Anonymous wrote:

Anonymous wrote:Actually, allow me to clarify.

$100,000 early withdrawal in the 25% bracket.

Total taxes and penalties due: $35,000.

So, you buy $10,000 in points on a new mortgage. Because you are in the 25% bracket, the actual tax savings of that is only $2,500.

Result is the same: You pay the $10,000 penalty, then you spend $10,000 in points. The tax savings is $2,500 and you still owe $32,500 in taxes PLUS you paid the $10,000 for the points.

Dumb.

you are forgetting that after purchasing the property you are renting it out for an income stream. There are also ways to use 401ks without penalty as real estate investments http://www.ehow.com/how_5896869_buy-real-estate-401k.html

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

http://www.ehow.com/list_6518889_mortgage-costs-irs-tax-deductible_.html

What income bracket is 10%? Unless you plan on making 8k a year then your income bracket would be much higher than 10%.

10% is the penalty. Which is what I said. Try reading it again. I wasn't even talking about the income taxes.

the theory is that if you take the 10% hit now vs later you are going to take a hit on income tax when you draw on your 401k. You are delaying profits.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

stupid? This is a common strategy among immigrants who do not trust the banking system and the stock market. Rather than investing through 401ks I have chosen to purchase multiple homes, rent them out and by the time I retire I will have both appreciation of physical property and rental income.

Many of us don't want to rely on pensions or the risk of external stock market fluctuations.

I still do use employer match but I am NOT counting on 401k to fund my retirement.

Yikes. This is all scary.

Anonymous wrote:Actually, allow me to clarify.

$100,000 early withdrawal in the 25% bracket.

Total taxes and penalties due: $35,000.

So, you buy $10,000 in points on a new mortgage. Because you are in the 25% bracket, the actual tax savings of that is only $2,500.

Result is the same: You pay the $10,000 penalty, then you spend $10,000 in points. The tax savings is $2,500 and you still owe $32,500 in taxes PLUS you paid the $10,000 for the points.

Dumb.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

stupid? This is a common strategy among immigrants who do not trust the banking system and the stock market. Rather than investing through 401ks I have chosen to purchase multiple homes, rent them out and by the time I retire I will have both appreciation of physical property and rental income.

Many of us don't want to rely on pensions or the risk of external stock market fluctuations.

I still do use employer match but I am NOT counting on 401k to fund my retirement.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

stupid? This is a common strategy among immigrants who do not trust the banking system and the stock market. Rather than investing through 401ks I have chosen to purchase multiple homes, rent them out and by the time I retire I will have both appreciation of physical property and rental income.

Many of us don't want to rely on pensions or the risk of external stock market fluctuations.

I still do use employer match but I am NOT counting on 401k to fund my retirement.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

http://www.ehow.com/list_6518889_mortgage-costs-irs-tax-deductible_.html

What income bracket is 10%? Unless you plan on making 8k a year then your income bracket would be much higher than 10%.

10% is the penalty. Which is what I said. Try reading it again. I wasn't even talking about the income taxes.

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

http://www.ehow.com/list_6518889_mortgage-costs-irs-tax-deductible_.html

What income bracket is 10%? Unless you plan on making 8k a year then your income bracket would be much higher than 10%.

Anonymous wrote:

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Seriously, how stupid are you?

1) While points are tax deductible, closing costs are not. That's just factually incorrect. Moreover, buying points for a deduction is outright stupid. Say they withdraw $100,000 and their basis is zero, the penalty is $10,000. Even if you buy $10,000 in points and are in the 25% bracket, you just spent $20,000 to save $2,500 in taxes. The hell?

2) Most people fall into a LOWER tax bracket when they retire than when they are in their prime working years (during which they are socking away money into a 401k.

Seriously, just stop talking.

Anonymous wrote:You will be hit with a 10% penalty and income taxes. You can deduct against income taxes by buying points and closing costs. You will lose 10% but employer match and the fact you will be taxed more than that in the future and fund managers take up to 2% a year, makes it not that big of a lost. The market hasn't really moved at all in the last 10 years and another dip would continue the cycle, especially with the recent predictions from OMB stating unemployment will be stagnant for 10 years http://www.politico.com/politico44/2012/07/omb-report-says-recession-will-cost-decade-of-high-130371.html . Rather than using 401k for retirement, another plan is to buy multiple properties, rent them out and pay them off by the time you retire. This is a good idea especially in our area where rents are high, jobs are good and people are flocking from the rest of the country to live here and need housing. Personally I have always advocated Real estate because it is like gold, a physical investment whereas stocks are theoretical. I want to be able to touch my investments.

Anonymous wrote:You are living beyond your means.

No one is forcing you to own a house that makes you a slave to a $300K/yr job but YOU.

My advice is to downsize to a home you can afford on one salary (or a lower salary) and gain your financial security/job flexibility that way. You can still live in a close-in neighborhood, just in less space.

Signed, someone who lives in a 1200 sq ft house that cost less ($500K) than the total value of our 401Ks, and with a mortgage payment that's less than half of one of our salaries. Very happy with our lifestyle and flexibility/savings.