Stupid me emptied my 401k to buy a house at 42

[Anonymous]

Anonymous wrote:You will be fine. Not the end of the world. You put 40% down.

It's okay. Just save and avoid unnecessary expenses.

You will social security and perhaps a small inheritance.

Nowadays everyone is all doom and gloom.

We bought in 2020 and have a 2.6% interest rate. I think it's very easy for people who bought houses when rates were cheap and/or houses were cheap. These people sit in their chairs with popcorns and scorn people like you. We have friends who have been priced out and are renting crappy places for insane money. Frankly many of us don't understand the situation that a lot of folks like you are under.

I understand it just fine. I also cannot afford to buy a house unless I massively raid my retirement account. so I am just going to rent or buy a very cheap condo that does not require me to spend my retirement money. Nobody has to own a home.

[Anonymous]

Anonymous wrote:You should have put down only 20% to avoid paying taxes on the retirement liquidation. You could always liquidate more later if necessary.

Plus a larger mortgage gives you a larger tax deduction. The after-tax mortgage rate is around 4%. Surely you can beat that with your retirement investments.

OP here. I am on a single income. So I wanted a mortgage payment including property taxes cheaper than what I was paying for rent. If I had put 20% down, I don't think I will be able to keep my house if I were to be laid off and unable to find a job within a year. My mortgage payment and taxes would have been very high with only 20% down.

[Anonymous]

Anonymous wrote:I get it, OP. At 42, you want to live your freaking life. And your house may appreciate more than the 401k anyway, even with the tax penalities factored in. Max out retirement moving forward, you'll be okay.

I seriously doubt that the house will appreciate more when you figure in the early withdrawal penalties, taxes, and the transaction costs for buying a house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You may not planning on retiring at 50 something, but you may be forced to. Lots of 50s something getting laid off then can't find another job that pays even close to what they were making.

I suppose you could always sell your house if you need the $$ later.

The United States cannot afford a bunch of 50 years old forced into a retirement. The impact on growth will be massive.

Tell that to the corporations who keep laying off the older workers and those not hiring them.

In total, 56 percent of workers over the age of 50 in long-term, full-time positions lost their jobs involuntarily. Among the rest, 16 percent were still working, 19 percent retired voluntarily, and 9 percent left their jobs for personal conditions such as health or caregiving.

The 56% who lost their jobs may have found new jobs, but more than likely, the pay was lower.

https://www.aarp.org/work/careers/forced-retirement/

[Anonymous]

What is done is done. Just focus on smart moves going forward. At least you bought an asset that normally appreciates, so the money is not all gone.

Be aggressive on savings now while you are still relatively young to get the benefit of time. Max 401(k) and do Roth IRA (backdoor if you need to). Open a Fidelity account and invest regularly in taxable account (after you have adequate emergency fund).

Refinance your mortgage if rates come down. Comparison shop for insurance. Cut cable and minimize recurring costs. Overall, tighten budget and prioritize savings. Check to see if you have adequate disability insurance.

Don’t beat yourself up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You will be fine. Not the end of the world. You put 40% down.

It's okay. Just save and avoid unnecessary expenses.

You will social security and perhaps a small inheritance.

Nowadays everyone is all doom and gloom.

We bought in 2020 and have a 2.6% interest rate. I think it's very easy for people who bought houses when rates were cheap and/or houses were cheap. These people sit in their chairs with popcorns and scorn people like you. We have friends who have been priced out and are renting crappy places for insane money. Frankly many of us don't understand the situation that a lot of folks like you are under.

I understand it just fine. I also cannot afford to buy a house unless I massively raid my retirement account. so I am just going to rent or buy a very cheap condo that does not require me to spend my retirement money. Nobody has to own a home.

Be careful with condos. We live outside of NY and bought a condo in 2020. Appreciation 0%. It depends on your market I guess with condos.

[Anonymous]

Anonymous wrote:I think most people take a loan against their 401k rather than liquidating it.

I don't know about you, but my 401k loan is capped at 50K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You should have put down only 20% to avoid paying taxes on the retirement liquidation. You could always liquidate more later if necessary.

Plus a larger mortgage gives you a larger tax deduction. The after-tax mortgage rate is around 4%. Surely you can beat that with your retirement investments.

OP here. I am on a single income. So I wanted a mortgage payment including property taxes cheaper than what I was paying for rent. If I had put 20% down, I don't think I will be able to keep my house if I were to be laid off and unable to find a job within a year. My mortgage payment and taxes would have been very high with only 20% down.

OP think … if you had gotten laid off THEN you could have drawn a small amount from your 401k to cover expenses. Sheesh.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I get it, OP. At 42, you want to live your freaking life. And your house may appreciate more than the 401k anyway, even with the tax penalities factored in. Max out retirement moving forward, you'll be okay.

I seriously doubt that the house will appreciate more when you figure in the early withdrawal penalties, taxes, and the transaction costs for buying a house.

As opposed to throwing away money on rent?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be fine. Not the end of the world. You put 40% down.

It's okay. Just save and avoid unnecessary expenses.

You will social security and perhaps a small inheritance.

Nowadays everyone is all doom and gloom.

We bought in 2020 and have a 2.6% interest rate. I think it's very easy for people who bought houses when rates were cheap and/or houses were cheap. These people sit in their chairs with popcorns and scorn people like you. We have friends who have been priced out and are renting crappy places for insane money. Frankly many of us don't understand the situation that a lot of folks like you are under.

I understand it just fine. I also cannot afford to buy a house unless I massively raid my retirement account. so I am just going to rent or buy a very cheap condo that does not require me to spend my retirement money. Nobody has to own a home.

Be careful with condos. We live outside of NY and bought a condo in 2020. Appreciation 0%. It depends on your market I guess with condos.

PP here. Oh yeah, I totally expect 0% appreciation. I would only do it as an alternative to renting if the numbers added up and the location was good enough that I would live there 30 years or be able to rent it out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I get it, OP. At 42, you want to live your freaking life. And your house may appreciate more than the 401k anyway, even with the tax penalities factored in. Max out retirement moving forward, you'll be okay.

I seriously doubt that the house will appreciate more when you figure in the early withdrawal penalties, taxes, and the transaction costs for buying a house.

As opposed to throwing away money on rent?

yes. There are many online calculators that show exactly this - when owning a home is more expensive than renting.

[Anonymous]

OP is 42 folks lol. By 50, he will have some money in retirement. He is single. He probably doesn't have kids either.

[Anonymous]

Hopefully you have parents leaving you an inheritance too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be fine. Not the end of the world. You put 40% down.

It's okay. Just save and avoid unnecessary expenses.

You will social security and perhaps a small inheritance.

Nowadays everyone is all doom and gloom.

We bought in 2020 and have a 2.6% interest rate. I think it's very easy for people who bought houses when rates were cheap and/or houses were cheap. These people sit in their chairs with popcorns and scorn people like you. We have friends who have been priced out and are renting crappy places for insane money. Frankly many of us don't understand the situation that a lot of folks like you are under.

I understand it just fine. I also cannot afford to buy a house unless I massively raid my retirement account. so I am just going to rent or buy a very cheap condo that does not require me to spend my retirement money. Nobody has to own a home.

Be careful with condos. We live outside of NY and bought a condo in 2020. Appreciation 0%. It depends on your market I guess with condos.

The worse financial decision we made was buying a condo outside NYC. You just triggered me lol. In some markets like you said condos are okay but in others it's a disaster

[Anonymous]

Anonymous wrote:Hopefully you have parents leaving you an inheritance too.

What a dumb thing to count on.