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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: of 308782  
Subject: Re: Begging for Aid Date: 3/1/2007 7:15 PM
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Forgot to mention, I have about $100K in a retirement plan...don't really want to liquidate it and pay taxes to pay off debt, but maybe I could use as collateral for a bank loan with reasonable interest rate and payment terms?

Nope - If your retirement plan allows loans, you may borrow against it within the plan. However, retirement plans are not allowed to be used for collateral for bank loans. If they are, they are deemed to be distributions, and taxes and penalties apply.

However, even borrowing against your retirement plan within the plan will not 'handle the situation' - it's just rearranging the deck chairs on the Titantic. You still owe the money and you still need to make the payments.

the key here is for me to get out of my housing situation, I think, but this will probably require more debt to pay a realtor

It was suggested in August, and again on this thread, that you call your mortgage company and inquire about a short sale or a deed in lieu. Have you done so yet? Once you understand how much they would accept on a short sale and what the terms will be, you can be an informed seller.

the amounts mentioned by AJ above are nowhere near accurate, specifically the 20% withholding. My medical alone is more than 20% of a deduction from my pay...AJ, do you have a government job by any chance?

Nope, never worked for the government in my life - in fact, I work in the customer service area for a mortgage company right now. Sorry I mis-estimated your withholdings - I based it on mine, which are about 21% and include Federal income tax at a single rate, Medicare, SS, Medical, Dental, Vision and ST Disability. I figured that the higher income tax withholdings would offset the higher insurance deductibles. If your medical insurance alone is more than 20% of your gross, I guess it was a bad estimate. Since I don't know where you live, I didn't know if a state/local income tax deduction was necessary, so I did not account for that.

So your medical insurance is costing you more than $1250 a month? Even for 5 people that seems extremely high....It's probably too late for this year, but does your employer offer a High Deductible Health Plan? Even if you have to pay the entire deductible, it still may be cheaper than your current insurance. If they don't offer one, you may want to look outside your employer for insurance coverage next year. Unless your family has pre-existing conditions, you should be able to get less expensive coverage for a more reasonable cost.

AJ
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