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Well, the most recent annual gains have been WAY OVER 3.25%, that's the biggest miss. My 401k gains for 2010, 2011, and 2012 were all in the 10-16% range and this year already +15% and it's only May 16th. Anyone who wasn't funneling every possible dollar into the stock market over the last 3.5 years is a complete fool and missed one of the biggest run-ups in the history of the US stock market. And we are STILL on an upward trajectory, for now at least. I would not take $1 out to pay off a piddly sub -$10k student loan.
Since you seem to be a financial guru, where do we go from here now that stocks are at record highs? Are we still at 'anyone who isn't funneling every possible dollar into stocks is an idiot'? Or is it time to lock up some gains and spread it around?
Then why come and ask for advice if you aren't going to listen. Student loan payments are not fun, but they are better than not going to college at all. Get a part time job on the weekends, both of you and put all of those funds toward your loans to pay them off faster if you want.
I have job that routinely mandates overtime and already work 6-7 day weeks. Making more on OT then any job pays. I obviously haven't made up my mind or I would not have made a post. We already funnel money into student loan payments as I said.... its our biggest monthly bill. We built up a emergency fund and have set our payments that each month we are near $0 or negative on funds but with tax returns and bonuses, we are slightly positive for the year. So not really saving any money other then max employer match in a 401k. Our networth grows quickly though.
I was trying to make sure I am not missing anything as its not a simple calculation on potential lost earning potential of taking the money out in a loan and incrementally paying it back. I was also considering seeing if I could get the payments to katch and see with the lower rate if I could pay it off lime 6 months faster.
If you are given the choice between dieing and taking money out of a 401K, choose dieing first. In other words, there will never be a good enough reason to touch your 401K. Don't do it, don't even think about it.. !! That money does not exist..!!
If you are given the choice between dieing and taking money out of a 401K, choose dieing first. In other words, there will never be a good enough reason to touch your 401K. Don't do it, don't even think about it.. !! That money does not exist..!!
Its a loan, not a removal of money and the interest goes to m 401k, so say the stock market drops 3.5% and i take a loan and add 3.25% i would actually have made more money then leaving it there. I know a lot of people mix these up a loan vs withdrawing, taking penalties, and not returning.
"Anyone who wasn't funneling every possible dollar into the stock market over the last 3.5 years is a complete fool" A person who did a max 401k loan in 2007 before the crash looks like a genius. I suppose you probably pulled every cent out of stocks just before the crash and then put it all back into stocks the day the Dow bottomed out.
After the big run up, now might be the perfect time to do a 401k loan.
"Piddly" to you does not equate to piddly for all.
I moved everything to bonds after the first 6 weeks of the Fall 2008 crash. I certainly didn't sell at the top but I bailed far before the bottom. I got back in as soon as I saw sustained 4-6 week upswing. It's not that hard to follow the market.... Real estate is much trickier to time than the Dow.
Since you seem to be a financial guru, where do we go from here now that stocks are at record highs? Are we still at 'anyone who isn't funneling every possible dollar into stocks is an idiot'? Or is it time to lock up some gains and spread it around?
See my above response about following 4-6 week market trends. At this point, I DO think we're still going up. A lot of individual investors who sat the last few years on the sidelines are still moving money back in. The housing market is healing and growing. Unemployment is going down. Companies are reporting pretty good profits. Consumer spending is ticking upwards. All signs - except for the artificially low interest rates - look positive for the near term market.
Many/most investment professionals would say it is ill-advised to try to time the market with retirement funds.
I agree I just put money in good long term companies that may bump a little but overall as long as they show steady improvement over the years I trust it.
Well, the most recent annual gains have been WAY OVER 3.25%, that's the biggest miss. My 401k gains for 2010, 2011, and 2012 were all in the 10-16% range and this year already +15% and it's only May 16th. Anyone who wasn't funneling every possible dollar into the stock market over the last 3.5 years is a complete fool and missed one of the biggest run-ups in the history of the US stock market. And we are STILL on an upward trajectory, for now at least. I would not take $1 out to pay off a piddly sub -$10k student loan.
I have hard time believing you made 10% to 16% gain in 2011.
So yesterday some people were talking about doing a 401k loan with my company, some are knowledgeable and done a few, so I got a lowdown on some of it but I need to look into and deep dive into the details. I used to know people that used them like monthly for crap, I usually just think throw money in and leave it.
1st, you can do up to half your 401k, its like a one time $50 fee. All interest you pay goes back into your 401k. I still need to confirm this.
Either way usually I think, I don't want to touch any of my retirement money etc... Then I got to thinking. My wife and I have some alot of student loan debt.
We can't pay it all off, not enough money in the 401ks. I was mainly going to focus on one private student loan that is 10.5% interest. It is ~$8900. Current plan has it paid off February, 2018. So just under 5 years.
Just skimming a brief Overview, saw I can borrow up to 5 years, for a General loan, and 20 for a residential loan.
They list 3.25% fixed vs a 10.5% variable on my other loan.
Now I know the downfall is reduced growth opportunities, but the upside is cutting my interest rate on the loan? Over 5 years, will I see a 7.25% growth? And even then the number isn't exact because I will be repaying the money over those 5 years, so the money will be seeing growth. Even then the interest I do pay... is going right back to me, so its kind of like I am saving the 10.5% overall.
Since its a student loan, I can't default, so if say I lose my job, everything its not like I can declare bankruptcy, so it makes it a little more appealing to tap retirement, over say a general loan like a house/car/credit card. I also recently was thinking of the 20 year loan towards my house, so I could gain enough equity to lose my Mortgage insurance. But does not apeal to me as much.
I am just starting to dig into this a little bit, and wondering if this may actually be a viable plan. I am normally put money in retirement and don't touch it guy.
This retirement account has $23k in it(accrued over 2.5 years). I have another with about $8500, I still need to rollover into this one. I just turned 31. My wife has about $25k and is 32.
Honestly, I think it would be better to do one of those 0 percent balance transfer credit card deals. Even though they usually charge a 3% or 4% transaction fee, it would still be worth it. Take the money from the balance transfer (often they let you write a check to your checking account) and pay off your student loan. Then when the deal gets close to expiring, do another balance transfer.
I think 401K loans are a bad idea. They just set a really bad precedent and get people into the habit of using their 401ks as slush funds instead of retirement funds.
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A person who did a max 401k loan in 2007 before the crash looks like a genius. I suppose you probably pulled every cent out of stocks just before the crash and then put it all back into stocks the day the Dow bottomed out. 
