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Old 07-23-2015, 06:35 PM   #1
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Default OK, financial gurus, how stupid is this idea.....

As some of you know I was recently laid off, but received a decent severance.

I'm considering returning the '15 BRZ to stock (ground controls, 18x9.5 RPF1s, Open Flash tablet, MXP Cat-back), pulling a bit of cash from 401k to make up any negative equity from it being such a new car and ditching it.

I would then go find a nice NB2, put some down, and essentially knock vehicle expenses by roughly $425 per month.

Thoughts? I'm hoping to get a job fast enough that unemployment will carry me and not have to touch my severance so I can just leave it in savings.

*I don't need a lecture about living within means, I was doing it when I was married (which ended a few months ago), we lived in a small house and I was able to drive a new car and still put 4 figures into 401k and savings per month.

But life has decided to hit the reset button for me.
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Old 07-23-2015, 06:57 PM   #2
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Why not buy an nb outright? you can get one for like 5k
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Old 07-23-2015, 06:59 PM   #3
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Why not buy an nb outright? you can get one for like 5k
Agreed. I bought my 04 MSM with 100K on the clock for 6500. Granted that was a deal, but still.

I would then try to sell the FR-S/BR-Z outright.
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Old 07-23-2015, 08:03 PM   #4
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Agreed. I bought my 04 MSM with 100K on the clock for 6500. Granted that was a deal, but still.
$5,500 for a rust-free, clean-body '04 (non-MSM) with 130k, and that was with the NY/NJ markup. Took me less than a week of searching, found it within a 30 minute train ride of my apartment.

There are NB deals to be had out there. The youngest of them is now 10 years and two generations old, and the prices are reflecting this.
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Old 07-23-2015, 08:09 PM   #5
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The one thing I'll say is if you need to pull money from your 401k, take a loan against it instead of a hardship withdrawal.

When you take a loan from your 401k you actually pay yourself back with interest instead of taking the tax bath as a result of liquidation.
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Old 07-23-2015, 09:00 PM   #6
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Default OK, financial gurus, how stupid is this idea.....

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<br />The one thing I'll say is if you need to pull money from your 401k, take a loan against it instead of a hardship withdrawal. <br /><br />When you take a loan from your 401k you actually pay yourself back with interest instead of taking the tax bath as a result of liquidation.<br />
<br /><br />If he's no longer employed he looses the ability to contribute to the 401K and therefore the ability to take out a loan. IIRC the rules. <br /><br />I could be wrong.
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Old 07-23-2015, 09:08 PM   #7
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I have a friend that has been looking for a deal on a used BRZ. He might even accept the mods. How much you wanting for it? Post up details here or PM them to me. He lives in Dallas and I will pass the info onto him.
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Old 07-23-2015, 09:33 PM   #8
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<br /><br />If he's no longer employed he looses the ability to contribute to the 401K and therefore the ability to take out a loan. IIRC the rules. <br /><br />I could be wrong.
This is true, however, it does depend on the plan. Most 401ks have a "plan summary" or "terms and conditions of withdrawal" which spell it out. Some plans won't let you take anything while still employed, you actually have to be terminated first.

Most will let you take a loan at any time.

*full disclosure*

I'm a mortgage loan officer
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Old 07-23-2015, 09:38 PM   #9
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I have a friend that has been looking for a deal on a used BRZ. He might even accept the mods. How much you wanting for it? Post up details here or PM them to me. He lives in Dallas and I will pass the info onto him.
Car is dirty in this pick:




2015 BRZ Limited ~8500 miles
18x9.5 Enkei RPF1s with 255/35 Dunlop Direzza IIs (maybe 2500 miles no track or autoX)
Ground control coilovers/camber plates 375f/425r spring rates
Open Flash Tablet
MXP Catback exhaust
Switched to all Motul synthetic fluids in engine/transmission/diff at 6100 miles

Not sure what I'd want, if you're friend is interested, I'll call the bank and see where I'm at. If he's interested, I can get it cleaned up and get more pics.
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Old 07-23-2015, 09:40 PM   #10
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Why not buy an nb outright? you can get one for like 5k
I could, but given recent events, I'd REALLY like to keep as much reserve cash as possible. As it looks like I'm going to have to move to find a job, and who knows how long that will take? Not to mention, depending on where I moved to, I'm looking at about 5-7 cities, that really quickly eat up another $3k+ in cash.

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Originally Posted by bahurd View Post
<br /><br />If he's no longer employed he looses the ability to contribute to the 401K and therefore the ability to take out a loan. IIRC the rules. <br /><br />I could be wrong.
Bang! Correctomundo.
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Old 07-23-2015, 09:46 PM   #11
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Originally Posted by z31maniac View Post
I could, but given recent events, I'd REALLY like to keep as much reserve cash as possible. As it looks like I'm going to have to move to find a job, and who knows how long that will take? Not to mention, depending on where I moved to, I'm looking at about 5-7 cities, that really quickly eat up another $3k+ in cash.



Bang! Correctomundo.
Bummer. I would still research into this a bit to be sure as a 401k loan is always a savvy way to generate a loan that you don't just **** away interest on.

If for some reason you need cash short term you can still pull from a 401k/IRA/retirement vehicle for up to 6 weeks without Incurring any tax penalties, provided you can return the cash in that time frame.
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Old 07-23-2015, 10:46 PM   #12
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Another option is to buy a cheaper car cash to get rid of having to carry full coverage insurance on it. Like a high mile civic for example, or even a high mile NB but something cheap you can buy for like 3K and pay cash, then just carry liability insurance to save money on insurance as well. Once you find your new normal you can adjust your cars as needed.

Agreed on sell the BRZ as you described (return to stock first to minimize loss on parts purchased). I would do that and get that thing looking NEW and try to find the right buyer to get the most out of it.
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Old 07-24-2015, 12:13 AM   #13
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^That's probably the best bet, but putting $2-3k down on a nicer/newer NB that wouldn't need immediate maintenance might make life a little easier.

Especially if I end up having to store my big stuff here at my buddies house, and put my clothes and inflatable mattress in the car and having to drive across the country for a job.
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Old 07-24-2015, 01:19 AM   #14
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That's why I suggested the 5k nb, anything less will almost always require work/money for sure.

Or like a 2k corolla cause even if neglected that car will still make it to 200k without nearly any work.

You would literally drive it into the ground.
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Old 07-24-2015, 01:54 AM   #15
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Yeah, that's a good point.

I think at the very least I'm going to start taking the BRZ back to stock, just in case.

I suspect everything that's happened is life's way of saying, "Time to make some big changes." I'm really hoping I can get the job I applied for in Colorado.
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Old 07-24-2015, 01:55 AM   #16
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Taking money out of your 401(k) is a bad idea, not only do you pay the taxes immediately, but you pay a 10% penalty on top of that as well. Make that a last resort.

--Ian
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Old 07-24-2015, 08:41 AM   #17
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<p>
Quote:
Originally Posted by codrus View Post
Taking money out of your 401(k) is a bad idea, not only do you pay the taxes immediately, but you pay a 10% penalty on top of that as well. Make that a last resort. --Ian
</p><p>Also keep in mind for caclulations sake that&nbsp;those &quot;taxes&quot; are like, 30%.&nbsp;</p>
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Old 07-24-2015, 09:12 AM   #18
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did you do any roth ira contributions?
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Old 07-24-2015, 09:22 AM   #19
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<p>There's been a lot of advice given on the topic of 401K/IRA things.&nbsp; Some of it good but a lot of it false.&nbsp; A great resource is the IRS for <strong><em>fairly</em></strong> clrearly written rules on just about everything related to this.&nbsp; Rather then generalize and possibly mistype something I'll link to the index page.&nbsp; Most of the answers on the subject of loans, withdrawals, rollovers are there and clear.</p><p>I hate to see somebody get screwed over financially because of wrong advice;&nbsp; Site Index ? Information for Retirement Plans</p>
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Old 07-24-2015, 10:49 AM   #20
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<p>There's been a lot of advice given on the topic of 401K/IRA things.&nbsp; Some of it good but a lot of it false.&nbsp; A great resource is the IRS for <strong><em>fairly</em></strong> clrearly written rules on just about everything related to this.&nbsp; Rather then generalize and possibly mistype something I'll link to the index page.&nbsp; Most of the answers on the subject of loans, withdrawals, rollovers are there and clear.</p><p>I hate to see somebody get screwed over financially because of wrong advice;&nbsp; Site Index ? Information for Retirement Plans</p>
The first logical step is to contact your 401k plan provider, then your CPA. While some items are clearly spelled out on the IRA website, many things aren't touched on.

Temporary withdrawals are commonplace in CA when home buying to meet reserve requirements for jumbo loans. You don't pay tax immediately, and you don't have to pay tax at all if its returned within a certain time frame. That said, check with your financial planner/institution/CPA first.
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