Financing a resto??

[Brokenarrow]

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?

When I bought my house 5 years ago I drew out $33,000 from my 401K. Out of that I got $28,000, which is what I needed to avoid a monster bank loan. Yours may be different but the way mine worked, as long as I didn't draw out more than what I had actually put in, there were no penalties and I didn't have to repay it as a loan. BUT, it was counted as taxable income at the end of the year, so it was actually taxed twice

[bindernut]

That's a lot of fabricating (CV front) and a lot of work overall. There is no way to come up with a price plan when you are fabricating. There's really no way to even come up with a COMPLETE projected parts list. When doing any kind of modified resto there will always be things you overlooked and forgot to add to the list or there will be things that, once you get started, will not follow your initial plan. Whatever amount you decide to take out, at least double or triple it. You can always put the money back that you don't end up using for your project.

Awesome advice,,never thought of taking out more, you're right, I can always put it right back in. That's exactly why I am on this board looking for others thoughts..... not many finacial experts here I am sure.... but my finacial expert would never have mentioned anything about fab costs either

[Fo-Mo-Co]

OK I will bite.

I build all my projects with cash I have saved. I don't use credit cards for anything. And I wouldnt ever pull money out for something like this. If you need to work on it that bad sell your 01 and buy a beater that runs good then use the money you save and work on the bump with that. We did have to pull money out of my 401 once and the paper work required my wife to sign it to. Just an FYI incase yours is the same way. To each his own and I love my bump but i plan to retire at 45 and live easy if all goes well. Keep that 401k happy.

[bindernut]

When I bought my house 5 years ago I drew out $33,000 from my 401K. Out of that I got $28,000, which is what I needed to avoid a monster bank loan. Yours may be different but the way mine worked, as long as I didn't draw out more than what I had actually put in, there were no penalties and I didn't have to repay it as a loan. BUT, it was counted as taxable income at the end of the year, so it was actually taxed twice

How could it be taxed 2x's? you may want to ask some questions if they are taxing your 401k contributions.... if you're putting in say 10% of your earnings, and you make say, $20/hr you should only be taxed on $18/hr.... that $2 is a tax free contribution....... tax free for now that is

[bindernut]

OK I will bite.

I build all my projects with cash I have saved. I don't use credit cards for anything. And I wouldnt ever pull money out for something like this. If you need to work on it that bad sell your 01 and buy a beater that runs good then use the money you save and work on the bump with that. We did have to pull money out of my 401 once and the paper work required my wife to sign it to. Just an FYI incase yours is the same way. To each his own and I love my bump but i plan to retire at 45 and live easy if all goes well. Keep that 401k happy.

Thanks for biting!

I also would have to have my wifes Jane Henry to pull this off..... no sneaking this one by her. I don't use credit cards either.... I hate them, whatever you buy with them you can add 40-50% to the original purchase price once you've fully paid them off, they're garbage and a scam in my book. 401k I'd consider only because the interest is far less and the interst I do pay on the loan still belongs to me and offsets any gains I miss due to the money not being in the account.

[Brokenarrow]

When I bought my house 5 years ago I drew out $33,000 from my 401K. Out of that I got $28,000, which is what I needed to avoid a monster bank loan. Yours may be different but the way mine worked, as long as I didn't draw out more than what I had actually put in, there were no penalties and I didn't have to repay it as a loan. BUT, it was counted as taxable income at the end of the year, so it was actually taxed twice

How could it be taxed 2x's? you may want to ask some questions if they are taxing your 401k contributions.... if you're putting in say 10% of your earnings, and you make say, $20/hr you should only be taxed on $18/hr.... that $2 is a tax free contribution....... tax free for now that is

My contribution is 10% taken off the top of my salary, before taxes. What I meant was, the 33K was taxed 16% at the time of withdrawal, then taxed again at the end of the year as taxable income.

[Mancar1]

You and the wife have to make the decission on whether to take the money out or not. It is nice having a comfortable retirement. Give it some hard thought before you jump. (Course I know a really nice reliable bump would be great.)
Back in the 80's I was a Navy Recruiter out of Glendale Az. I drove my 65 with no AC. Those Whites looked rough by the time I got home.
Some days I got a treat, Vicki would kand me the keys to her AC ride.

[bindernut]

My contribution is 10% taken off the top of my salary, before taxes. What I meant was, the 33K was taxed 16% at the time of withdrawal, then taxed again at the end of the year as taxable income.

I hadn't heard of that, truth is I didn't even ask. I assumed, like a traditional loan, you didn't have to pay tax since the money you use to repay the loan is taxed. Eitherway, I'm really leaning toward leaving my toys my toys and my retirement my retirement. Got myself all worked up with this idea and just really wanted some nuetral input.

I always think of old Willie Coyote when it come to stuff like this..... if you're not careful, you'll get hot and heavy on an idea and sometimes overlook the faults in your plan...... and even tho others can see all the holes in your awesome scheme, you'll end up strapped to a rocket heading straight down a cliff.

Thanks for the input everyone!

[DuckRyder]

This whole loan on a 401K thing is fairly new I believe, but you need to sit down and talk to someone independent who knows for sure. You want to make sure you actually understand what its going to cost you in the long run.

I personally would avoid it if it in any way affects your retirement income.

[cdeal28078]

Pretty sure you pay at least a 10% tax just for pulling it out and then you have additional income tax on top of that BUT. I knew for a year I was getting laid off from the local power company so I pulled some money out to build my shop and buy a few larger woodworking tools like a shaper and a pocket holer. I did pull a few dollars out a couple years before that to rebuild my 71 F100 and paint it. It did hurt me around tax time I will tell you that. Glad I did it but it hurt just the same
If you have a tax man better ask him
clint

[onetuford]

...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.

This is very valid point. Oh the wonders I could work if that extra $1000 I borrowed ended up in my truck and not on my walls finishing my lower level in my home. Now the last things I have to do to get it roadworthy are sort of nickel-dime add ons.

[sargentrs]

I just borrowed from mine but to pay off high interest debt and reduce expenses. My payments are 25% less than the minimum payments on the credit cards and I'll save thousands in interest. The shortcoming is in the near future earnings of the 401K. 2 years ago, I watched my 401K drop from $6000 to $3800 in a matter of months. It stagnated like that a while longer but has since come back to over $10,000 and I could see a noticeable increase in earnings with every statement. I borrowed $5300 to buy an economical import car and pay off $4000 in 26% interest debt. The way my 401K loan works is that they actually reduce your earnings by the loan amount so now my plan is only worth $5300. My share buying ability was cut in half and my interest earned will be on a considerably lower base. Fortunately, I'll be saving thousands in gas in the next 12 months and an equivalent amount saved from the high interest loans I paid off. My goal being to dramatically reduce expenses over the next few years to allow me to increase my 401K contribution and get my company's 40% match. So, I take a short term loss for a long term gain. Oh yeah, and to have money to finance my resto, of course.

[thorn1968]

The way my loan worked, I didn't pay any tax or penalty. Where I ran into a problem, was a few years later, when I got laid off. Then the loan became an early withdrawal that I paid a penalty for, and it also then became taxable income. I had to completely withdraw everything from my 401k to cover the taxes and penalties! The good thing was we were able to keep my wife's 401k intact. It sounds like a great deal on paper and it will probably work out...it just didn't for me.

[390Nut]

I understand what you are saying, but what you're describing is not a "restoration" - it's a resto-mod. I don't believe there is ANY restoration of a 40 yr. old vehicle that would be as, or more, reliable than a newer vehicle and I greatly differ on your projected lifespan of new vehicles. When I was a kid (50's-60's) cars were considered worn out at 50,000 miles - today they can run 200,000 plus with regular maintenance. I'm not by any means knocking what you do to a vehicle - but it would be interesting to see if one you've built, that is used on a regular basis for work/daily driving as this fella is planning to do, is as reliable and relatively inexpensive to maintain for 150,000 miles.

My `69 had over 318,000 ORIGINAL miles on it before I decided to replace the worn and tired (yet still running relatively well) 360 and drop a nicely warmed up 390 in it. Still has the original transmission, rebuilt the rear axle at 330,000 miles because it was howling (rebuilt the driveline at the same time), and rebuilt the front suspension using standard parts store components at 335,000.

Truth be told, I had better reliability with the stock 360 than I have EVER had with this 390, no matter what I have done to it. When it runs good it is very strong, but keeping it running good is a testament to patience.

Saying old cars/trucks (particularly the Ford turcks of this era, and the FE engine in stock form) aren't or can't be reliable is misleading and shows a lack of knowledge. It's all in how you take care of your vehicles, and my father was a nut when it came to maintenance.

The only real thing that makes todays vehicles "better" than yesteryears, is the fact that they are idiot proof. They have little lights that blink when something is wrong, and computers that do all the work for you. If that is your idea of better and more reliable, so be it.

[sargentrs]

The only real thing that makes todays vehicles "better" than yesteryears, is the fact that they are idiot proof. They have little lights that blink when something is wrong, and computers that do all the work for you. If that is your idea of better and more reliable, so be it.

Better or more reliable? To quote Ron White......I don't think so, scooter! Just my opinion, of course. No offense intended. I'm an old fart.

My truck has 260,000 miles on the original 302 and still cranks on the first key. USES very little oil (but she does mark her territory, my fault, not hers). Every old school vehicle I've owned has broken 200K miles before the engine went and I can pick up a salvage engine for under $500. My stepson has an '85 mustang GT and recently had an overheating problem. He knows little to nothing about vehicles in general but liked the way it went Vroom. I warned him when he bought it. If you're not prepared to spend every day under the hood, then don't get it. Not because you have to, just because you need to be willing to. The little repair job we just performed consisted of thermostat, water pump, radiator and hoses. In the process we busted the timing cover and broke 3 bolts. Total parts cost was under $200 because I happened to have a timing cover. Otherwise, would have been $250. Labor, about 12 man hours total. Special tools required = one helicoil set. What would that have cost in one of "today's" vehicles? I mean, you can't beat the gas mileage of the new vehicles, no denying that, but, IMHO, reliability is an owner thing, not a vehicle thing.