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Author: USconcrete Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75622  
Subject: Company SOLD!! - My 401K !!? Date: 4/3/2007 4:43 PM
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Hi!
I have a fun question for anyone interested in stirring this one about...
I have participated in the 401K investing plan that was offered by my employer for 10 years. I have a nice little nest egg in it now. We were informed last Friday that, Ta Dah! This company no longer exists. Lucky for many of us, we were absorbed into a 'New Venture' that consists of the old owners, (My former employer) and the new owners (US Concrete) having a 40- 60% interest (respectively) in the new company, a privately held firm known as Superior Materials LLC.
The memo read: You can keep your 401K in the funds you now have, but you cannot add to it anymore. (I knew that)
You can take a lump sum (with a 20% hit for taxes)
You can roll it into the 'New 401k, if they offer one.
You can roll it into an IRA

I want to pay off debt. I see this as an opportunity to do just that. I see many of you screaming at your monitor, right now. "NOOoooOOO!"

Yet...

My wife has about the same money in her 401k, and a longer timeline then I. (she won't see 59.5 years for another 17.5 years)
we are considering taking the tax and penalty hit, to be debt free. We would still owe on our house (tax shelter) and cars (lease)
But no loan or credit card debt.) (Please resist the "you'll run it back up" argument) :-)

I would like to begin investing, without the short term liability's hanging around my neck (aka: credit cards, loans) I would still have a nice chunk of change after the tax and 10% penalty hit. For investing in the long term, AND I would be able save, and pour money into the NEW
401k plan.


Thoughts?


Thanks!
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Author: ravvt Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56555 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 4:55 PM
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I you REALLY feel you MUST take 401K funds to pay down installment debt, you might want to consider taking a loan from your 401K instead of taking a lump sum distribution.

Rationale:
- No tax penalty
- Forced pay back /w interest to YOUR account

Every 401K plan will have its own limits on the fraction of the account that can be borrowed and the payback terms. You might want to consider this alternative...








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Author: Dwnwthvwls One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56557 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 4:59 PM
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Roll it into an IRA and use your income to pay off the short-term debt!

I understand the psychological impulse for eliminating "the short term liability's hanging around your neck", but I've learn that it's usually best to take a calm, calculating, rational look at money.

How much is the 10% penalty hit relative to the savings from eliminating the short-term debt?

Have you considered taking out a loan against the 401K?

Does it have to be an all or nothing approach? If you're intent on tapping into your 401K for short-term debt relief, then tap only enough to eliminate the highest costing debt.

Dwnwthvwls

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Author: Hohum77 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56560 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 6:00 PM
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I would like to begin investing, without the short term liability's hanging around my neck (aka: credit cards, loans) I would still have a nice chunk of change after the tax and 10% penalty hit. For investing in the long term, AND I would be able save, and pour money into the NEW
401k plan.


Thoughts?



So how much debt are we talking about?

I think you have a lot more options than you realize-
1. a 401k loan,
2. cut back on your 401k contribution until the debt gets managable from regular inflows
3. A combination of 1. and 2.

Each of those options save you on taxes and the penalty, so from my perspective they are better options.


Hohum


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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56561 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 6:49 PM
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I want to pay off debt.

Good.

I see this as an opportunity to do just that.

This is not paying off debt. It is rearranging your personal balance sheet. You are taking an asset (your 401K plan) and using it to pay a liability. The problem being that you will reduce your asset by between 35% and 50% in the process of getting it available to use against the debt. However, if you wait a few years the haircut on the asset will be reduced - at a minimum by the 10% penalty.

I see many of you screaming at your monitor, right now. "NOOoooOOO!"

That would be correct.

I would like to begin investing, without the short term liability's hanging around my neck

But you CAN begin investing. If you roll the 401k over into an IRA, you can begin investing that money yourself right away. You don't need to blow 1/3 of it on taxes and another 1/3 on credit card payoffs.

--Peter

PS - DON'T TAKE THE MONEY!!!!!!

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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56562 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 6:58 PM
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I'm going to have to join the chorus of 'no's that you were expecting. Think about the costs for a minute. The 20% withholding is merely a downpayment. I don't know your federal tax bracket, but lets say 25% (and this doesn't push you higher, which it very well may). Add the 10% penalty. Plus any state taxes or penalty you may pay (say, 5%). So you're looking at distinctly possible 40% haircut right off the bat.

Think about that. That means if you take $10K out, you're left with $6K, and $4K is gone forever - PLUS all the earnings on it for many years.

To put it another way, to pay off $6K of debt, you lose on on $4K of money. That's equivalent to 67% interest. And that's not even counting the lost interest.

If you really are paying down debt well and committed to it, as you imply, then your interest rates are probably getting lower and lower, and before too long, with balance transfers, may be very very minimal or none. I highly doubt it makes any financial sense to pay 67% interest to uncle same in lieu of paying much less to a bank.

While you've clearly made good strides on your debt I'm afraid you're still a bit too interested in what feels good *now*, versus what is wise financially (assuming your consumer debt was from purchases). Clearly you've made great strides in what it is that feels good - i.e. paying down debt vs. buying things - is it still striving for instant gratification in lieu of what is really wise.

A 401K loan is still a bad idea, though not quite as bad. But I would urge you against that too. A 401k loan is an expensive way to borrow money (hint: the real cost of a 401k loan has *nothing* to do with the interest rate).


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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56563 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 7:06 PM
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NO, and HELL NO....don't touch that money.

You would pay regular income tax rate and a penalty. You would never recover.

Take current income, and pay down debt. Figure out why you have so much debt. Your lifestyle needs to change and change quickly

If you take the money and pay down debt, you'll be back in the same boat with massive debt in 5 years, and without all the money in your 401K.

Plan to roll it over to a Vanguard or Fidelity IRA quickly. The sooner the better, before it gets lost. Never leave it in a dying plan. The custodian has no reason to monitor it for expenses or even watch it!...

Don't take a 401K loan. If the plan ends (or in many cases, you can't if you are not an employee of the company with the plan - and it is termnated so you may not have that option).

Don't raid home equity.

Just hunker down, SPEND LESS, don't contribute to retirement plans till you are out of debt.

You need to cut back spending, or you'll be in worse shape in a few years.


This is not free money. The only time you should tap it is if your LIFE IS IN IMMEDIATE danger from a medical necessity that needs immediate action (life bypass surgury after heart attack).....

t.



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Author: Jim2B Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56564 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 7:08 PM
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1) Do NOT cash out the 401K
2) Do NOT use a 401K loan
3) DO roll your 401K into an IRA since these have many more options & control than any 401K program. You may also turn the traditional IRA into a Roth IRA, provide you satisfy certain conditions.

Some other miscellaneous and unasked for advice.

In most cases, car leases are a total rip-off.
Whether it makes sense to pay off/down your house depends upon a number of factors and we couldn't assess the pros/cons without more information.

Let me just say that in my case the 5.5% (~4% after deductions) 30 yr mortgage is "cheap debt" and I wouldn't pay this off early even if I had the cash sitting around in my bank account to do it.

OTOH, I do not like auto-loans (and hate leases) as these are typically much more expensive and offer no tax breaks.

Also you mentioned wanting to invest "without the short term liability's hanging around my neck (aka: credit cards, loans)", yet this line seems to contradict the preceding one "But no loan or credit card debt.) (Please resist the "you'll run it back up" argument) :-)"

Do you, or do you not have non-mortgage debt & non-auto leases?

If you do have them (no need to tell me!), then I highly recommend reading &/or posting to the Credit Card & Consumer Debt board, they have a bunch of useful information even if you intend to only lurk.

Jim

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56565 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 7:12 PM
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Why the heck you 'leasing' cars? That is usually the most expensive option.

Get out of the 'need' for a new car every 3 years. That is in expensive addiction, unless you can write off the car for business purposes and come out ahead tax wise!

Foolish! (in the not-to-smart). When your lease is up, BUY a new car that will last you at least 8 years, and keep it 8 years. Not a $50,000 car either, but a middle of the road car. You are 'not your car'.

You need to adopt some LBYM attitudes immediately.

Get ahold of The Millionaire Next Door and absorb the info quickly.

You seem to be living beyond your means.

The AMT is going to whack people with lots of 'deductions' they thought they had...and find they vanish into thin air, or get taxed at 28% instead......

Trim down financially? What the heck are all the credit card bills from? Over spending? Keeping up with the Joneses? spoiling the kids? Spoiling yourselves? Eating out too much? Buying every gadget? redoing the house/kitchen/bathroom?????

Some reality needs to be inserted here!...


t.



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Author: USconcrete Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56568 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 8:24 PM
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Wow!
(Long pause....)
I mean W O W!
OKay okay okay!! I won't smote the 401k! :-) All good advice, some even chewing me out for having debt, which I probebly deserve. (Much of what you don't know, is that I was not blowing money to live outside of my means. However, divorce can be a costly life changing event too!)

Back on track. The debt comes up to only about $13000.00 ( I say only, because that seems small to the size of my 401k ) I have been dedicated to not spending more then I take in, and I have been working this down month after month, year after year. Right now, about $6500.00 of it is all on one card. A Capitol One card that I have 0% interest from a balance transfer. That is the largest of the debt, and it's coming down fast with monthly $250.00 payments. Many of you may not realize the nature of the concrete business, either. (Some of you may) It is cyclical, to say the least. 9 good months, followed by 3 bad. Really bad. "Make hay whilst the sun doth shine" planning for it is always easier said then done. But I try ...
I (we) did cave into taking on more debt about a year ago. Home improvment. ($4k) Some of it neccessary, (repairs) the other although cosmetic, boosts my homes value. So you know that I am not a total boob.
I see the tax/penalty hit is wayyyy to much to put any of this other debt down. Due dillegence, working to pay it all off, is going to be the only way out. I really liked the one comment that paying off debt by robbing my 401k, was not paying it off, but rather shifting my balance sheet around. As I said, all good advice. Thank You Thank You for not letting me become a true...Fool.

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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56570 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/3/2007 8:56 PM
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I would like to begin investing, without the short term liability's hanging around my neck (aka: credit cards, loans) I would still have a nice chunk of change after the tax and 10% penalty hit. For investing in the long term, AND I would be able save, and pour money into the NEW
401k plan.


When investing for retirment, the compounding time is your biggest ally. The money you have contributed already has already been compounding. If you cash in, not only are you contributing about 35% (maybe more, depending on tax bracket) to Uncle Sam (federal and state taxes, plus 10% penalty), but you are also starting the clock all over on the compounding. Even if you reinvest every remaining penny, you will have taken a large chunk out of the earnings which can be compounding for you to give to the government.

It's your money, but think long and hard about this. Personally, if I was in your position, I would roll it into an IRA and pay my debt using my current cash flow. But that's just me.

foolazis


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Author: MarinBMWZ4 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56579 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 12:30 AM
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What about the equity in the home? Can you get $20k out? A fixed rate 5 year 8% loan for $20k is @ $400 a month. What's your car payment? What's your credit card payments? Forget the investing part and decide after you see what type of funds the new company is offering. It's quite possible they are offering some good long term investment mutual funds. If you can get 10% average you would double your money in a bit over 7 years. At 15% it's 5 years. Plus, you would get the tax deduction from the equity.

Don't take it out, bite the bullet and look at the BIG long term picture.

MZ4

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Author: USconcrete Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56583 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 5:55 AM
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I have been thinking about this. A LOT! :-) It took me 10 years to accumulate what I have in my 401k now. I sure don't want start from square one, when 10 years from now I should have much much more in there. Especially if I consider that my starting point now is around 56k. Not 0. So with all of the really great advice I go from you foolish folks, I am going to hang on. Bite the bullet, and pay down the debt as I have been. And I will keep contributing to my retirement as I have been.

I have another question. But I don't know if this is the right forum. A few of you, have mentioned that a lease (auto) is not the way to go. Now, I am not stupid, and please don't chew my butt out, but follow my line of thinking on this...

To be fair, I have a few things I feel are on my side when it came to my lease. I do not drive more then 12000 miles per year. I qualify for the friends and family thingy from GM. My lease is for 27 months. I paid NO money down. Nothing. I drive a new Silverado. ( I say new, but not in the tone of, looky me in my new car, it's more looky me, no fricking $900 repair bills, as before...) And the lease note is $300 per month. That's $8100 for the life of the lease. (Yeesh! All of my debt would nearly be paid off!! Now I hear you out there "Exactly!" But driving an old fricking car, all of them years, and taking the time off work to get them fixed, finding myself stranded waiting for the wrecker ..ugh..) Doesn't some of the return, other then monetary come from the peace of mind that you know chance are you won't be stranded, or have to face another steep repair bill?) This is my first lease folks. Be gentle. :-)

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56584 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 7:00 AM
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To be fair, I have a few things I feel are on my side when it came to my lease. I do not drive more then 12000 miles per year. I qualify for the friends and family thingy from GM. My lease is for 27 months. I paid NO money down. Nothing. I drive a new Silverado. ( I say new, but not in the tone of, looky me in my new car, it's more looky me, no fricking $900 repair bills, as before...) And the lease note is $300 per month. That's $8100 for the life of the lease. (Yeesh! All of my debt would nearly be paid off!! Now I hear you out there "Exactly!" But driving an old fricking car, all of them years, and taking the time off work to get them fixed, finding myself stranded waiting for the wrecker ..ugh..) Doesn't some of the return, other then monetary come from the peace of mind that you know chance are you won't be stranded, or have to face another steep repair bill?) This is my first lease folks. Be gentle. :-)

Sure, it's all about how you get peace of mind.......But after spending that $8100, you will have nothing. No vehicle. And then how will you get to work? Lease another vehicle? Assuming that vehicle lease rates go up @ 3% a year, you will be looking at a $320 payment. For another 27 months, thats $8640. And another 27 month lease at $340, and another 27 month lease @ $360. For a total of $35,640 over the course of 9 years.

But they sell vehicles now with 10 year/100k mile bumper to bumper warranties. Which means no repairs other than maintenance - which you have to do on your vehicle anyway. Okay, you may have to do some things like the timing belt that you wouldn't have had to do on a new vehicle. But you could get one of the brand new vehicles for say, $20k, and it would last you nearly the same 9 years. Even throwing in $5k for additional maintenance, you would still come out over $10k ahead.

Even if you had to finance the $20k at 6% for the 5 years, you would only pay $23.2k over the course of the loan. So even if you spent the extra $5k on maintenance, you would still come out nearly $7.5k ahead.

Plus, as cars get older, the cost to insure them drops. And if you aren't forced to carry low deductible collision, comprehensive and (probably) gap insurance, like you are forced to with a lease, you could probably save at least an extra $300 - $500 a year for the last 5 years, which is another $1.5k - $2.5k in your pocket.

So, on average, by buying a brand new car and keeping it for 9 years, you could probably save about $1k a year.

Over the course of 15 years (until your retirement), if you invest the $1k a year at 8%, you will end up with $27.8k more toward your retirement.

It's all about your priorities. You will earn a finite amount in your lifetime. You need to decide if you're going to spend it paying for your past activities (i.e. credit card debt), paying for your current activities (i.e. leasing a car) or investing for your future activities (i.e. retirement). Making that decision now, while you still have 15 years or so before the 'normal' retirement age of 65 may give you a better life in 16 or 26 years. Or not - it's up to you.

AJ


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Author: TwoCybers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56586 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 9:26 AM
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OK Concrete -- this is a very simple deal from an economic point of view.

Currently you have a certain Net Worth -- that is the total of all your assets (house, car, clothes, pocket change, etc.) - liabilities (house mortage, unpaid car note, unpaid ultility bills, credit card debt, etc.)

Your Net Worth may be negative -- all that means is you owe more then you own and unfortuantely a lot of people are that way.

If you do what you propose, the end result will be you lower your Net Worth. (If you have negative Net Worth, your proposal will merely make your negative Net Worth larger.)

Another way to lower you Net Worth is burn money.

Gordon
Atlanta

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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56589 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 10:10 AM
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(But driving an old fricking car, all of them years, and taking the time off work to get them fixed, finding myself stranded waiting for the wrecker ..ugh..) Doesn't some of the return, other then monetary come from the peace of mind that you know chance are you won't be stranded, or have to face another steep repair bill?) This is my first lease folks. Be gentle. :-)

Sure, there's some risk. But I think you exaggerate it. I have an "old frickin car" that has been fairly unreliable and I've yet to miss a day of work for it. Very few problems are bad enough to entirely disable the car (not none, but very few).

The one time I did have a pretty bad problem, I had my auto club tow me to my usual repair place, from which I can walk to work. In addition, many repair places will give you shuttles around or let you rent/borrow a car. Plus, since you said you're married, couldn't you always help each other out?

And, heaven forbid, you have to miss a day of work every 5 or 10 years. The horror ;). Enjoy your day off, get some stuff done around the house.

So yes, you have to question what the hassle is worth. But as some numbers that people ran show, is the risk of that hassle really worth $10K-$30K extra even 10 years? That's a lot of money. That's a lot of retirement security.


There comes a point where the repairs and hassle aren't worth it anymore. I feel I've hit that point - even though I would love to keep my care *another* 9 or 10 years if I could. So I'm going to get a new car within the next several months.

But even though my repairs have been significant (two complete brake jobs (don't ask), new AC compressor, new struts, new belts, hoses, many replacements in the underbody and exhaust, etc) and I've spent a lot of money in the past 2.5 years, I *still* haven't spent more than the $300/month you pay month in and out, not even close.


So yes, peace of mind is worth something. But its your decision how much. And you need to consider the financial peace of mind you're giving up in return.

http://partners.leadfusion.com/tools/motleyfool/auto03/tool.fcs


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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56595 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 2:30 PM
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But even though my repairs have been significant (two complete brake jobs (don't ask), new AC compressor, new struts, new belts, hoses, many replacements in the underbody and exhaust, etc) and I've spent a lot of money in the past 2.5 years, I *still* haven't spent more than the $300/month you pay month in and out, not even close.

I had to replace the transmission on my 97 Caravan at 125,000 miles. $1800. It was tempting to consider a new vehicle until I thought of it a 6 months of car payments - and got the transmission replaced. This was 2 years ago, and my Caravan is still chugging along and been paid off for years.

foolazis

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Author: 2old4bs Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56598 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 3:16 PM
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I do not drive more then 12000 miles per year...My lease is for 27 months. I paid NO money down...And the lease note is $300 per month. That's $8100 for the life of the lease.

As AJ stated, the problem is that at the end of 27 months you have a car that you still have to pay for, or you have no car, or you have to buy/lease a new car. Let's assume for simplicity that you lease another car, at $300 per month, and you continue to do this for 7 years. Now you will have spent $25,200, and you still won't have a car!

Compare this to my situation. I bought a Mazda MPV 7 years ago for $26,000. I put $6,000 down, which was the proceeds of the sale of my previous car. Therefore, the cost of this car was really only $20,000, which I financed over 3 years at 0%. My monthly payments were about $550. My service costs have averaged $200/year over the past 6 years. That brings my total cost to date to $21,200, and the blue book is ~ $9,000--that's a net cost of $12,200, a 50% savings over your car of ~ $13,000!

When I retire in 5 years, I will buy a new car, but I will keep the Mazda for trips to the grocery store and garden center, and other chores that require a large storage capacity. I will use this car until such time as it makes no sense financially to repair it!

So, given an approximate identical relative value of the two cars (Silverado and Mazda), the question you should be asking yourself is, is it worth $13,000 over 7 years (or $1,900/year) for you to be driving 'newer' cars?

And imagine that you can now invest the $13,000 at a 7% return. It adds up.

2old




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Author: Jim2B Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56599 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 5:39 PM
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I had to replace the transmission on my 97 Caravan at 125,000 miles. $1800. It was tempting to consider a new vehicle until I thought of it a 6 months of car payments - and got the transmission replaced. This was 2 years ago, and my Caravan is still chugging along and been paid off for years.

Ditto for us & our '95 Caravan's transmission.

About 2x/year I need to take it in to get something repaired. But each job is in the $300 - $600 range making it a BARGAIN compared to a new vehicle.

Jim

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56601 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 8:04 PM
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DAng..the 1990 HOnda Accord was bought for cash in 1990....been waiting for five years for something to go wrong...only thing was the starter motor, and that was $250 at PEP Boys.....that was the only time in didn't start in past five years......

Finally decided it was time to sell it....

Changed the oil every 5,000 or so......hadn't had a tune up, or anything else done in 5 years....... 165,000 miles on it....

The Buick LeSabre (the road car) bought for cash in 2001. Has 150,000 miles on it....never failed to start....put new battery in it...on the third set of tires...last about 75,000 miles a set....and put new brakes on it around 135-140K miles. Never left me stranded......will likely keep it another 2-3 years and add another 50K miles to it....

STick to GM or FOrd or Toyota or Honda and you'll get many many years of use...

Chrylser...well, you'll spend more money on maintenence....they aren't at the highest quality levels. Not bad, but not as good...

Stay away from fancy stuff and 'performance' stuff unless you want more problems. Avoid turbos like the plague....going to cost you big bucks sooner or later....same for manual clutches these days....

t.





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Author: MarinBMWZ4 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56604 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 10:13 PM
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Well, I hate to say it but I'm looking at close to $1000 (yes!) for 2 tires for my car...

But, it's such a gas to drive.


MZ4

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56605 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/4/2007 10:30 PM
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"Well, I hate to say it but I'm looking at close to $1000 (yes!) for 2 tires for my car..."

Just got 4 new 80,000 mile tires for the Buick at less than half that price......


"But, it's such a gas to drive."

I got over my 'car fever' at age 27 or so when I sold my 69 Corvette.....speed limit had dropped to 55, and not much fun to drive....heck, you were almost doing 55 in first gear if you revved it up....

WHich is good, since it allowed me to retire early at age 52......

Lots of folks waste lots of money on cars....and wind up working till 65 to pay for all those 'toys'.....

Since 1990, think I have driven about 450,000 miles.....and had fun on lots of trips, especially the ones when I WAS RETIRED......

Just sold the 1990 Honda Accord after 17 years...it didn't want to break down...but didn't need a second car with insurance and registrations to pay each year.....

Had a second highway cruising car (Buick LeSabre)....

Both got 30mpg on the road, and both get about 23-25 mpg around town....

Had enough fun vehicles (65 Mustang, 57 VW in college, 69 Corvette, 75 Ford Van, 83 Nissan Sentra, 90 HOnda Accord, inherited 1994 Buick Lesabre, 2001 Buick Lesabre)......

Too many folks think that 'the car they drive is what they are'....Madison Ave hype.....

Not much need to have more than about 1HP per lb of car.....

But if folks are crazy enough to work work work and work till 65 to afford their car addiction, fine...let them buy 'upscale' and work and pay all those income taxes......less tax for me to pay....

I had a friend back in the 70s..bought a new car every 18 months...super customer of the car companies.......and he spend darn near every penny he made working at a decent job on buying a new car every 18 months.....and trading in the 'old one'.....tens of thousands of bucks over the years.....(back when folks only earned 12-15K/yr...)...

Now, Madison ave have folks on 2 1/2 or 3 year lease plans, where they pay to get a 'new car' every short time interval...


t.





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Author: vaking One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56617 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/5/2007 9:50 AM
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I bought a Mazda MPV 7 years ago for $26,000. I put $6,000 down, which was the proceeds of the sale of my previous car. Therefore, the cost of this car was really only $20,000

I agree with the point you're making, but don't think the math is accurate. In my mind, the cost of your car was $26k. Whether the $6k down payment was from the sale of a previous car, stock sale, or selling lemonade at a corner stand wouldn't change that.

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56628 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/5/2007 4:43 PM
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Let's assume for simplicity that you lease another car, at $300 per month, and you continue to do this for 7 years. Now you will have spent $25,200, and you still won't have a car!

This is not a good calculation, because you are ignoring the time value of money. The $25,200 is not spent all up front.

Later on you make the same mistake when you say:

Therefore, the cost of this car was really only $20,000, which I financed over 3 years at 0%. My monthly payments were about $550.

You paid for the lower interest rate in a higher price for the car. If you hadn't taken the 0% offer you would have gotten cash back (or could have negotiated a lower price).

You make an even worse mistake when you say:

And imagine that you can now invest the $13,000 at a 7% return. It adds up.

No, because you do not have the whole $13,000 now.

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Author: USconcrete Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56632 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/5/2007 6:42 PM
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You know, I have to include this. We (wife and I) Bought the kids (we have three teens still at home) a 94 Honda Accord. Fricking thing is loaded. Wish my parents would have been able to do this for me and my sis, anyway. That Honda is the best car I have ever owned. So far anyway. I did have to put $450 for wheel bearings and brakes, and another $250 for a new muffler and part of the exhaust (Got dicked on that one). But I have owned this car for about a year. Good car. (Teens can be such a pain in the ass, both of us work, they need to be everywhere, so ...."Here, drive this, leave me alone." <g>)

As for the leased Siverado. Well... I had an 01 Silverado. I traded that in to get the Accord, then leased the 06. The train of thought there at the time (obviously, not deep enough thought, after reading all the great logic as to why to avoid a lease, I mean that.) was I was paying $350.00 to purchase the 01, and saved $50 bones a month to lease. I know, I know... I don't have a car after the leased expires. You are all right. I know that. But at the time I talked myself into it because I really was sick of calling wreckers. Going to the repair shop, blah blah... I had 91 Chevy Van, that I LOVED! But after a while, there was no hope. (I loved the no payment logic, until I paid and paid and paid for repairs.) So I concluded, "The Hell with it!" I'll lease one, and turn the Bastard in, and GET A NEW ONE after the lease expired. Let someone else deal with fixing them. I actually at one time owned teo pieces of crap. So long as one ran, I could make it to work. I didn't care. I wanted no more trips to see the wrench. I wanted to KNOW the fricker would start, every time. Know what I mean???? :-) (no break down here, mental that is.... honest!) There. I have bared my soul on the lease issue. I know it's a lot of money.... But as they say... "Why is divorce so expenisive?" CAUSE IT"S WORTH IT!!!

Tounge in cheek there kids. Thank you so much for all of the great advice. I mean it. I think the best money I have invested so far is the money I paid to get into the Fool forum.


~ USconcrete....

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Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56634 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/5/2007 8:28 PM
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I had to replace the transmission on my 97 Caravan at 125,000 miles. $1800. It was tempting to consider a new vehicle until I thought of it a 6 months of car payments - and got the transmission replaced. This was 2 years ago, and my Caravan is still chugging along and been paid off for years.

Ditto for us & our '95 Caravan's transmission.

About 2x/year I need to take it in to get something repaired. But each job is in the $300 - $600 range making it a BARGAIN compared to a new vehicle.

Jim


I win! My Caravan is a '90, purchased in 1989.
Ditto transmission. (Aamco kept them in stock. Out of three transmissions on the shelf, one was a Caravan.) Ditto repairs.

Have your Caravans' headliners started to come down yet?

Vickifool

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Author: MarinBMWZ4 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56636 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/5/2007 9:45 PM
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After driving junk for cars for too long I finally bought something I wanted. I gave the son the Honda and, wisely, bought my last car used. I saved close to $15k under current retail and the car was only 3 years old from production but only 18 months old from first sale date. Everything is covered up to the first 50k miles and I believe these are the original tires. Lots of higher end cars are using "run flat" tires which have special sidewalls that allow the tire to run "flat" for 50+ miles. So, no spare.

When I decided to change careers at 38 I knew my income would change. from my old job at $12 hr ($25000 a year) I went back to school and upon graduation after 2 years (yes I worked full time for 3/4 of the schooling) I started at a base of $18 ($37500 a year). That's 50% increase in base and 36% increase in take home. After 8 years I am now at a base of $45 ($93600) plus OT and call I make well over $160000. I felt it was time after working so hard for 8 years to get a car I wanted and could afford. So, $1000 for 2 tires is fine, I just commute 10 miles each way anyway, plus the occasional trip to the wine country (Napa and Sonoma) 15 miles north of me.

Of course, I paid the loan off with the home equity line and now pay the line back at 2 times my previous car payment, just to get that lower.

BTW, if you know anybody that wants to really change their life and income, tell them to train to become an xray tech. I started in that and now work in the cardiac cath lab / interventional radiology lab. It's normally a 2 year training program and the job security, demand and growth is phenomenal. Many places will hire you straight out of school at $25+ an hour and give you a $5000 - $10000 sign on bonus and even pay back student loans and help with moving expenses. This is no BS too.

My current job allows me to take 40 hours a year for eductaional leave and I have over the last few years gone to Kona, Atlanta, Washington DC and Vegas for conferences. Many companies want you to be trained in current practice and are more than willing to give paid time off.

MZ4

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Author: MarinBMWZ4 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56637 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/5/2007 9:51 PM
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But at the time I talked myself into it because I really was sick of calling wreckers. Going to the repair shop, blah blah...

--------------

I bought my first new car in 2003 after adding up thye monthly cost I was putting into my 3 cars that needed work all the time. It came out to over $450 a month, averaged out over 3 years. I said, jeeze, I might as well get a new car if I'm willing to cough up that much on average. So I did.

The wife immediately loved it and I got the best of the used cars, dumped the otehr 2.

Wait a minute, I got the used one? Oh well, she's happy. :)

That also was a mitigating factor for buying the 2003 BMW Z4. Plus, have you ever driven one of those on the Highway 1 California coast? It's a gas! It get 18 - 22 MPG (depending on my foot).

MZ4

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56641 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/6/2007 2:19 AM
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I win! My Caravan is a '90, purchased in 1989.

Aaack. You all are pikers. My '90 Voyager (purchased brand spankin' new in June of 1990) only made it to 50k miles before eating a tranny. And since the dealer just patched it up enough to get it back on the road, it died again at 77k. Amazingly, just past the 70k mile warranty. That tranny lasted to about 160k, when we sold it off. Got about 15 years out of it total.

And yes, the headliner was falling down by then.

Averaged over the 15 years, the purchase price cost us about $1333 per year. (The sale price after that time was small enough to be ignored, as it was sold needing both brakes and a tranny.) Subtracting from $3600 per year (the lease cost in question), leaves about $2267 per year for repairs. I can pretty much guarantee we didn't spend that much in repairs.

--Peter <== who apparently didn't learn and now has '98 and '01 Town & Countrys for the household. Both purchased used at significant discounts from the new price.

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Author: USconcrete Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56648 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/6/2007 9:24 AM
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"...tell them to train to become an xray tech"

Don't forget the 'nologist' part of that my friend! My wife is an X-Ray Technologist. Not a technician. Big difference there. She carries the degree that goes with being an 'nologist'! :-) And yes, the pay is very very good. She has been in this field going on 20 years. Me? I am but a simple Transit Mix Operator. (Cement truck Driver) She finally passed me up in hourly pay about two years ago. When the demand for that field increased, on a huge scale. (as you mentioned) Which is really impressive if you consider that my base pay is determined through a 'Collective Barganing Agreement' (can you say 'Strike') with the Teamsters Union and the Company. She now is about 2-3 DOLLARS ahead of me, and if it weren't for my overtime, anually, she would slay me! My pension kicks her butt though. the Hosp where she works offers next to nothing in a pension. Which is why I got her into the 401k around 10 years ago, the same time I opened mine. With our combined 401k's and my pension, we should be 'Alright', come the 59 years. (Target retirement age)

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Author: 2old4bs Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56651 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/6/2007 12:07 PM
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I agree with the point you're making, but don't think the math is accurate. In my mind, the cost of your car was $26k. Whether the $6k down payment was from the sale of a previous car, stock sale, or selling lemonade at a corner stand wouldn't change that.

Yes, I understand what you're saying. I included the $6000 in this analysis because it's directly related to the cost of leasing vs: buying. Had I leased, rather than bought my previous car, that $6000 would not be available at all.

IMHO, this is a major reason to buy, rather than lease. Of course each person has to do the math as it applies to their unique situation. I have a friend who always leases, and it makes sense for her since she takes the lease payment as a business deduction on her tax return. She also feels that since she drives for business purposes, and often into 'unknown' neighborhoods, a newer car is less likely to break down and also makes a better impression on her clients.

2old



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Author: MarinBMWZ4 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56661 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/6/2007 10:00 PM
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"...tell them to train to become an xray tech"

Don't forget the 'nologist' part of that my friend! My wife is an X-Ray Technologist. Not a technician. Big difference there. She carries the degree that goes with being an 'nologist'! :-) And yes, the pay is very very good. She has been in this field going on 20 years. Me? I am but a simple Transit Mix Operator. (Cement truck Driver) She finally passed me up in hourly pay about two years ago. When the demand for that field increased, on a huge scale. (as you mentioned) Which is really impressive if you consider that my base pay is determined through a 'Collective Barganing Agreement' (can you say 'Strike') with the Teamsters Union and the Company. She now is about 2-3 DOLLARS ahead of me, and if it weren't for my overtime, anually, she would slay me! My pension kicks her butt though. the Hosp where she works offers next to nothing in a pension. Which is why I got her into the 401k around 10 years ago, the same time I opened mine. With our combined 401k's and my pension, we should be 'Alright', come the 59 years. (Target retirement age)
------------------
Oh I know the semantics part. I technically am called a Radiologic Technologist 5 working as a Cardiac Catheterization Technologist / Interventional Radiology Technologist (let's see, did I spell all that right?). There is a big ongoing debate because most people would think we just push buttons and that makes us a "technician". They feel a technologist is better. I don't know one way or the other, but it's a fickle and variable problem.

I am also in a union: affiliated with AFL/CIO in Local 250. Our Local has merged with the Southern California union and the goal is to bring all up to better wages. That's great in theory, but, when you live where I live and the average SFH costs $1.2 Million (I kid you not - here's the link for Feb. 2007 data - http://www.westbayre.com/main.html) I can't have alot of sympathy with somebody who makes my rate but has to deal with average home prices of less than $500,000 (http://www.latimes.com/classified/realestate/selling/info/la-fi-homes17jan17,0,2944868.story?coll=la-class-realestate-selling)
. Anyway, the union of course has good and bad issues, I have been a shop steward and seen both sides of the fence from management and labor. But, this is about retirement.

Our union has negotiated a great contract with minimum 4% annual raises, revenue sharing (based upon measurable statistics such as cost savings) and just recently (finally!) a 401k matching, of sorts (1% of salary for the year - once again based upon measurable and attainable goals - for me, that includes all OT and call, not just base pay).

I'm fine with the union but have problems with some policies and procedures.

MZ4

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Author: OldOne Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56663 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/7/2007 1:02 AM
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In addition to the considerations already raised, there is another drawback to taking money out of a 401(k).

Even if you re-invest part of the money, unless you do it in a Roth, you lose the tax-advantaged status of the money. While this may not seem like a big deal, since you have to pay taxes sooner or later, the big issue to me is that I can trade to rebalance without any tax liability.

I am not advocating day trading with your IRA, but annual or even semi-annual rebalancing are legitimate portfolio management tools. If you have to pay taxes on each rebalance, it tends to discourage doing it.

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Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56665 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/7/2007 11:42 AM
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--Peter <== who apparently didn't learn and now has '98 and '01 Town & Countrys for the household. Both purchased used at significant discounts from the new price.

I'm working on VickiSpouse to start buying used instead of new. We could save a lot of money that way! I've definitely got him talked into it if we buy an RV. Don't know about just a car car though.

VIckifool

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56666 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/7/2007 12:04 PM
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I'm working on VickiSpouse to start buying used instead of new.

Some of this for us had to do with where we lived and attitudes when we were growing up. In our case, we spent a number of years in Central PA and people pretty much bought new and kept cars about 5 years because of fears of rust issues. We continued to tend to buy new after we moved to Colorado but it was pretty easy to keep a car at least 10 years here, particualrly since we didn't much care about the hail damage.

Now we have a mixed stable. I started buying used cars for kids - the first one because I wanted some safety features and didn't want to spend the money on new. My current car was a former loaner car that was a great deal and ended up with a longer warranty than a similar new car. The car my husband drives I bought new because we couldn't wait for the model to be available used and there were features on it we wanted.

We still plan to keep them 10 years or longer. I may trade mine before that because I'm thinking about a different kind of car. Both possibilities are readily available used so I will probably go that way.

rad


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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56669 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/7/2007 11:16 PM
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telegraph,

You wrote, ....same for manual clutches these days....

Really? My 1994 Accord LX had 225,000 miles on it before I sold it to my son. It has a manual transmission. Original clutch. At least for Honda, you don't have to replace the clutch every 50-75,000 miles any more.

BTW, My 2006 Accord EX is also a standard. It handles better than my 1986 Acrua Integra LX. Sweet ride.

- Joel

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56671 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/8/2007 9:40 AM
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I'm working on VickiSpouse to start buying used instead of new. We could save a lot of money that way! I've definitely got him talked into it if we buy an RV. Don't know about just a car car though.

VIckifool


Well I'm a minority here but I advocate new. We keep cars until the wheels fall off and for the extra penny or so per mile (and I save maintenance that first three years) it is well worth it to me to have a car I've driven every mile. Having said that I don't have time to do my own maintenance, but I am good about regular maintenance and keep a detailed schedule and cost on each car in my possession.

Grandma is driving the once new 1992 Camry with 220,000 and with the exception of an ill conceived Olds we did buy used for DS, and another formerly new 99 Camry that my son sold after it was passed to him, we have periodic visits by every car we've purchased since 1992, and know every bit of maintenance each has done.

I like the peace of mind. Hang in there VickiSpouse!

Hockeypop



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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56672 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/8/2007 10:13 AM
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Most people don't know how to properly drive a manual transmission.

Put them in city stop and go traffic, with hills, and their clutch isn't going to last them long.

Others never learned to use them correctly.....think that high revs are good all the time......

Occasionally, after a traffic light has stopped traffic around here (on the six lane major roads in this town), you start off from the stop...and next to you is someone in a manual shift car..you hear them go up through the gears, shifting at what has to be very fuel inefficient points.....and not doing it well....

I would suggest that very few with manual transmissions actually get better gas mileage than an automatic......and most probably don't, and will spend more on 'trasnmission/clutch' repairs over the life of the car than those automatics.

For newbies, all it takes is missing one shift at 5000 rpm to really screw something up.....and too many newbies are trying to impress people with their 'manual transmission'.

I've had a few manuals.....57 VW...(no synchro in 1st gear - big pain).....1965 Ford Mustang 4speed V8......'65 Internatonal Scout - 4 cylinder - used - no snycrho in first gear......'77 International Scout - 4sp manual 4 cyl..... and drove a half dozen others....

Only car I had to replace the clutch in was the '57 VW which was 11 years old when I got it with over 100,000 miles on it.......and I drove all the time in very hilly Troy NY......36HP engine was tough to get it moving uphill..........couldn't really complain....

Had a bunch of automatics....never had to 'rebuild' an automatic.....the Buick at 203,500 miles was probably about ready for a tranny rebuild.....would lose overdrive after 4-5 hours of highway driving....but can't complain about that either.....(it was a 25 cent part going bad, but it costs $500 in labor to replace it - so you would rebuilt entire tranny at same time!).....otherwise, the tranny lasted as long as I kept the cars (usually a long long time!).....

You did well with your manual transmissions. I'd say better than 95% of all folks out there with manuals.

t.


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Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56675 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/8/2007 11:06 AM
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Well I'm a minority here but I advocate new. We keep cars until the wheels fall off and for the extra penny or so per mile (and I save maintenance that first three years) it is well worth it to me to have a car I've driven every mile. Having said that I don't have time to do my own maintenance, but I am good about regular maintenance and keep a detailed schedule and cost on each car in my possession.

Grandma is driving the once new 1992 Camry with 220,000 and with the exception of an ill conceived Olds we did buy used for DS, and another formerly new 99 Camry that my son sold after it was passed to him, we have periodic visits by every car we've purchased since 1992, and know every bit of maintenance each has done.

I like the peace of mind. Hang in there VickiSpouse!

Hockeypop


That's EXACTLY the reasoning VickiSpouse uses! Except that it doesn't save on maintenance costs because the dealers charge at least double what my after-market mechanic does. And the dealers often aren't very good. (Particularly the case on the Caravan. Although we had tons of dealer mis-maintenance on the Volkswagen earlier.)

And we trade cars in the family, too.

Vickifool

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Author: Hohum77 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56677 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/8/2007 3:27 PM
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Wow! Did this topic get driven off the road ( pun intended :) ).


The answer for the OP is still, "A lease is a bad option"



Hohum

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56686 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/8/2007 9:06 PM
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That's EXACTLY the reasoning VickiSpouse uses! Except that it doesn't save on maintenance costs because the dealers charge at least double what my after-market mechanic does. And the dealers often aren't very good

Well, I've got a good dealer who is more expensive, usually. I've got two newer cars so here's the maintenance, mostly from the dealer, before 30k and for the next 30k (it may not be representative, but it's what I have):

2003 Honda below 30k: $133.
30k to 60k: $2,210

2004 Honda below 30k: $100.
30k to 60k: 2,544.

It may not be totally representative, but it does eat into the savings from depreciation.

In any case, that VickiSpouse is one lucky driver.

Hockeypop ... DW's father gave only one piece of advice almost 30 years ago -- "NEVER assume that she'll check the oil." For 30 years he's been right.

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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56687 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/8/2007 9:09 PM
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That's EXACTLY the reasoning VickiSpouse uses! Except that it doesn't save on maintenance costs because the dealers charge at least double what my after-market mechanic does. And the dealers often aren't very good. (Particularly the case on the Caravan. Although we had tons of dealer mis-maintenance on the Volkswagen earlier.)

I learned that lesson. I never take my Caravan to the dealership unless it is warranty work or a recall (had several of those). And my warranty has long since expired.

foolazis

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56693 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 8:47 AM
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Except that it doesn't save on maintenance costs because the dealers charge at least double what my after-market mechanic does. And the dealers often aren't very good.

Then bring the new vehicle to the after-market mechanic for maintenance.

I'm also in the 'buy new' camp, and the only thing my vehicle goes to the dealer for is warranty work. Beyond that, DH does it or the local mechanic handles it, but there's no reason to take the vehicle back to the dealer for maintenance that is not covered under warranty.

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56694 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 8:50 AM
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I've got two newer cars so here's the maintenance, mostly from the dealer, before 30k and for the next 30k (it may not be representative, but it's what I have):

2003 Honda below 30k: $133.
30k to 60k: $2,210

2004 Honda below 30k: $100.
30k to 60k: 2,544.

It may not be totally representative, but it does eat into the savings from depreciation.


You don't have to take the vehicle to the dealer for this maintenance. You can do it yourself, or have someone else do it. You just need to document it.

We've never taken a vehicle to the dealer for one of those recommended maintenance intervals, and do it ourselves instead. Much less expensive, and it can be done more at my convenience.

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Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56695 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 9:46 AM
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I'm also in the 'buy new' camp, and the only thing my vehicle goes to the dealer for is warranty work. Beyond that, DH does it or the local mechanic handles it, but there's no reason to take the vehicle back to the dealer for maintenance that is not covered under warranty.

VickiSpouse seems to think that the dealer has to do all the scheduled maintenance for the first 5 years, or however long the warranty is. Is that true? Or can I take it to the other mechanic?

Vickifool

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56696 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 9:57 AM
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I found that owing a Honda isn't cheap as far as 'required maintentnce'.

You buy a Buick LeSabre, and other than changing the oil every 7500 miles (what they require - I do it at 5000-6000 miles typically as mostly highway miles), changing air filter every 30,000 miles, and maybe changing gas line filter every 50,000, there is NO other required maitenence before 100,000 miles!...

The Honda dealer wants to sock it to you for 7500 and 15000 and 22500 and 30,000 miles and every 7500 after that...sometimes they would 'tighten the suspension bolts' and similar.....rip off....

If you want to do some serious negotiating, when you are buying, ask to see the secheduled maintence and COST from the dealer's service department.

Add up all the recommended service items to the car for the first 100,000 miles, and then complain loudly about 'how expensive it is to own a Honda' compared to a GM car.....and let the fun begin......

You can easily, easily spend another $3000 in the first $100,000 on 'required service' to maintain your 100K warranty (if that is what they are giving you or 60K or whatever).....and GM cars come with 100K warranty now.....

In reality, the resale value of the Honda (Toyota) will be higher after 6-8 years, but that is irrelevant to the purchase negotiations....

t.



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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56697 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 10:30 AM
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I found that owing a Honda isn't cheap as far as 'required maintentnce'.

I've found the opposite based on a '95 Civic and an '03 Civic. Maybe it's the dealer you use. My dealer is pretty upfront about what needs to be done and on the '03, it's been oil changes and tire rotations & alignments as needed.

The '03 was a former loaner that came certified and to be able to pass on the certification, the work has to be done at the dealer.

I was a buy new only person until I started adding cars with teen drivers. The '95 Civic was the first used purchase. I bought it in '98 and it's still in the family and resides in Steamboat Springs. That went so well that now each purchase is a new/used decision point. I am having trouble remembering the sequence of purchases but we have an '05 Subaru Legacy wagon purchased new, an '02 Impreza purchased used and the '03 Civic purchased used.

I have a non-dealer mechanic that does Subarus and Hondas where everything other than the '03 Civic goes for work. They're great about early notice and prioritizing maintenance.

rad




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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56698 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 11:46 AM
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The 1990 HOnda manual said 'adjust valve clearance' every 30,000 miles.....dang.....check and tighten suspension bolts.....etc....(rip off).....extract cash from wallet.....

The HOnda needed timing belt replacement at 90,000 miles......if you keep a car 200,000 miles, that is a bunch of money...

The GM car (Buick) has no timing belt....

The GM dealer is always coming up with schemes to get folks to do extra maintenence.... your 'brake fluid' needs replacing....... this needs service....etc....

HEck, the 2001 had the engine tuned at 100,000 miles....didn't make any difference.....but has new expensive plugs......gets oil changes/filters, air filters at 30K miles, gas filter changes at 50K miles....and that is about it.....did change the anti-freeze at 5 years/100K miles.....and did change the filter in the auto tranny at 100K miles....

I still think the foreign designed cars typically need more 'required maintenence'..... but other than changing the belts once, and the radiator hoses once in 17 years, the rest of the stuff was ignored after the first 10 years........ changed brakes when needed.....changed anti-freeze every five years...bought new tires when needed.... had car lubed every now and then....with oil change....oh, Honda needed new starter at year 16, and new battery every 5 years or so.....oh, the power antenna gave up the ghost after 12 years..replaced it with fixed antenna....

Buick has needed new battery......rear power window gave up the ghost....that's about it in 150,000 miles....just bought second set of tires...about 75000 miles a set....

As long as you don't buy the 'lowest price' GM cars, you are in good shape.....

t.




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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56702 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 12:23 PM
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VickiSpouse seems to think that the dealer has to do all the scheduled maintenance for the first 5 years, or however long the warranty is. Is that true? Or can I take it to the other mechanic?

I'm not an expert in this area, so all I can say is 'read the warranty'. But I do not believe this is ever (hardly ever?) the case.


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Author: Yumoroz Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56704 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 1:28 PM
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Wow! Did this topic get driven off the road ( pun intended :) ).
The answer for the OP is still, "A lease is a bad option"
Hohum


Well, Hohum, even this is little bit off the road,
the answer to the OQ for OP is "Don't take out money from your 401k!!!" :)))

Yuri

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56711 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 5:02 PM
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telegraph,

You wrote, You did well with your manual transmissions. I'd say better than 95% of all folks out there with manuals.

I think you are mistaken. Manual transmissions have improved greatly in the past decade or so. Here are the manual transmission vehicles my (now) ex-wife and I have owned:
1981 Civic LX Wagon
1986 Acura Integra
1993 Saturn LS2
1994 Accord LX
1999 Honda CRV EX
2006 Accord EX

The Saturn was a lemon, so you can ignore it for all practical purposes as Saturn was forced to buy it back from me in 1994.

The first two vehicles had mechanical clutch designs. We replaced the clutch every 35-50,000 miles. My ex-wife's driving was particularly harsh.

Our 1994 Accord LX came with a newer hydraulic clutch. My ex-wife drove the Accord exclusively for the first 90,000 miles. She also drove it for a summer with a hole in the radiator, which caused warping in the flywheel assembly, among other things. The result was that the transmission would sometimes "slip" when the engine was really cold. The damage occurred during those first 90,000 miles. My mechanic inspected it, but told me I should drive it until it failed. It never failed, even after ~240,000 miles.

My ex-wife still drives the 1999 CRV. As far as I know, its still the original clutch despite several accidents and her ex-boyfriend, who did a crappy job doing the maintenance himself. (He forgot to put oil back in the car once and she drove it afterwards! My son tells me it did quite a number on the engine.)

Anyway, my ex-wife was at one point or other the primary driver on all of my vehicles except for the latest. Also, we both drive our vehicles hard. When I say hard, I mean we accelerate quickly, shift quickly and are generally impatient with drivers that are slow to get out of the way. While I accelerate quickly, I try to stay fairly close to the speed limit. My ex-wife had no such restraint. She wasn't really bad at shifting, but she was often sloppy in my opinion.

BTW, I tend to agree about fuel economy. These days a standard really offers little in fuel economy over an automatic. And with the VTEC engine in my 2006 Accord, it probably buys me only a little in additional performance. Still, I guess it's the control freak in me that wants a standard. And I still feel a little smug knowing that I got my car for more than $1,000 less just because it was a standard transmission. Also the dealer had a bunch of them on the lot and was having a hard time moving them ... something I thought was ironic since that was exactly what I was looking for... :-)

- Joel

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56713 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/9/2007 5:58 PM
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Joel: "Still, I guess it's the control freak in me that wants a standard. And I still feel a little smug knowing that I got my car for more than $1,000 less just because it was a standard transmission."

And when you go to sell, will get less......

I suspect many people will pay the better part of $1000 during the life of the car for a 'clutch replacement'.....throwing the savings out the window...

Having a nice 289 Ford Mustang with 4 speed with heavy duty clutch in Chicago far suburbs cured me of manual transmissions for every day driving in the suburbs....never had to replace it, but sitting in stop and go traffic for rush hour traffic was no fun......

You might geel a little smug with a manual, but I look at the it the other way. I'm sorry for the poor folks who can't afford to buy an automatic initially, but will fork out the bucks to replace the clutch sooner or later..... and the ones with cramps in their legs, and the ones unable to 'creep' easily when the line just barely moves. Even worse when there is more HP involved. Even more sympathy when they stall out....

Maybe the engineer in me just appreciates the smooth shifts at optimum points saving the most amount of gasoline.

Actually, it is hard for someone driving a manual transmission to consistently out accelerate a manual transmission..... note the 'consistently'...for any set of circumstances.....

The Honda 4 cyclinder had no problem keeping up with traffic..just the 'LX'.....but sold it after 17 years.....still running nicely...

t.







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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56720 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/10/2007 10:51 AM
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telegraph,

You wrote, And when you go to sell, will get less......

Yeap. I think Edmund's said my 1994 Accord was worth $100 less because it was a manual. After all, I'd already driven it 240,000 miles and it was only worth about $1000 in a private party sell and about $500 in a trade-in.

Also, I suspect many people will pay the better part of $1000 during the life of the car for a 'clutch replacement'.....throwing the savings out the window...

I've seen family members have to have their automatic transmissions overhauled or replaced while still under warranty. Of course they were mostly those wonderful American-made models. None of those cars ever made it half as far as mine do before they were traded in.

Perhaps our experiences are different. Different people and different cars are better or worse on the transmission. My last experience leads me to believe owning an manual transmission will cost me nothing in maintenance and should have saved me over $1,000 on the purchase price. Plus I prefer driving a manual anyway, so it cost me nothing to indulge myself.

I also tend to keep a car until it has almost no residual value, so I'm not really concerned about the resale value.

Finally, Maybe the engineer in me just appreciates the smooth shifts at optimum points saving the most amount of gasoline.

Of course a good driver that knows how his car behaves and how to shift, can meet or beat the automatic transmission on fuel efficiency. I admit automatic transmissions these days are very good and it really makes almost no difference on either efficiency or even performance any more. However, an automatic transmission never knows when there's really a change in driving conditions - only the driver knows that. When a driver with a stick shifts gears, he's not always doing it to save gas...

- Joel

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Author: Adenovir Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57077 of 75622
Subject: Re: Company SOLD!! - My 401K !!? Date: 4/29/2007 8:15 AM
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I realize that this is a late reply, and you may have already made your choices, but I thought I would throw in something extra that no one had mentioned.

I would be able save, and pour money into the NEW 401k plan.

I don't know if your new company has matching funds for 401k contributions. If they do, then you need to contribute just enough to get the max matching funds. Don't ever turn down free money. Anything over that you should keep yourself to help pay down the debt. I would prioritize it this way...

1. 401k to get maximum matching funds from employer
2. Debt paydown
3. Roth IRA
4. 401k non-matching
5. Taxable investing

Two years ago I found that I had a loan from my school that they never notified me about. I found myself with $500 monthly payments for a year. My solution was to decrease my monthly 403b contributions by about $750 for one year to pay off this debt. I also picked up some extra overtime. I thought of it as a penalty-free way to access my 403b money. My employer has no 403b matching program.

Adenovir


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