What Would You Do?

[Jmurman]

I am in aposition where I can access some of my 401K money. The loan will be to myself and will be paid back in bi-weekly installments.

The last time I did this was for a $1,000 bag of silver pre-64 coins...I bought at half what silver is today, although I didn't buy as an investment but as a SHTF currency.

Now I can do a similar type of thing.

We have 3 months of preps, with no real room to store a years supply...I could possibly go to 6 months, any more than that it would have to go in the attic and it gets hot up there.

What would you do in my situation? What areas to prep for?

 

[Jmurman]

no thoughts on this?

 

[Dinghy]

I have never borrowed from my 401k yet. Very strict rules for what we can borrow it for. Any way, wouldn't you have to pay interest on what you borrowed? I don't know if it would be worth while doing just to buy preps. Maybe if you were paying off a loan that had a higher interest rate than what you'd be paying back it would be. I hope somebody who really knows chimes in to help you!

 

[Jmurman]

I have never borrowed from my 401k yet. Very strick rules for what we can borrow it for. Any way, wouldn't you have to pay interest on what you borrowed? I don't know if it would be worth while doing just to buy preps. Maybe if you were paying off a loan that had a higher interest rate than what you'd be paying back it would be. I hope somebody who really knows chimes in to help you!

The interest is paid back to me.

 

[Freeholder]

Do you own your home free and clear? If not, do you have someplace else to go, should you lose it in economic catastrophe? That would be my first priority -- to make sure we didn't end up homeless, living in cardboard boxes under a bridge someplace.

Kathleen

 

[Jmurman]

Kathleen,

Good point.

The note on our home is about 160K, so a portion of the money would be used for 6 months of mortgage payments in case the economy took a tank. I would consider having the mortgage money in gold coin.

The remainder of the funds would be used for preps and would amount to about $3,000.

 

[Todd]

It all really depends upon how you see the future. It sounds to me like you're a prepper not a doomer like me. You might consider buying a small storage trailer that you would keep at your place so as to be able to store more stuff or renting a storage locker close to where you live.

There have been lots of posts regarding what people are storing or think should be stored.

Todd

 

[HeliumAvid]

Jurmurman;

I make it a rule to NEVER buy on margin (which is what you are proposing to do). I will finance a purchase if I have the bucks in the bank to cover the purchase. I do this from time to time as some things (like buying a car) work better if you go with the system (I have tried paying cash for a new car and got nothing but grief) and then paying it off the first month. I have borrowed from my 401K to pay off stuff in the distant past because as you correctly point out, you are paying the interest to your self.

If I were in your shoes, I put every effort into paying down the mortgage on the house. I can not explain to you how much better you will sleep at night when you burn the mortgage.

The silver is pure speculation, and other than a small stash for preps (a kilo buck or two sounds good for the case you have described), any build up in silver is just a bet that it will increase in value. I agree with that assumption, but again, I would pay of the mortgage before buying a lot of silver. By paying extra each month on the mortgage it will be paid off in no time flat.

Good luck

HeliumAvid

 

[Claudia]

To someone who has no mortgage, that amount of money owed seems tremendous. In your position, I'd be doing nothing with money except trying to lighten that load, in one way or another.

The only time I ever took a brokerage account on margin was to pay cash for this house without having to wait for the old house to sell. As soon as that house sold, I took the account off margin and paid for this house in full. We were lucky to have been able to do it. I think I ended up paying a grand total of about $120 interest for the privilege of margining.

 

[rhughe13]

Not sure what type of property you have (residential, rural), but having a root cellar and small greenhouse might be a good payback over time.

Are you on a slab or crawlspace?

 

[chairborne commando]

I would agree with paying down debt. If the time should come, when
everybody is being inflated out of their jobs, then having 6 months
worth of living expenses would greatly increase your options.

My other suggestion-at least for the near future, is buying 'stuff'.
Preferably stuff that has a dual return. Potentially saving your life
or at least making it more bearable if and when we slide into Depression II.
And, ideally, saving you money in the interim.

If you want visible results for your expenditures, what about auxiliary
Preps? If you expect to travel to a retreat, how about bicycles for all
family members? A hybrid SUV; or commuter car like a Toyota Prius?
Gas probably won't be getting any cheaper, eh?

How is your home heated? Or cooled? Passive solar panels? A generator
with a starter switch inside your house? And protected (and sound deadened).
What about water supplies? Sears used to sell a hand operated mechanical
pump that was easy to install right next to a sink.

How about (emergency) lighting? Sanitation? If the power goes out, do you have
a plan for cooking indoors? Fencing for security?

http://www.bountifulgardens.org/growbiointensive.html

http://www.northerngreenhouse.com/ideas/how_to/tiregarden.htm

 

[Brooks]

A 401k loan is "paid back" to you from post-tax dollars, so you end up paying taxes twice on that money. Something to consider.

 

[bobfall2005]

Taking a loan out on a 401k makes senses in 2 cases:

1. you really need the money, something very important.
Saving your house, if you think preps are important than those too.
What ever it is you feel the gain is worth the loss.

2. you 401k is going down, in value, and there is nothing you can do about it.

People I work who loss 30% of their 401k. in the tech bubble crash.
If you can not move it or shelter it somehow, taking a loan out, might make sense.

The interest you pay yourself, does not cover the loss in your 401k.
In good years.

That interest is your money, you could throw it in a bank cd, go get some lotto tickets, anything.

Your 401k will mostly be interest on the money you put into. The more you take out, the more you lose.

But, like I said,
Having a great 401k and no food, is not the way to go.
Make sure, you use the money on something important.

IF your 401k is going to tank anyway, and you cannot protect it, taking a loan out might be a good idea.

Good luck.

Bob