Should I Pull From My 401(k) To Buy A House?

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  • čas přidán 8. 09. 2022
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Komentáře • 352

  • @keithhendrickson8522
    @keithhendrickson8522 Před rokem +118

    Dave: I'm guessing you're in your 20s.
    Caller: I'm 47.
    Dave: ...Ok, you're out of debt?
    Caller: Yeah, debt free except for 36k!
    😆😆😆

    • @clarifyingquestions
      @clarifyingquestions Před rokem

      Exactly - consumer debt and a mgt but yeah he is out of debt.

    • @CosmicDarkLord
      @CosmicDarkLord Před rokem +3

      For some reason people dont think of car loans as debt. It seems odd. Almost brainwashed.

    • @WoodimusMaximus
      @WoodimusMaximus Před rokem +1

      Pulling from retirement seems so gross . I’ve done it and regret it all the time .

  • @ghostbird92
    @ghostbird92 Před rokem +66

    He has like 20 videos of people asking the same question, and I will click on it every single time lol

    • @mbyrd6713
      @mbyrd6713 Před rokem +1

      Lol, I just like to hear how he says no 😉

    • @ghostbird92
      @ghostbird92 Před rokem

      @@mbyrd6713 Same hahhaha

    • @jcattera
      @jcattera Před 6 měsíci +3

      Dave makes it sounds like he's taking a hit of 30% on his 401K money for every year for 30yrs! No! the hit is only for 1yr! Not for the entire 30yrs! He's going to save a TON of mortgage interest over 30yrs! Probably $300K in interest! Plus! You eventually have to pay the 401K taxes on that money when he retires anyway! Yeah! he's going to pay a 10% penalty but look at all that mortgage interest he saves over the life of the loan! I don't think you're seeing the forest for the trees! 🙄 NFA

  • @synelpt2927
    @synelpt2927 Před rokem +125

    Yeah, we are completely debt free, we just have a 30K and 6K car loan 🤦‍♀️😅😅

    • @MrTmenzo
      @MrTmenzo Před rokem +1

      Goobers huh

    • @luketarplin
      @luketarplin Před rokem

      🤦

    • @unfairsanic5089
      @unfairsanic5089 Před rokem +10

      Because most people in america think that car debt is part of life and not really a debt lolz

    • @jimhandler1129
      @jimhandler1129 Před rokem +4

      Dave thought he was in his 20's based on how he was speaking. Couldn't believe he is 46 yrs. old

    • @synelpt2927
      @synelpt2927 Před rokem +1

      @@jimhandler1129 hard to believe

  • @Treerootz1
    @Treerootz1 Před rokem +111

    Besides all the debt I have, I’m debt free!

    • @stevenporter863
      @stevenporter863 Před rokem

      😅😅😅

    • @cameronandrew1853
      @cameronandrew1853 Před rokem +8

      So many people call in the show and say they have no debt then proceed to mention a car loan right after

    • @blackworldtraveler3711
      @blackworldtraveler3711 Před rokem

      @@cameronandrew1853
      I always laugh when they say “I’m debt free except for my mortgage”:

    • @OttMattSens
      @OttMattSens Před rokem

      @@blackworldtraveler3711 i have heard dave say debt free except my mortgage.

  • @johannamiller527
    @johannamiller527 Před rokem +157

    It's not that I disagree with the answer, but a one-time penalty of 35% is not at all like a 35% interest rate (which is paid every year until the money is paid back).

    • @boombaman31
      @boombaman31 Před rokem +2

      Totally agree with you!

    • @midkort
      @midkort Před rokem +13

      Well, it is like a 35% simple interest (not compound) rate.

    • @thegreatgatsby9583
      @thegreatgatsby9583 Před rokem +2

      Usually Like the TSP it’s a loan to urself and u don’t have to tell the IRS.

    • @truthseeker6370
      @truthseeker6370 Před rokem +18

      It's not "just a 1 time penalty" of 35%!
      First, a 35% penalty is Huge! It's literally Throwing away 35% of everything you've saved for.
      Second, you're Losing 35% of your base for future compound interest!
      You are throwing away Way more than that initial 35%.
      I've learned from having made that huge mistake years ago. A 5.75% mortgage on a 15 yr fixed rate mortgage is a Way less expensive way to go. One's future self will thank themselves for doing such.

    • @rudyflores7396
      @rudyflores7396 Před rokem

      401K is a Retirement account that means is for retirement. If you need to take money of that account for a home that means you are not ready to buy a home. Dave Ramsey principles are 100% legit and it works. However, if you don't want to follow them is up to you is your life. But please don't try to proof his method wrong when his been doing this for 30yrs and has help millions of people to get of our DEBT and become Millionaires you look dumb! 👍😁Peace!

  • @VS-fo9py
    @VS-fo9py Před rokem +99

    I got a 401k loan for a house down payment. Didn’t realize the loan must be paid in full when you leave the employer. I had a job offer for over $15 more per hour than what I was making. Had to pay the loan off in full when I left that job. A lot of my former coworkers were “stuck” at that job because they were so in debt with multiple 401k loans. It’s not worth it. I know better now.

    • @alexclosson4341
      @alexclosson4341 Před rokem +11

      Honestly didn't know this little fact. Thanks!

    • @reese85
      @reese85 Před rokem +3

      @@alexclosson4341 yeah 401k loans has to be paid b4 leaving a job!

    • @reese85
      @reese85 Před rokem

      How much was the down payment?

    • @HelderP1337
      @HelderP1337 Před rokem +1

      Whoa, that's crazy. I had no idea

    • @dancalmpeaceful3903
      @dancalmpeaceful3903 Před rokem +7

      Yup...that's the rule. I know a guy who made the same mistake. If you leave - you HAVE to pay if back in FULL. I tell people TO NEVER BORROW on their 401K......EVER.

  • @Sizukun1
    @Sizukun1 Před rokem +64

    I think people are seeing car debt like a mortgage: its some big payment that you just have with you for years and years at a time and then the car gets old and you get a new one and continue paying for years and years. They don't consider it debt because its just going to be there for significant portions of your life.

    • @angelap32
      @angelap32 Před rokem +7

      The people that have car loans that don't think they're in debt they need a new brain... because even if you have a mortgage you still are in debt just for a different reason

    • @Sizukun1
      @Sizukun1 Před rokem +5

      @@angelap32 Its the same crowd that think if their debt interest is lower than inflation they're actually making money from the loan.

    • @angelap32
      @angelap32 Před rokem

      @@Sizukun1 lol

    • @I_like_turtles_67
      @I_like_turtles_67 Před rokem +3

      Sadly I know a few people who have had car paymet for over twenty years.

    • @blackworldtraveler3711
      @blackworldtraveler3711 Před rokem +1

      That’s fine with me.
      I’m completely debt free and invested into those companies with REITs as part of my pretax and Roth portfolio.

  • @DoctorSmartyPants
    @DoctorSmartyPants Před rokem +19

    Pay off both vehicles with your cash. Take the remaining cash and put down on new house and finance the rest and pay that mortgage as quickly as you can. Don't touch your retirement savings!

  • @575burntoast
    @575burntoast Před 2 měsíci +2

    "How old are you"?
    "My house got burned down by a firework"

  • @ashitabhat
    @ashitabhat Před rokem +17

    It’s not true what Dave said , Some employers allow 401k withdrawals up to 50k without penality. Also interest you pay is not to bank but yourself so you don’t really loose money. Also if you leave job it depends on 401k policy of employer many allow to carry loan as long as you are paying monthly minimum payments. It’s works pretty well in this scenario

    • @tee6atl
      @tee6atl Před rokem +7

      Exactly, people obviously don't know all the benefits. They just think 'don't touch' but sometimes it benefits. Just have to call and find out what you can do with the employer you have

    • @thdoom81
      @thdoom81 Před 3 měsíci

      shut the fuk up...no employee allows a withdrawal without a penalty

  • @canadianjatti
    @canadianjatti Před rokem +13

    just use the savings to pay off all debt and buy the house with a small mortgage and work to pay that off ..simple

  • @nkp650
    @nkp650 Před rokem +20

    I love when people call in, Dave asks them if they have any debt, they say no and then proceed to rattle off how much debt they have 😂

  • @jackstonehenge
    @jackstonehenge Před rokem +22

    I must have misunderstood something. I thought there was a way to make a one time withdraw on 401k without taxes and penalty if it's put toward mortgage.

    • @Omego2K
      @Omego2K Před měsícem +1

      No. You can just take a loan from your 401k

    • @NicolasD414
      @NicolasD414 Před 24 dny

      Not withdraw completely but you can take a loan up to $50K. In that case, you basically pay yourself back with interest.

  • @rayhill5767
    @rayhill5767 Před rokem +30

    I just paid off my house this morning.
    Wire has been sent.

  • @jak2427
    @jak2427 Před rokem

    Thank you Dave as always!

  • @Jamaicandoctor
    @Jamaicandoctor Před 7 měsíci +7

    This is not right. we did not get a 10% penalty when we borrowed our 401k loan of 35K for closing costs on an investment property. We only got charged around $500 dollars to take the loan and it came the next week as a check. We paid 5.8% interest and it was not to the company it was back to our own 401k. Now the market went down for the past 2 years!!!!! so we didnt lose any money on that investment at all. I think this is a "it depends!" situation. So Dave ramsey is simplifying here. We are in a bear market and a sideways market for the next year. IF you are borrowing to flip a house better to borrow from yourself than from a bank.

    • @00justincredible00
      @00justincredible00 Před 2 měsíci

      I don't think he said loan from the 401k .. he wanted to withdraw all funds from the account

    • @funnyperson4016
      @funnyperson4016 Před 2 měsíci +1

      Oops market just went up 20%.
      Predictions are hard.
      Over Buffett’s lifetime his $114.25 he invested in 3 shares of some stock that didn’t make money would have made him $400,000 if he just invested in the s&p and held. There have been many crashes along the way but who cares.
      Your $1 takes 7 years at 10% to earn another $1, it takes 5 years for then next, 3 years for the next $1. 2 years for the next. Under 2 years for the next and pretty soon it’ll be printing you $1 in less than a year. In about 20 years your money reaches escape velocity where it makes babies every year or less. Every year you’ll earn more than $1, After the 40th year, you will earn more than $4.5 for every $1 invested each and every year and so you can live off the interest. But doing so would prevent a much better situation if you could wait… After the 50th year you’ll earn more than $13 per year. 60th year you’ll earn $35 per $1 you started with. Meanwhile it will be worth 300 times more than you started with… But you can’t interrupt the compounding for this to occur. The 71st year you’ll earn $80. Moral of the story is invest in an account for your kids and don’t let them touch it and don’t touch it and in there lifetime it will be worth 1000x more and they will have a legacy for your grandkids as well. On the 100th year it’ll be worth 13,780 times more earning $1378 per year.

    • @michaelh2282
      @michaelh2282 Před 2 měsíci

      You got lucky when the market dropped, but generally, borrowing against your 401k is an awful idea because you're paying tax twice on the money you withdrawal:
      In your case, you paid a higher tax rate on the 35k you withdrew, and then you paid back the loan using "post tax" money. Then when you retire, you pay income tax AGAIN when you withdraw that 35k a second time. It's like paying an additional 22-25% in taxes on your money.

  • @flea4061
    @flea4061 Před rokem +14

    I can't stand fire works. I find it really disrespectful to be shooting them off in a neighborhood.

    • @reese85
      @reese85 Před rokem +1

      Your overreacting

  • @alinatamashevich3354
    @alinatamashevich3354 Před rokem +29

    Cannot be stated enough, make sure you have enough insurance on your home, life and car.

    • @blackworldtraveler3711
      @blackworldtraveler3711 Před rokem

      I’m close to overinsured with my primary home because of materials replacement costs and have umbrella insurance.
      I avoid all household warranties.
      Never cared about life insurance and since life insurance was mandatory as policy of employment I took the $2.50/mo. minimum.
      Prefer to self insure my home appliances and the car.

    • @kingcarlos4348
      @kingcarlos4348 Před rokem

      Insurance is a huge money pit

    • @alinatamashevich3354
      @alinatamashevich3354 Před rokem

      @@kingcarlos4348 Until you need it.

  • @Mr_Fairdale
    @Mr_Fairdale Před rokem +18

    Man, people love car debt

  • @DonesdeMotivacion
    @DonesdeMotivacion Před rokem +32

    Disagree. I took a $15k 401k loan to buy a house in early2021, bought it
    For $325k, house’s worth $525k now

    • @thdoom81
      @thdoom81 Před 3 měsíci

      you still have paid alot of money...in two years how much have you paid for the house...you got equity but you paud into it as well...stupid

    • @lyngirl7594
      @lyngirl7594 Před 3 měsíci +1

      This is my point. Real estate typically appreciates, if in a good spot, way faster than savings/401k.

    • @carlosquintanilla4088
      @carlosquintanilla4088 Před 2 měsíci

      I think you are talking about a 5401K loan and they are talking about a 401K withdraw. Complete different things!

    • @DefinitelyNotRin
      @DefinitelyNotRin Před 2 měsíci +3

      You bought at one of the best times in history. Yeah it can pay off. Dave's advice isn't to gamble like you did. Your gamble paid off. It will usually not. The fact you're justifying your gamble says it all.

    • @rodrigosanroman5858
      @rodrigosanroman5858 Před měsícem

      You don't want that to happen. I hope you live in a state that has low property taxes. Your house going up in value means you owe Uncle Sam more per year not to mention insurance will end up following suit. The only time that should make you happy is if you're a house flipper. It's the same reason so many people say not to count your house net worth as your net worth. It's a liability if anything. I hate when my house goes up in value.

  • @edhcb9359
    @edhcb9359 Před rokem +5

    LOL…when after talking to you on the phone someone thinks you are in your mid-twenties when you are in your late forties that speaks volumes about your intellect and maturity! 🤣🤣🤣

    • @ghostbird92
      @ghostbird92 Před rokem +2

      I love how when Dave asked him how old he was, he went on some long story about how his house burned down. Like what?

    • @mackdaddy2208
      @mackdaddy2208 Před rokem +1

      I wouldnt have guessed his age. He sounded super young, but his financial decisions made him sound younger.

    • @pumpkin6464
      @pumpkin6464 Před rokem

      😂

  • @lanceoa
    @lanceoa Před rokem +6

    I have an old workplace 457b, similar to 401k, but when you leave that job, it becomes essentially a brokerage acct, meaning there is no additional 10% penalty before 59.5, only ordinary capital gains…

    • @austintomkewitz3981
      @austintomkewitz3981 Před rokem +5

      That's awesome bro idk what the purpose of an age penalty is I think it's just dumb

    • @evansutton6760
      @evansutton6760 Před rokem

      @@austintomkewitz3981 gov't deterrent to keep people from pulling out their money for dumb reasons when they're young

    • @rachelharrison7961
      @rachelharrison7961 Před rokem +12

      @@austintomkewitz3981 The purpose is to keep people from spending their retirement money before they retire. You can disagree with it, but the reason is obvious.

  • @user-ch5mv3xn9b
    @user-ch5mv3xn9b Před 7 měsíci +6

    Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.

    • @EdwinHawkins-eg7ob
      @EdwinHawkins-eg7ob Před 7 měsíci +4

      Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.

    • @AnnaMoore-
      @AnnaMoore- Před 7 měsíci +3

      Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.

    • @user-ch5mv3xn9b
      @user-ch5mv3xn9b Před 7 měsíci +3

      I have thought about it, but haven't figured out how to get consultation, I don’t live in a big city.

    • @AnnaMoore-
      @AnnaMoore- Před 7 měsíci +3

      Really? Have you searched? Use any investor/advisor tool. Look for Monica Mary Strigle I am close to retirement with 1.4 M to my name outside of retirement accounts. I hired her services 3 years ago, she contributed immensely to my portfolio progress.

    • @user-ch5mv3xn9b
      @user-ch5mv3xn9b Před 7 měsíci +4

      What is her fee structure like? Are her services available to about anyone? Can you share more details?

  • @rachelharrison7961
    @rachelharrison7961 Před rokem +11

    Nothing about how much the insurance payout is and why that wasn’t covering a new house? (BTW, this caller is no where near a 25% tax bracket)

  • @scorpion2320
    @scorpion2320 Před rokem +4

    I live in Corpus Christi as well. People here will drive nice car than the house. The car has the highest priority around here. Wife won’t let that car go i can guarantee 😀

  • @maximegaulin8699
    @maximegaulin8699 Před rokem +32

    "The biggest mistake they ever made was super expensive car when they're still broke" YUP! That's me. Never again. Thanks M. Ramsey.

    • @reese85
      @reese85 Před rokem

      What’s super expensive?

    • @reese85
      @reese85 Před rokem

      @marks90004 was the Beamer brand new or a few years old and what model? Cuz all beamers are not expensive, especially if used

    • @maximegaulin8699
      @maximegaulin8699 Před rokem

      @@reese85 A brand new Tesla 😉

  • @Seethi_C
    @Seethi_C Před měsícem +1

    But that money will eventually have to get taxed when you take it out in retirement, so you shouldn't really consider the tax rate in this question, only the 10% penalty

  • @travlepreneur
    @travlepreneur Před rokem +2

    401 gets taxed no matter when u take it out.

  • @willelliott5052
    @willelliott5052 Před rokem +4

    He reminds me of myself when I was around that age. He has no idea how poorly positioned he is to buy a house. He needs to hear and acknowledge that he is broke. It is time to get humble and start cleaning up the mess that he doesn't want to see. Funny how he didn't think of the car loans as real debt. I hope that he will not choose alternatively to borrow from his 401k. I did that and it bit me back hard.

    • @WoodimusMaximus
      @WoodimusMaximus Před rokem

      I’m 28 and borrowed 7K from the 90k in my 401k and I regret it.

  • @FastAligator1234
    @FastAligator1234 Před rokem

    Take the 108k and pay off both cars. Don’t really need to sell them in your position. Now you’re debt free. Then use the rest for a 3-6 month emergency fund. Then throw what’s left as a down payment in the house.

  • @tompinkerton8099
    @tompinkerton8099 Před 2 měsíci +1

    I generally agree with Dave, but a guy who has a $95,000 per year household income and over $100,000 in savings is not broke, even if he has a car loan. He may be in the early stages of building his wealth, but he is definitely not broke.

  • @richarde735
    @richarde735 Před 11 měsíci

    61, eyeing up 100+ acres… would like to buy outright and thought my 401k could simply be shifted from a bank account to real estate (which would continue to grow). is that wise? plus it’ll be land for the kids to inherit.

  • @smokenojoke8182
    @smokenojoke8182 Před rokem +1

    Does 401k give you a break on a first time homebuyer? I read somewhere you can withdraw up 10k for a first time home penalty free.

  • @cyberms2783
    @cyberms2783 Před 9 měsíci +3

    No it's not like 35 % interest.
    You pay 35% once.
    But if you borrow at 7% you'll end up paying twice what you borrowed in 15 years.
    My advice is , go for it

    • @poetessbritt
      @poetessbritt Před 5 měsíci

      yeah and let's be real..dave knows this..he just doesnt want to give unlazy answers

    • @thdoom81
      @thdoom81 Před 3 měsíci +1

      don't take your retirement idiot

  • @nkyryry
    @nkyryry Před rokem +3

    Listen people. Listen loud and clear…. YOU SHOULD NOT HAVE A CAR PAYMENT. Period. No justification. No rationalization. No excuses. No car payment… ever.

    • @jeffkline9191
      @jeffkline9191 Před rokem +1

      Totally agree. It has become the norm to have car payments as big as house payments.

    • @jersmith1486
      @jersmith1486 Před 13 dny +1

      should i borrow from my 401k to pay off my car?

  • @nepatriots77
    @nepatriots77 Před rokem +15

    30k car is actually now considered below avg cost car.

    • @AK-rq1cz
      @AK-rq1cz Před rokem +4

      Sure, if you always buy new and from a dealer and don't think outside the box.

    • @nepatriots77
      @nepatriots77 Před rokem

      @@AK-rq1cz true

    • @jcattera
      @jcattera Před 6 měsíci +2

      @@AK-rq1cz Good luck finding a reliable $10,000 vehicle. SMH 🙄

  • @3lectric0
    @3lectric0 Před 11 měsíci +2

    you can also take a loan out of you 401k... cant you? so instead of pay the bank you pay back to your 401k fund?

  • @sweetfayce18
    @sweetfayce18 Před rokem +2

    So what is a 30k car payment? A utility bill?

  • @pinkorganichorse
    @pinkorganichorse Před rokem

    Thank you

  • @qposton25
    @qposton25 Před rokem +2

    I will never get the money out tax free so why even include the tax in the equation?

  • @MichaelHollen
    @MichaelHollen Před rokem +3

    Woah…full stop. 😂

  • @briankowald6465
    @briankowald6465 Před rokem +1

    Bad time to withdraw from a 401K. If the money wasn't in investments, then Dave would say to put the money on the house. Since its already in a 401K, leave it there.

  • @KeebasLife
    @KeebasLife Před rokem +1

    Seems to me just about every car today is atleast 30k or very close.

  • @NevaJWilson25462
    @NevaJWilson25462 Před rokem

    Come on Dave Ramsey.
    I'm out of debt SSDI. Your loan officer officer did not know anything.

  • @brandonschuppe1833
    @brandonschuppe1833 Před 11 měsíci

    I want to know if they collected insurance.

  • @exgamer07
    @exgamer07 Před rokem +5

    How is $109k in cash savings broke?

    • @MichaelAnderson-wk1no
      @MichaelAnderson-wk1no Před rokem +2

      I think that's probably just the money they got from their insurance payout when they lost their house, and now they have no house.

  • @Rustic1990
    @Rustic1990 Před 11 měsíci +4

    I have a question I can’t seem to find an answer to anywhere. I understand the taxes would be 25%, but is that really a “loss” since you eventually have to pay taxes on it down the road anyway or am I missing something?

    • @poetessbritt
      @poetessbritt Před 5 měsíci

      if you are doing a withdrawal, no true added loss bc u arent required to pay it back. you, ofc, miss out on interest that would have accrued were your money still sitting in that account, however.

    • @poetessbritt
      @poetessbritt Před 5 měsíci

      retirement LOANS are diff: you are required to pay yourSELF back, with interest that goes in YOUR pocket. no taxation at ALL, unless you leave the company and dont pay them back in time. not all companies are 60 days.

  • @TheTopherocks
    @TheTopherocks Před rokem +4

    That has to be the youngest sounding 47 year old I’ve ever heard. Thought he was 25.

    • @itwaswritten804
      @itwaswritten804 Před 2 měsíci

      No worries after talking to the advisor I’m pretty sure he aged faster than Obama did in his first term as POTUS. This guy is incorrigible…

  • @gomerhondo7249
    @gomerhondo7249 Před rokem

    Not giving up the tax rate…. You will still have to pay that when you take it out of your 401k unless Roth.

  • @genos_vacuum
    @genos_vacuum Před 5 měsíci

    Wow
    ...so much knowledge. But we NEED our SUV Honda pilot my guy

  • @Carnerd101
    @Carnerd101 Před 4 dny

    Unlike an early withdrawal from your 401(k), a 401(k) loan isn’t taxable. Most loans - including personal loans, cash-out refinances and home equity loans - are also not taxable.

    • @Carnerd101
      @Carnerd101 Před 4 dny

      Is Dave getting a 401k loan and withdrawal mixed up?

  • @nicole4779
    @nicole4779 Před rokem +20

    You can get a 401K loan to help buy a house. You avoid penalties as long as you pay it back and stay with that employer.

    • @mannyjeanpierre4062
      @mannyjeanpierre4062 Před rokem +5

      And what happens if you get fired or laid off?

    • @kaiung7542
      @kaiung7542 Před rokem +4

      @@mannyjeanpierre4062
      Then don't get fired

    • @robj577
      @robj577 Před rokem

      That's what I did, worked out great for me, but you have to plan to pay it off soon, don't just forget about it

  • @kbanghart
    @kbanghart Před rokem

    I did, worked out pretty well.

  • @jimroscovius
    @jimroscovius Před rokem

    You NEVER take from an IRA unless it's too stave off bankruptcy. Don't lose the interest.

  • @KartalFL
    @KartalFL Před 10 měsíci +1

    So the tax you owe , if you wait till your 60s, is not there ??? Let people use their money (in stuff that makes sense, while it is still there and while they are alive

  • @catherinemapes2394
    @catherinemapes2394 Před hodinou

    Dave makes the point that selling the money in a 401k is the same as paying 35%-40% interest depending on tax rates. When you consider what is lost from potential gains on the investment over ten years when that money is gone makes it even worse. Cash out $100,000, have $65,000 that pays off debt where in ten years that $100,00 would be over $200,000. The money in one of my 401k plans invested in The Investment Company of America more than doubled in nine years even with the ups and down of recessions on the market. Leave your retirement accounts alone!

  • @kevinh4910
    @kevinh4910 Před 3 měsíci

    You have to pay taxes on it anyways when you sell 30 years from now... potentially the 10% penalty is waived as it might be eligible for a hardship? Withdrawal

  • @davidmilhouscarter8198
    @davidmilhouscarter8198 Před rokem +2

    “How old are you?”
    “Well my house burnt down.”

    • @kingcarlos4348
      @kingcarlos4348 Před rokem

      He was rationalizing why he was so financially illiterate at his age before he answered

  • @ryankeels4661
    @ryankeels4661 Před rokem

    Refinancing on a 15 year right now would be a horrible idea if they got in the house before this craziness!

  • @LuckyC1723
    @LuckyC1723 Před rokem +3

    Did I heard correctly. 108k in savings, around 30k in car debt. Why you no pay off debt?

    • @DoctorSmartyPants
      @DoctorSmartyPants Před rokem +1

      The 108k is what they got from insurance payout, probably. And they have no house.

    • @tc-qv1fv
      @tc-qv1fv Před 12 dny

      Yea but it’s going to cost you about 600 months from ur paycheck

  • @cosmomontanaro5759
    @cosmomontanaro5759 Před měsícem

    Why doesn't he just pay off the car and other loan if he has triple that saved? Is the interest rate negative or something?

  • @kc201310
    @kc201310 Před 7 měsíci +2

    how does the fact that he has $108,000 in savings not make him not broke?

  • @djpuplex
    @djpuplex Před rokem +2

    Yeah sell you stocks when stocks a low and houses are still high. This guy's wife needs to turn off HGTV and Bravo.

  • @LawTizzle1
    @LawTizzle1 Před rokem +2

    he does sound like hes in his mid 20s…only to find out hes 47. daves reaction lol

  • @murphyville
    @murphyville Před rokem

    I took 401K loans out and I regret it. If only I had the inkling to save before, I would have never got the loans to begin with.

    • @blackworldtraveler3711
      @blackworldtraveler3711 Před rokem

      There were some coworkers actually crying at our annual company retirement seminar/workshops and wondered why after over 25 years of employment some of us were 401k millionaires retiring early and others barely had $200k and told they could not afford to retire.
      Borrowing from yourself and paying yourself back with interest sounded good and hooked many. I didn’t fall for it. Also didn’t like the idea of pretax money sitting for 30+ years and contributed to aftertax and Roth instead.

  • @ChristoherWGray
    @ChristoherWGray Před rokem +2

    Why does he just guess people's age instead of just asking
    Especially when he is always off by a decade or more

  • @bantizzle79
    @bantizzle79 Před rokem +1

    Ruben will keep the cars

  • @jcattera
    @jcattera Před 6 měsíci +1

    Wait! Hold on Dave! You make it sound like he's taking a hit of 30% on his 401K money for every year for 30yrs! No! the hit is only for 1yr! Not for the entire 30yrs! He's going to save a TON of mortgage interest over 30yrs! Probably $300K in interest! Plus! You eventually have to pay the 401K taxes on that money when he retires anyway! Yeah! he's going to pay a 10% penalty but look at all that mortgage interest he saves over the life of the loan! I don't think you're seeing the forest for the trees! 🙄 NFA

  • @DoctorSmartyPants
    @DoctorSmartyPants Před rokem +9

    I am guessing the cash came from the insurance company from their house burning down. Sounds like they opted to take the cash value payout from the loss rather than rebuild on same land?

    • @reese85
      @reese85 Před rokem

      Is that an option? They would rebuild for you?

    • @DoctorSmartyPants
      @DoctorSmartyPants Před rokem

      @@reese85 yes they will give you the funds for it. It's called replacement value.

  • @mjwmontgomery
    @mjwmontgomery Před rokem +7

    401k is not a great idea in my view. Its taxed when you need the money.

    • @sd0753
      @sd0753 Před rokem

      Beside Roth accounts, all investment vessels are taxed when you get the money.

    • @mjwmontgomery
      @mjwmontgomery Před rokem +1

      @@sd0753 what about investing using a c corp or ltd partnership?

  • @geno816
    @geno816 Před 10 měsíci

    I've always wondered. If you have a 401k that you contribute roth.. if you take money out, will they still tax you on it and take the 10% penalty? Just always been curious

    • @poetessbritt
      @poetessbritt Před 5 měsíci

      my company only allows hardship withdrawals. i have part roth, part 401k. they charge one time tax of 10% if you have a legit, documented hardship: repair on your house for a proveable natural disaster, etc. retirement LOANS are diff: you pay no tax unless you leave your company and dont pay it back in time. you only pay the interest on the loan, but it goes back in YOUR POCKET. but yeah sadly, they didnt have an option for me to go: pull this from the roth portion for the purchase of your investment property.

  • @tee6atl
    @tee6atl Před rokem +5

    I did this. It's much smarter to pull 401k. They allow you to take a loan with a house and not have all the penalties. Especially if u do traditional and roth. Would you rather pay yourself back or some company??? This was bad info

    • @vr3142
      @vr3142 Před rokem +1

      I think there was a difference. He asked if he could pull all the money out not take a loan. But I might be missing something and I agree that it’s a wise step right after clearing the car debt.

    • @tee6atl
      @tee6atl Před rokem

      @@vr3142 well in most cases it will still result in a "loan" even if u are 100% vested. Depending on company u work for they usually allow up to a certain amount removed then you can get the remaining in a loan. But the loan is paying yourself back in the 401k. Much better

    • @Rossdink
      @Rossdink Před rokem

      @@tee6atl he was talking about taking it out completely and being penalized... . 401k loans can be great for down payments on homes but really should be discouraged otherwise. I doubt he would have enough for a loan though they only let you take out so much in a loan and he needed a lot of money so that wasn't on the table I don't think

    • @tee6atl
      @tee6atl Před rokem +1

      @@Rossdink have you done it? Because i have. I know what im talking about.

  • @quixomega
    @quixomega Před rokem +2

    I think not buying fire insurance is his biggest mistake, the cars being stupid, but not life-destroying terrible.

    • @johnhwang339
      @johnhwang339 Před rokem +1

      If he had a mortgage with the previous house that burned down, he would have been required to have fire insurance. It would have been in the escrow account with the mortgage servicer.

    • @DoctorSmartyPants
      @DoctorSmartyPants Před rokem +1

      I believe that is the cash he is holding. Insurance payout.

  • @Niafunn
    @Niafunn Před 5 měsíci

    It’s a false equivalence. No penalty for a Withdrawal for hardships and first home. And you would have had to pay the taxes on the front end or the back end anyway for that money. Don’t loan on your 401k and you won’t have to pay it back. Withdrawals are not loans so you don’t have to pay it back if you leave your employer. Stretch the amount over three years of your taxes legally to lessen the tax burden. Or let them take it out before you get your cut. At his income with two people married filing jointly the tax burden wouldn’t be half of what Dave suggested. Seriously you have to pay taxes at some point it went in tax free. That being said, stop contributing past the match and save the money. I would consider it but 20 percent down in a single family home in California is 100 grand. Too big of a step back in my 401k.

  • @JustinCase780
    @JustinCase780 Před rokem

    Why does a Talking Heads song come to mind?

  • @anaa03899
    @anaa03899 Před rokem

    108 k in the savings account. 😳😳

  • @mr.puggin8384
    @mr.puggin8384 Před rokem +2

    Use the savings to payoff the car 😂 and don’t get a new car

  • @shaynehuber287
    @shaynehuber287 Před rokem +3

    Dave thought he was mid 20’s???? He has a little more than 50% of the purchase price of the house, his wife has a built up 401K, and they have 100k+ in savings…..what mid 20’s person does he know in this financial situation???

    • @POMPLP72
      @POMPLP72 Před rokem

      None which is why Dave is a clown and his advice is rubbish.

    • @kc201310
      @kc201310 Před 7 měsíci

      exactly... this person could just pay off the cars in full and still have over and above the necessary amount for an emergency fund... I don't see how they are considering him broke...

    • @poetessbritt
      @poetessbritt Před 5 měsíci

      pffbt dave doesnt think that..he just set him up to knock him down, as dave's narcissism is wont to do

  • @rudyflores7396
    @rudyflores7396 Před rokem +4

    Cash is King!!!

    • @gregorymoore2877
      @gregorymoore2877 Před rokem +1

      Debt is dumb! And the paid off home mortgage has taken the place of the BMW as the status symbol of choice!

  • @oclayton1911
    @oclayton1911 Před rokem

    He didn’t want to hear that about his car. Probably a super uped truck

  • @jimroscovius
    @jimroscovius Před rokem +5

    Why is it so hard for people to understand getting out of debt??

  • @lkj0822g
    @lkj0822g Před rokem +5

    Honestly, I've seen Dave go both ways on this question. But the bigger concern is that a forty-something year old can't figure this stuff out - even Dave thought he was in his twenties.

  • @Liam___ohara___
    @Liam___ohara___ Před rokem

    what would be better is that he had Roth IRA tax free if he withdrawals that

  • @calebweaver3628
    @calebweaver3628 Před rokem +3

    Shop rates are now $150 + an hour and parts are hard to get. A $10k car may not be cheaper annually if it isn’t reliable and $10k doesn’t buy much of a car. I would not sell that car. Falling behind the times Dave.

    • @jcattera
      @jcattera Před 6 měsíci +1

      Yeah, Dave isn't aware a $10,000 vehicle is basically a junker and most likely not very reliable. Most new reliable cars range from $35,000 to $100,000 now. Dave is not being very realistic! I wish someone would have the balls and debate the guy! I'm itching to call on his show and have a nice debate with him! 🙄 NFA

  • @melissab8653
    @melissab8653 Před 15 dny

    They’ll just get you one way or another 🤯

  • @dancalmpeaceful3903
    @dancalmpeaceful3903 Před rokem +1

    Sorry...NEVER take a loan out on your 401K.....if you leave your job - you have to pay it OFF in full. Not sure what happens if they lay you off......

    • @tubenachos
      @tubenachos Před rokem

      It becomes a withdrawal by default I think and reported to IRS

    • @dancalmpeaceful3903
      @dancalmpeaceful3903 Před rokem

      @@tubenachos I think that's ONE option besides paying it off immediately...although I would say this - NEVER get the IRS involved....EVER.

  • @dkolb65
    @dkolb65 Před měsícem +1

    Since when is 30k an expensive car? Have you priced any new car in today's market? If you buy a 10k car it better come with a good mechanic.

    • @secretlyclever4062
      @secretlyclever4062 Před měsícem

      30k is expensive if you’re salary is only double that or less. I make 60k and wouldn’t spend more than 15k on a car.

  • @mciti2594
    @mciti2594 Před rokem

    Kinda hard to give him advice when he keeps changing the figures and withholding info. 🙄😂🤷🏼‍♂️

  • @rudyflores7396
    @rudyflores7396 Před rokem +3

    Is Funny how all of these people are suddenly money experts and trying to tell Dave Ramsey his wrong ... Lol...

  • @lot2196
    @lot2196 Před rokem +11

    My house is paid off, our kids are grown up, and household income is $120K. I couldn't imagine in my wildest dreams of having $36K in car debt.

    • @BLdontM
      @BLdontM Před rokem +4

      That's because you're a cheapskate (unless you are very, very far behind on retirement savings and trying to catch up)

    • @mackdaddy2208
      @mackdaddy2208 Před rokem +2

      Or he just has the financial means to pay things in cash. Especially when he has great income, and no house payment!

    • @dancalmpeaceful3903
      @dancalmpeaceful3903 Před rokem +1

      my income isn't that high...but my house was paid off years ago..and I pay cash for my old, beat-up cars.....which I like. Car loans kill your wealth-building... I haven't had one since 1994......

    • @Maelu-op9gf
      @Maelu-op9gf Před rokem +2

      @@BLdontM it’s called being smart with money

    • @BLdontM
      @BLdontM Před rokem

      @@Maelu-op9gf cheap =/= smart

  • @rockson4975
    @rockson4975 Před měsícem

    Life is too short to be keeping a 401k. What the heck? Spend your money when you can people.

  • @jimmymcgill6778
    @jimmymcgill6778 Před rokem +9

    Don't use retirement to buy a house.
    Don't sell the car.
    Do a thirty, not fifteen..

    • @w7855
      @w7855 Před rokem +2

      15 is better if you only plan to be in the home for 3-10 years, since the amortization schedule is way more advantageous. If one plans to stay for the long term, 30 is better cause they can likely just pay it down faster if they choose to.

    • @unfairsanic5089
      @unfairsanic5089 Před rokem +1

      Doing a thirty is stupid

    • @Nolaman70
      @Nolaman70 Před rokem +2

      @@unfairsanic5089 why? You can always pay it off early. You can always refinance it. It can get you in a house easier. At today's house prices most will not have a choice.

    • @freedomfan4272
      @freedomfan4272 Před rokem

      @unfair sanic it depends on the situation and everyone's is different

    • @amireallythatgrumpy6508
      @amireallythatgrumpy6508 Před rokem

      He's too old for a thirty.

  • @melinda67
    @melinda67 Před rokem +5

    He tells him to get a 10k car but there are no 10k cars! Any used car these days goes for 15k or more. Those that cost 10 are wrecks and accident vehicles

    • @josephzo4920
      @josephzo4920 Před rokem

      I didn't get one for under 10 grand at the police auction

    • @jcattera
      @jcattera Před 6 měsíci

      Yup! And if they're $10,000 and look new, they probably have "salvage titles" from being in a flood...

  • @Gus_Chiggins
    @Gus_Chiggins Před rokem

    How old are you?
    Well ya see a firework went off in my back yard…

  • @allsensegamer6396
    @allsensegamer6396 Před 7 měsíci

    That right buy an old ten thousand dollar car and get everything fixed on it now if it last

  • @SS-sy4uu
    @SS-sy4uu Před rokem

    Umnn its 35% of the capital gain not 35% of the lumpsum

  • @webfreakz
    @webfreakz Před rokem +1

    No compensation from whom burned their house down with fireworks?

    • @Rossdink
      @Rossdink Před rokem

      yes that was an interesting question that didn't come up, perhaps it only covered half the new house

    • @amireallythatgrumpy6508
      @amireallythatgrumpy6508 Před rokem

      Probably will be decided in court in about three years, knowing the legal system.

    • @sendit3251
      @sendit3251 Před rokem

      No it they still fault

  • @r.a1692
    @r.a1692 Před rokem +1

    Could he get it as a loan from the 401K instead of pulling it from the 401K some one could explain me that

    • @poetessbritt
      @poetessbritt Před 5 měsíci

      yes he could, but could face taxation and a balloon payment if he doesnt pay it off quickly after leaving the job

  • @matt75hooper
    @matt75hooper Před rokem +1

    Another caller that doesn't need financial assistance. It's humble bragging.
    Dave saved another one.
    Poor guy only has $180k in cash & $90k in income. Very little debt.
    Rice n beans.....beans n rice.
    Ridiculous.

  • @lamarg247
    @lamarg247 Před 2 měsíci

    Disagree. The 35 percent tax you pay on the 401k is mostly likely less than the interest you will pay throughout the life time of the mortgage.