401k for people who are not of age to pull it out without penatly

I have yet to hear Dave Ramsey recommend using the 401k for people who are not of age to pull it out without penatly. The reason is, that if you compute the penalty, the tax, etc, you find yourself essentially paying an excorbitant interest rate.

What many 401k participants, desperate for money, may forget is the cost of taking a financial hardship withdrawal. A $10,000 withdrawal does not equal $10,000 in your pocket.

“If you are under 59 1/2, you will lose 35 percent to 45 percent of the withdrawal in taxes and penalties,” Benna said. “You need to think about that.”

For example: suppose your tax filing status is married filing jointly and you earn $60,000 a year. That means your income falls in the 27 percent tax bracket.

If you take a $10,000 hardship withdrawal to pay for your child’s college tuition, you will owe $2,700 in federal income taxes and an additional $1,000 to cover the early withdrawal penalty. You’ll be left with $6,300, or less if you also owe state income tax.

Taking a hardship withdrawal can also result in longer-term pain — a less generous retirement.

Take the example of a person who, starting at age 30, contributes $5,000 a year to her 401k plan. At age 40, she buys a house and takes a $10,000 hardship withdrawal for the down payment. Let’s assume her portfolio generates an average annual return of 8 percent. By retirement at age 65, she will have $793,094. Had she not taken the hardship withdrawal she would have had $861,584, or $68,490 more.

A $10,000 withdrawal may seem insignificant today, but over time it can mean a lot. The trouble is making up for it in the account.

Tapping into the 401k should always be the last resort.

My 2 cents worth.

Stopping Credit Card offers from Landing in your mail box

This took less then five minutes to do. I checked my credit report about two weeks ago and these guys are always in my credit. One did it about every three months. If I understand correctly, inquiries are just as bad on your credit. Why check my credit to send me a pre-approved card that they know they will not give me? It is a waste of their time, money, the mailman’s time, the US post offices money, and the trash collections time and money. And we wonder why dumpster bills are so high. J/K

I know someone who gets so annoyed at getting those offers in the mail. What they do is take the envelope the company sent them (with the no postage necessary type) and return it to them with an empty application or sometimes nothing inside! The company has to pay the postage just for them to have to deal with it!

If you want to be a real hind-end, I suppose you could overstuff the envelopes with blank paper to cost them more money! Inquries such as those DO NOT affect your credit
score. If you’ll look at the section on your report (or at least on Equifax), they have an explanation of the different types of inquiries on your report and what they mean.

The kind we all get, like you’re talking about, are, according to Equifax, (and I’m copying word for word from the report) “Inquiries that do not display to companies and do not impact your credit score.

This section includes inquiries which display only to you and are not considered when evaluating your credit worthiness. Examples of this inquiry type include a pre-approved offer of credit, insurance, or periodic account review by an existing creditor.”

The only inquries that impact your credit score are ones that you generate yourself, by applying for loans or credit cards, etc.

Thank heavens!

Re: Debt collectors question

My dad had a CHASE Visa, and got my name on it too so if I needed it if he was in diffs health wise, I could use it.

Mainly he used it on car things, house repairs, clothes and such.

When he passed on in 2001, they (CHASE) sent me a request for the death cert copy and a paper to sign. Remember, I was shell shocked from his death, can’t see well, and had no other family to help me. I signed what I now know to be a paper taking responsibility for the debt. But the card people would not work with me, and wanted about $630 a month. I was getting $780 a month from SSI. I knew nothing about legal things, and was getting calls every day about this. Some were ‘nice’, others were threatening to open his estate and slap me down in court. I even looked into bankruptcy, but that would have left me with no house, little money to reloacet to g-d knows where…

They sold it off to the collectors, who said they would in fact work with me. And they have… but when that first year came and I called to see how it was doing on my payments and such, then she told me about the interest, I got very upset and said “I’m sending you over 1/4 of my living money! What am I to do now?” she said look into it, and about an hour and a half later she called me back and put me on the phone to Mr. Johannes, and he told me they scrapped the interest and put a new lower balance on, instead of what I originally had.

It was my stupidity to sign carp (My way of saying ‘Cr*p…”) without having it looked over, but at the time, I pretty much was numb from every thing around me when he died. It was the 11 of September 2001 when he died, but so did over 3000 people in the twin towers. I pretty much isolated and sadder than he** for my loss, and everything else.

Anyway, it’s done and I guess I made my bed and have to lie in it. No money for legal, so…..

Dad and I had this house and all in a trust. So to get the house and all in my name was easy, and the property taxes are ‘grandfathered’ on the Prop 13. so thankfully, I don’t have to go homeless.

Debt collectors question

As most of you know, I’m making auto payments to Machol & Johannes, P.C for a debt my father left.

Someone emailed me offlist raising questions about whether or not this might, in fact be a legit thing they are doing:

“I noticed in one of your posts on the debt steps group you wrote you were making payments to a collection agency.

I hope I don’t seem like a snoop, but I would like to ask you a question.

Are you sure this agengy is being honest with you? I ask because I was scammed by one of these places.

I agreed to make monthly payments and paid $1,700.00 over a period of months thinking I was reducing my debt. After getting suspicious when they failed to give me any accouting of my payments I found out they were charging me high interest and instead of my debt going down, it was increasing.

Citibank was the original creditor who sold my account to the collection agency. I had paid the original balance to them several times, but was not able to pay the balance in full so was held hostage with high interest and other fees.

This collection agency actually bought an account that was all interest and then added their own interest.”

As I’d mentioned before, they were in fact doing this on a $200.00 a month plan in 2003-4, but when I called to raise heck, they wiped the interest off and applied it instead to my principal.

I am in until 2008 (July) and would like to ditch this account sooner than that.

I called them and found out I am over half paid off. So every payment and any augmentations (Say if I can send checks and such also) is in fact going to the balance. Not the interest. This is good, and makes me feel better too.

But this brings to the board a good question: How would one go about checking up on these ‘collection agencies’? Is there an oversight committee or BBB, legal body with which one can call or mail to check them out?

When someone dies the only recourse for collecting on debt is there estate. If there is not estate they cannot go after the kids to pay it off. Something does not sound right here. In Texas you can contact the Secretary of State for collection agencies who can legally collect in Texas. You said that you are paying your father’s debt. Did you co-sign a loan with him or something? Unless you were a co-borrower, we usually aren’t responsible for our parent’s debt.