[mitchntx]

Since about 30, I've been saving, scrimping and hoarding pennies, working 2 jobs, 3 sometimes, all so that I could retire at 55.

Everything ... mortgage, debt, housing amenities, shop, tools ... everything was set up on this idea that I could retire with reasonable comfort and then work as I wanted, when I needed and do what I liked.

The last year has seen that dream slowly dwindle into the reality that I will have to work at this stinking job till I'm a hundred and 55. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/unsure.gif)

My job is great ... been there since March of 1982. I really like what I do. Unfortunately it comes with it's share of migraine headaches, mostly with the title of Manager attached somewhere.

I was talking with a very good friend yesterday and he made some really good sense. Might as well pull all the money from market accounts and buy a new car. The drop in value couldn't be any worse.

Oh well, just thought I'd rant a while ... kind of feeling sorry for myself. So I want all of you to feel bad, too. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/drink.gif)

[mitchntx]

OK .. so lets look at this a diferent way ...

The 401K is taking a dump.

What if I were to take a loan against the 401K, short term loan (24 months), 7% interest (actual finance charges are 7% of the loan value) and pay off debt?

I am seeing this as it costing me 7% over 24 months to pay off multiple debt like a car, 2nd mortgage, small credit card, etc. This 7% doesn't appear to help much in the way of any single finance charge (but collectively it does) and it does free up cash flow.

And the 7% is a fixed amount that I'm losing, I realize, but it's a lot less than the 30% I've already lost in value. Am I seeing this wrong?

Some of you might see the market rebounding. and I do too. But not within the next 24 months. I think we are here to stay for a while.

[marka]

Howdy,

OK .. so lets look at this a diferent way ...

The 401K is taking a dump.

What if I were to take a loan against the 401K, short term loan (24 months), 7% interest (actual finance charges are 7% of the loan value) and pay off debt?

I am seeing this as it costing me 7% over 24 months to pay off multiple debt like a car, 2nd mortgage, small credit card, etc. This 7% doesn't appear to help much in the way of any single finance charge (but collectively it does) and it does free up cash flow.

And the 7% is a fixed amount that I'm losing, I realize, but it's a lot less than the 30% I've already lost in value. Am I seeing this wrong?

Some of you might see the market rebounding. and I do too. But not within the next 24 months. I think we are here to stay for a while.

I'm _far_ from a financial expert. I'm very likely wrong. But here goes anyway...

Taking a loan against your 401k turns your current shares into money... I.e. they sell them, and you actually realize the paper loss they're showing you.

Instead, if you just leave them alone, you have the exact same # of shares in whatever funds you did before, they're just currently worth less than they were. If you assume that this isn't a permanent downturn and that the economy will recover to the former level in say five years, their paper value will increase back to where it was and all you'll have lost was some hair on your head due to worry.

Mark

[mitchntx]

Taking a loan against your 401k turns your current shares into money... I.e. they sell them, and you actually realize the paper loss they're showing you.

Mark

I'm no expert either ...

But I thought they were just taken out of play ... in other words, you were getting no dividend or growth from them.

[FBody383]

Taking a loan against your 401k turns your current shares into money... I.e. they sell them, and you actually realize the paper loss they're showing you.

Mark

I'm no expert either ...

But I thought they were just taken out of play ... in other words, you were getting no dividend or growth from them.

What's funny is part of the market issue is the concept of "mark to market." The reason you know the value of your 401(k) or any other investment is that there is a closing price to value it. As long as there is a bid/ask you can ascribe value.

Borrowing within your 401(k) reduces the amount investable but also creates other issues. If you separate from the company with an outstanding balance and can't pay the loan back, I believe it's treated as an early withdrawal subject to ordinary income tax as well as a penalty. Should be very low on your list of ways to raise capital; should probably get more familiar with Ebay first.