Financing a resto??

[bindernut]

Has anyone ever thought about dipping into his/her 401k to restore their truck? I know the cardinal rule says not to, but in my case I think it may be a better solution. the payments are low, interest is to myself and, if I could make my f100 as dependable as my 01' F150, I'd sell the F150 in a heartbeat. Dropping that payment would make my 401k payment twice! I owe 3 yrs on the F150 and if I made the same payment on the Bump I'd have the loan repayed in 2 yrs..... and have a truck my heart's more into. I never even drive the F150 even tho sometimes it's risky biz getting from point A to B in the Bump! My Wife thinks I'm a nut cause I'd rather drive my gas smelling, rattling, cold blooded, no AC (in AZ!) stalls in the middle of traffic Bump than my cush power EVERYTHING, perfectly good F150.

My thoughts are to keep the F150 long enought to repair everything on the F100 and lose the F150 ASAP. I just know I'd rather have the Bump and the Bump won't be anything anytime soon if I keep throwing nickles and dimes at it.

Anyone have any thoughts?

[fordman]

what about income taxes and deductions? would that be a problem if the 401k was drawn from.

[bindernut]

No, The money I repay the loan with will be taxed, but I won't suffer any penalties or have to claim the loan as earnings. Basically, it's the same as if I went to my bank and drew a loan, the money is repaid with my taxed earnings, the difference is the money I pay in interest goes right into my 401K instead of good old Bank of America's pocket.

[Montana71-F100]

I'm no financial expert but I do know that you only go around once, so I say go for it. It sounds like you have it pretty well planned out. It shouldn't cost too much to get it dependable. I work on mine as needed or I have money.

No A/C in Arizona? You're tough! I don't have it but I live in Montana and would only use it in August.

Good luck!

[averagef250]

I've had customers pay for thier projects with credit cards and retirement savings. The idea was the same as yours, get rid of the new POS and have something solid and reliable.

I agree with you about doing it one swoop rather than nickel and dime it over a decade. Enjoy your vehicle, don't burn yourself out working on it.

If you go forward with it have a solid plan. Go with the reliable, conservative, better mileage options.

[bindernut]

Go with the reliable, conservative, better mileage options.

you're probably right about that, however, if I were to do so, I'd want my dream truck in the end... that's tough to comprimise on..... in fact, I wouldn't know what the point was if I didn't end up with what I wanted. That's kinda why I bought the truck.

[fbomb100]

.

.....of course when I say dependable, I mean a fresh rebuilt slightly massaged 390, a taller rearend, crown vic front end, wheels and tires, 2 new doors, paint & body all new weather seals.... and for God's sake some A/C!!

and thats all????????

[bindernut]

and thats all????????

[fordman]

well i have no idea how taxes and deductions work when takign money out of the retirement accout. if you are just loaning money to yourself. i guess that would work. do what ever is best for you finacially.

getting it all done at once may be good.

i can barely work on the newer trucks. but they never seem to break down on me either. and i own all of my vehicles. i have no car payments at all. the only thing i don't care for is the cost of gas. so i would rather drive my newer trucks daily and work on my other trucks.

[DuckRyder]

So are we talking about a loan with the 401 as the collateral or actually taking money out? do you still earn interest on the same amount in the 401K.

I'm no financial expert either, but if you actually remove the money then I think its not a good idea at all, because it will end up costing you much more than the amount you withdraw in the long run...

[Ranchero50]

It depends on the company's regulations on how much you can withdraw and what happens if you get fired or quit with an active 401k loan. Sometimes you have to pay it back imediately. The way I understand it the 401k loan is just you giving yourself a loan from your accumulated 401k amount although I'm not sure who is cutting you the check, the 401k manager or the company you work for. Here I'm pretty sure it's the company I work for.

Jamie

[flyboy71]

Ive taken a 401k loan but not for my truck. Youre basically taking the money out and replacing it with interest back into your acct. Right now mine has an APR of 3.25% which is sweet. Im considering taking another loan to pay the credit cards I used to buy parts for my truck. Depending how much you take out it will hurt your long term goals. The younger you are the more you can take and have time to make it up essentially but when you get to my age you get more discretionary especially after the hit mine took during the last dip. Just review your plan to know the good and bad points. Jamie is right that if you quit or lose your job you make be required to pay the balance in full or face paying taxes on it since they will consider it a withdrawl. Personally if you can spend as you go then Id skip the loan, but if you take the loan then be careful to keep it all on the truck. Its tempting to have money in the bank that gets used on everything else life throws at you.

[71highboy]

i say go for it.life is to short.

[Montana71-F100]

I didn't know the extent of your resto. First, I wouldn't recommend doing anything without your wife's complete support. I've borrowed money from a retirement fund and it's not a bad way to go. She might go along with borrowing just enough to do the engine and drive train and anything else to make it dependable so you can get rid of the other truck. I like the idea of getting it all done at once but there is always the risk of losing your job.

[bindernut]

Ive taken a 401k loan but not for my truck. Youre basically taking the money out and replacing it with interest back into your acct. Right now mine has an APR of 3.25% which is sweet. Im considering taking another loan to pay the credit cards I used to buy parts for my truck. Depending how much you take out it will hurt your long term goals. The younger you are the more you can take and have time to make it up essentially but when you get to my age you get more discretionary especially after the hit mine took during the last dip. Just review your plan to know the good and bad points. Jamie is right that if you quit or lose your job you make be required to pay the balance in full or face paying taxes on it since they will consider it a withdrawl. Personally if you can spend as you go then Id skip the loan, but if you take the loan then be careful to keep it all on the truck. Its tempting to have money in the bank that gets used on everything else life throws at you.

the low interest rate is really what I like about the idea. and yes, if I were to lose or quit my job the balance would be due in 90 days. Right now, at the ripe old age of 36 I don't see it hurting my goals too much and my investments are set pretty conservative right now anyhow. (to lessen any additional hits) sounds like, if you do take a loan to pay off higher interest rate creditcards then you'll be doing pretty much what I have in mind.... in the end.

the good thing is i have been throwing money at this account bigtime (15%!) and am really ahead of schedule. the money (5-6K) I would like to "borrow" will not put me behind in my goals.


Anyhow, I guess what I'm looking for here is for someone to say "don't do it, and here's why" I think it's not a bad idea at all the positives far outway the negs.... unlesss I am missing a neg somewhere. That's my cause for pause. As for the repayment if I were to lose my job.... prob would have to sell the truck or my 69 Scout..... if that doesn't work, I have another IRA I could cash in....either one of those options is a major major NEGATIVE