Do THIS Instead of Borrowing From Your 401(k)
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- Опубликовано: 1 июн 2024
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This guy is in a great position - no car payment, he's single, so he doesn't have to negotiate the debt payoff with a spouse. He can definitely do this!
Women are the worst part of life.
@@rnt45t1and so are men if you want to go there.
I absolutely agree
@1:37
Dave: "You single?"
Caller: (with pride and joy) "I sure am..yea"
Smart dude.
I’m single AND a virgin
Get those broads outta here
Easiest path to financial freedom, don't get married and don't have kids...
@@EricSmyth4Christ Go get laid and have a life.
This was my same exact situation right out of college: 60k/year, 60k in loans, paid them off in 3 years. Totally doable.
Dude can do it, 3 years is all it takes, maybe two. I was in the same position as him and didn't do anything else but work and save up money for a car in cash. It seems like a long time but time moves faster than you think. If he's dedicated, he can do it
Live like you're a broke college kid for 1-2 years. Since he's single, it's entirely possible. Just keep expenses low, put all extra money each month into the loan and it'll be done.
I don't even like to hear stuff like this. ANY financial advisor would tell you the last thing you want to do it to do this. Hell, I worked with a lot of people who would borrow against it and they'd pay themselves back with interest, as our company had it set up that way, and I still hated to see it. People see a large dollar amount sitting there and if they have money issues and are NOT good with money, it's like a carrot on a stick. I'm glad Dave gave this advice.
" I worked with a lot of people who would borrow against it and they'd pay themselves back with interest"
If you're going to take a loan, that's the way to go. Not sure why you hate that approach so much.
Caller, if you are reading this. We are cheering you on. You will be debt free in such a short amount of time. And you'll be a millionaire in no time with the way youre tackling your debt and being disciplined with your money. Keep at it. You are young and you are in a great career ahead of you. Good job!
Go crazy and pay it off ASAP. No other debt, that's great.
I paid off my first car with 50% of my net income. It took me 18 months to pay off the 12K car loan paying $823/mo. I was earning 28,300 per year at that time. Yes, the co workers did suggest that I was eating too much Kraft M&C(every day for lunch at work) which was cheap at that time. It all paid off because I was able to live on 50% of my income for another 8 years until I purchased a forclosed Oreo house. It was worth it to be debt free at 26 and funding the 401K at 16%+3% co match.
I knew a guy at work who borrowed from his 401 all the time, after awhile he quit and never heard from him.
Borrowing from the 401k is better than borrowing from other places. But I did it and was disappointed. I was charged a $75 loan application then a yearly maintenance fee on top of intrest.
As an IT professional, it's not that easy to just get side gigs like that
Programmer here, agree 1000%. Also often your contract with your employer can get in the way even if the work isn't in the same domain.
doordash
@@TheDeanosaurus yep, I'm also a programmer/ software eng
@@Ryanblueslots doesn't come anywhere close to the same rate. I think Dave's point was the IT guy would be able to pick up side IT contracts and work and it's just not that simple.
@@Ryanblueslots this is more realistic
I did free lance IT between 2012 and 2016 easy money on top of my full time IT job, it eventually landed me to job that paid me over 20k more than what I was earning at the time, guy needs to hustle just a bit, with no spouse and kids (no additional debt) he can knock it out.
Agree!
You deserve to do good dont cut yourself short
Consistency is key! It’s really difficult to focus and keep this intensity up, esp when you’re in the thick of it. Willpower 101. If this guy clears his loan and medical bill, I can honestly say (from experience) he will set himself up for life. It’s hard but yes it can be done.
That yeaaaaa from Dave after freelancing was brought up was deep lmao
I have a $700 (it was $1200) debt that i owe my mom and it's choking me up that i want to clear out by next year. U don't know how crazy I'd become if i had thousands and thousands of debt.
Always cash out.
More great advice from Dave. Don't keep drbt around like a pet. This guy can do it and he'll be a millionaire.
Might even apply for charity care to get medical bill reduced
Come one Dave who REALLY pays 20% on your gross in taxes?? But he is right in the 10% penalty tax, i would say most ppl pay at most 15% i say the norm is 10%
That number before extra money is lower than my threshold. Walking a little taller today.
I’m sure he can pick up some OT in the emergency room.
😂😂😂😂😭🙃
What about cashing out roth money to pay down debt?
Just from the title of this video we knew what the answer was gonna be 🤣🤣
Always interesting how these guys pretend like $50k a year is net. Take 30% off and that’s what he gets to use to live on and pay debt with. He’s not putting $25k a year on student loan unless he moves back in with parents, doesn’t have to drive anywhere and they buy his food.
Get the extra jobs, and make it happen ASAP!
Exactly...cable TV and PlayStation/X-box can wait till you're in better financial shape.
10% penalty is off set by dividends and gains. Thats how I see it
I’m scared to even think about touching my 401k before 58
Maybe at 58 the market will crash and then you won’t have anything to take out right when you need it.
You mean 59.5?
@n1k01k0 but more likely it won't
Only every 10 years!
Misleading title. You can borrow against 401k much cheaper than cashing it out. If you have a high interest rate debt or multiple… it’s very likely a good idea to borrow at a lower rate to pay off a higher interest note. Prove me wrong.
He doesn’t even need to get a side hustle. Just stay disciplined even if it’s for 3-4 years. If the economy gets better he can perhaps find a better job then.
56K is about right for salary though. I’m in IT and make almost 80K and that’s considered high.
If the economy gets better? There aren't enough people to fill all of the open IT jobs.
0:50 Love Dave... but it always puzzles me why folks compare a flat fee or return number against a rate. One is time dependent. The other isn't. So no... it's not like "borrowing money at a 40% interest rate." They just both happen to be numbers that involve a percentage. For somebody that is a "math nerd" Dave and others do that a lot.
Yeah but with 401ks, compound interest is your best friend. You're better off letting it grow while you tackle debt
@@freakymrq I didn't say he should borrow from his 401k... It was just a comment on the math
@@tannerdrakeYeah, I think a better argument would just be to focus on explaining the fact that you're stealing from your future (retired) self, not learning the behavioral changes from debt payoff, etc., in ADDITION to paying taxes and penalties on your investments.
I agree. 56K seems low in this economy for his skills. I would be looking for jobs. Tell them you need 65K minimum.
I’m in the tech field. 56K is about right believe it or not. Tech doesn’t pay as much as people think and the field is over saturated.
@@Yogastrong908 True. There's H-1B workers willing to work for less as well as remote work that may not pay as much.
@@unclebenny I’ve always said STEM was overrated and this is more proof of that. We are a global economy and you aren’t worth what you think you are.
Borrowing vs cashing out a 401k are 2 completely different things.
This. I’m thinking Dave thought he’d borrow with payback and interest. But cashing out is taxed like crazy yes. But essentially it’s your $ right? They won’t give you the full amount in your account since a lot of it is what your company matched. For example I have 40k. And am able to take out about 18k. That’s just my $ I’ve personally invested.
Don't do either. Either way, you lose everything it could have made. NEVER borrow from your 401k and NEVER cash out except to stave off a bankruptcy.
@@jimroscovius I’m with ya man. I don’t want to do it. But the way things are going right now in California. We’re going to see a massive influx of 401k withdraws. And max out debt. Then what? Lol
@galaxygolden My best advice? Get out of California. No one could pay me enough to live there. I live in the Midwest, with reasonable housing, whether buying or renting, a paid-off house, no debt, and a nice retirement nest egg. People say, "But I can't move". We did, and we're better for it.
@@jimroscovius We did this in order to put a downpayment for our first house. EVEN WITH the housing market going gangbusters and the equity we have now in the house the money we missed out on with the 401k loan is still more. Also it's a HUGE risk because it becomes a withdrawal if you don't pay it back if you get let go within 60-90 days.
Wb a company i no longer work for?
Wouldn't the 401k funds after penalty be added to his other income? He's not going to pay 30% on that alone.
The way most student loans are structured, you are making interest only payments for years if you follow the schedule. This is why it seems like you are getting anywhere, because you aren’t
Well the loans are %5 , which is lower than inflation
It makes it tempting to not pay right away
Who the hell puts the percentage sign THERE?@@EricSmyth4Christ
I’m here first 🤓
🏆
Never cash out retirement.
Even in retirement?
@@unclebenny Smart aleck.
@@jimmymcgill6778 Avoid absolute terms like "never". Bob's your Uncle.
@@jimmymcgill6778lol you mad
@@unclebennyBob's your uncle? What does that mean😂😂😂?
Don't you still have to pay taxes when you cash out 401k when you're retired?
If it’s a Roth no, traditional yes
So he has been out of college for 10 years and he only makes 56,000 a year.
Wait, was the thing he said to do instead is just work 2-3 more jobs?
Live on the bare minimum and throw the rest at the debt until it’s paid off
Even if you aren’t a Dave die hard, no reason to do this whatsoever. Cashing out the 401k and paying penalties is an absolute last resort. Paying a big penalty to pay off low interest student loans is even stupider.
Just pay it off. Pay it off fast by having no life if you want to be a Ramsey person or just pay it off in like 6-10 years if you don’t want to. Or just make minimum payments forever if it’s below 4% interest. In a few years, the minimum payment will be peanuts anyway. Whatever you want, I don’t care. But just pay it.
Get out now! The market is crashing! Run for the hills! Hahaha
I respect Dave a lot but he also piss me off when he talk about paying off debt based on income before taxes.
✝️🙏
Hey man if you're reading this you should be at least making 80 k or easily even more to 100 k. Please look in to it. They are under paying you.
Comment
The problem with Dave's theory at 35% interest is it is a one time fee vs if it take 6 years to get out at 8% may end up being a similar dollar amount lost to interest or plentily. I do agree with Dave to never take out a 401k unless it is an absolute emergency. It's a 401 k retirement plan not a 401 k fun/pay off debt plan. This guy should not take out his 401k.
Store up in your barn houses …. That’s biblical .
Sign up for the SAVE plan.
NOPE
@@TheDeanosaurusYEAH.
Why not if he can save money? Interest will get paused. And you can still pay more then they ask you to pay. You'll save thousands in interest alone.
Avoid ALL plans. A plan is nothing more than an opportunity to get screwed
@@jimmymcgill6778 They'll have you paying ONLY interest for decades. That's their plan to hold onto it as long as possible. Dave's talked about it a lot in his recent videos.
@@amireallythatgrumpy6508 Nothing with with getting on an IDR.
Borrowing from your retirement fund is one of the worst things someone can do financially. First, most importantly, you lose compounding interest. Second, you pay a double digit penalty THEN it’s taxable income.
Dumbest choice someone can make. Sorry.
Inflation is a tax as well that negates the compounding interest. The idea that you get ahead by investing in a Wall Street Casino is beyond dumb.
you can't call yourself an American if you are not doing something financially stupid
@FrankS111
"Borrowing from your retirement fund is one of the worst things someone can do financially"
"Second, you pay a double digit penalty THEN it’s taxable income."
You are only partially correct.
If you borrow, AND pay it back, there is NO penalty or taxation.
If you borrow, and DON'T pay it back, THEN it is considered a distribution, and has a double digit penalty, if under age 59 1/2, and it is taxable income.
If you are over 59 1/2, there is no penalty.
Another unrealistic goal, 56k a year GROSS not net so he may bring in 40 and they say pay 30 a year is this dude just got to not pay any bills or is that fine to them
He's got to get his income up too. That's so obvious it goes without saying
If you are under the age of 35, then yeah, do it. Take out the 401
Dave only says don't use 401K because if everyone pulls out of the market HIS net worth goes down. Thank about it, folks!
Most of Dave's net worth is in real estate. If stock market crashes we are all screwed.
Davey ramsel ONLY wants to keep the corrupt fiat currency, curse to humanity, system propped up. Indirectly supporting central planners/banksters. His allignment says it all. Open and shut case.
@rnt45t1
Why dump on Dave?
If everyone pulls out of their 401k, which is invested in the market, and they go to cash deposits somewhere, EVERYONES net worth goes down, NOT JUST DAVE'S.
Besides, if you pull your money out of a 401K, and roll it into a Traditional IRA, and buy stocks, ETF's and mutual funds within the Traditional IRA, there would be ZERO affect on the market.
THINK about it.
Who is Dave Ramsel? @@jonasyracheta2185
Thanks for keeping us financially educated ♥️ I'm favoured, regardless of how bad it gets on the economy, I still make $27,000 every single week
This must be an investment with Mrs Amisha Jain
She helped me get back what I lost while trying to trade.
Yes Mrs Amisha Jain make it possible for me
👍👍👍👍
I'm a long term investor. I withdraw my profits of over $56.000 Last week
Republicans and student loans…..
That 401K will be completely worthless by the time you are 65. Take the money while it still buys something.
No it will not.
The whole point of keeping money in a retirement account is so that you maintain some of your purchase power when you need it
Let me guess, you're one of those gold/silver stackers who thinks giving a broker 10% right off the top is better than index funds at 0.02%?
@RusskiCommieBot
And how do YOU plan to survive, when you are too old to work?
@@thomasd5488not everyone has an interest in growing old, I work with the elderly every day and I've decided I'm not going to linger on this planet I'm going to check myself out when the time comes
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