work in a tool store

I've had that same thought several times (Tractor Supply is looking for help) and then I remember how well my people skills (comma, lack thereof) mesh with retail work.

That and it's 25-ish miles one way to work and I'd be lucky to make enough to pay for my gas.

It is very easy to spend another man's time or dime.

A bird in the hand, and all that.


Paying off a debt, such as the house, and the concrete assurance of not having that burden, may well be better then the "promise" of interest earned on investments.

If the past few years have not opened people's eyes of how tenuous things many have relied upon to always be solid, only to realize how fast it can change, they are ignoring things.

You own your home. You still have that income to invest, I believe, you can still feed the pig, and have a good return and either it's a wash with the money side, or it is better.

But, you are solid in your home. Do research on foreclosures, and think of the cost of money, plus the anguish of going through that. Knowing you likely will never have to face that, will ad years to your life, and take a burden off your back.

Yes. It is different, when you own it, rather than owe it.

Conga-rats lizzurdman!

quote:

Originally posted by Schmelby:...
Got a letter yesterday,they want me to come back. Screw em. I,m done.

Good for you! (on the financial part, too)

If they want you, other people will want you, and likely appreciate you more.

Find you a "happy job" or whatever you decide. Getting out of the game, before your dragged off the field is always better for you. And the fans only care about the score, until the next game.

quote:

Originally posted by sigmonkey:

quote:

Originally posted by Schmelby:...
Got a letter yesterday,they want me to come back. Screw em. I,m done.

Good for you! (on the financial part, too)

If they want you, other people will want you, and likely appreciate you more.

Find you a "happy job" or whatever you decide. Getting out of the game, before your dragged off the field is always better for you. And the fans only care about the score, until the next game.

Thank you. I'm going to take 3 to 6 months off. Find me some menial job. Probably be a
fifteen dollar an hour paycut. I don't care, Just need insuarance for a few more years.

I agree with most of the post's here. Congrats. And to Schmelby as well. A wise decision, especially where we are at right now.
Shedding debt before everyone else is forced to do it at such a high price and devastating cost is a very smart move imho.

Payoff that other card and cut it to pieces as soon as possible.

quote:

Originally posted by Schmelby:

quote:

Originally posted by sigmonkey:

quote:

Originally posted by Schmelby:...
Got a letter yesterday,they want me to come back. Screw em. I,m done.

Good for you! (on the financial part, too)

If they want you, other people will want you, and likely appreciate you more.

Find you a "happy job" or whatever you decide. Getting out of the game, before your dragged off the field is always better for you. And the fans only care about the score, until the next game.

Thank you. I'm going to take 3 to 6 months off. Find me some menial job. Probably be a
fifteen dollar an hour paycut. I don't care, Just need insuarance for a few more years.

Around here, I know of a few guys that retired and then started driving school busses for the insurance. They pay well and have great benefits