cash out roth IRA, 41K or sell house first ?

[Anonymous]

Hi, we just moved in our home less than 6 months ago. We have 1 year of emergency cash for expenses (including cobra health ins ). My husband will have to look for a new job soon. Just in case it takes more than 1 year to find a new job:

1)We are younger than 59 ½, cash out of roth IRA ( pay 10% penalty + pay income tax ? )
2)cash out 41K & pay 10% penalty + pay income tax
3)If we sell our home at 100K less than what we paid, we can find a buyer very quick. After paying back mortgage, we can get back +500K.
Which order will be best (1, 2, 3) for us ?
Thank you very much.

[Anonymous]

You only pay the penalty on Roth gains, not contributions.

[Anonymous]

Why would you have to sell your home for $100K less than you paid? You might lose a bit in transaction costs, but where are you that your home's value has dropped in six months?

Do you have space in your home to rent out to a tenant to bring in some cash?

Could you rent out your home and cover the mortgage and move into a smaller rental for a year?

I'd do those things before I'd start cashing out assets that have penalties attached.

[Anonymous]

Rent out some rooms. Look at task rabbit for odd jobs. File unemployment.

[Anonymous]

How much did you pay for your house and how large is your mortgage?

[Anonymous]

How much equity do you have on your house?

[Anonymous]

Why will it take him more than a year to find a job? Is he in some industry in huge decline right now?

[Anonymous]

I am OP;
The house's value is the same as 6 months ago.
But if we need to sell fast, we have to lower the price & we have to subtract 6% fee. We got the loan for less than 1/3 the value of the house. Equity is more than 500K. If you don't have a job, you can not get equity out. Is it right ? If we rent out, the rent out the rent price is about 4K but our mortgage is only 3K. So we can have 1K extra from rental but we also need a place to stay !
Great idea with rent out the house but we can not fix anything in the house if tenants ask us. We don't have extra room(s) to rent out unless we all move to one bedroom. My husband is in computer field. We don't know how hard it will be to look for new job. Lot of jobs in computer field require clearance.
I have learned to save but I am not sure how to cash out the best way in case we need the money.

[Anonymous]

You can cash out your Roth with all your contribution without any penalty. This maybe a short term solution for you. It depends on how big is your Roth account and how much is your contributed amount.

[Anonymous]

there are plenty of jobs in the area in computer field that do not require clearance. I've spent 20 years in this industry without a clearance. A a competent engineer engaging in a focused job hunt in this area should not take a year unless there are some huge red flags (fired for cause, no recommendations, terrible performer, etc.).

[Anonymous]

Why are you borrowing trouble? You have a year's worth of savings and a huge amount of equity in your house. I'm all for being prepared, but honestly, this is a bit much.

[Anonymous]

Are you working, OP? If you have a job, you have more options. If not, you should find a job.

If your mortgage was $3K and you could rent the house for $4K and you could rent a studio somewhere for $1K, you'd break even and keep the house. I'd do that before cashing in a bunch of stuff, paying penalties and then having to make up the retirement you'd spent. But yes, you'd need to fix something if it broke either way.

buying a house is a long-term thing, OP. not to be a jerk, but if your finances were very dependent on one person's income and you aren't confident in that income, you probably should have kept renting.

[Anonymous]

Have your DH get as many computer certifications as possible. Then apply for classified jobs, if he has the qualifications. Many companies are desperate for computer people that they will hire them and put them in non-classified positions until the get their clearance.

[Anonymous]

Anonymous wrote:Have your DH get as many computer certifications as possible. Then apply for classified jobs, if he has the qualifications. Many companies are desperate for computer people that they will hire them and put them in non-classified positions until the get their clearance.

from the cadence of OP's writing, I'm suspecting that her husband may not be a citizen, which generally eliminates getting a clearance. Certifications are good to get if you can get someone else to pay for them, but I don't feel that it's a wise investment if currently out of a job. The best plan is to actively study up on/practice in one's professional area, and keep applying for jobs. At least 2 a day.

[Anonymous]

And this, people, is why you don't tie up this much downpayment in your house when interest rates are at historic lows.