Raid my 401k to pay off my house so i can have a less stressful/more fulfilling job?

[JEDI]

I currently have $300k in my 401k/Roth. (i'm decades away from retirement age.)

I owe $90k more on my house.

My mortgage is $1100/month. if my house is paid off, my monthly expenses will be ~$1500/month. (insurance, property taxes, healthcare premium, food, gas, etc). That's $18k/yr.

I need to earn 25k to have $18k take home pay.

I'm currently in the IT Field. I'm being paid good $, but it's not fulfilling. I'm past the point where $ doesn't make me happy.

I dont know what my calling is. My plan is to try MANY low stress jobs till i find one.

Whether it be working for Starbucks making coffee, or working for a non-profit helping people, or making baskets and selling it on ebay, etc.

So what do you think of the idea of using 1/3 of my retirement funds to pay off the house so i dont have to worry about a large monthly note?

 

[Slew Foot]

Youll take a huge tax hit if you do.

Ive learned that money only makes poor people happy (for the most part). Once you get a bunch of money, you start having no idea what to do with it.

 

[nonameo]

Making baskets and selling them on ebay could be a lot more stressful than you might think... as well as starbucks. low $$$ != low stress

 

[xanis]

Don't touch your retirement funds. It may seem like a good idea now to raid your 401K NOW, but down the road when you retire you don't want to regret doing it.

 

[skyking]

Your goal is a noble and proper one.
Robbing the 401K is not the right way to do it.
Get aggressive about paying it off early. You can get it done in a few years if you keep that car going and don't get a new one.

 

[JS80]

yea, pay off your 5% mortgage and take a tax hit and miss 10% stock market gains :roll:

 

[TheCrackedJack]

Hell, you could die before you even get to retirement and never get to use the money. But you never know, it always good to be somewhere in the middle. If you think you'll make enough to alright to retire in the future, I'd go for it. Might as well make your life as enjoyable as you can in the present, but not in a reckless way.

 

[HomeBrewerDude]

If your good in IT, you could look into working for a school district... that might give your job a little more meaning (I'm assuming your working in business).

 

[thedarkwolf]

Sell the house and buy a $200k house. If you can't buy a decent house in your area for $200k move. You've already decided to make a life change anyway might as well go all out.

 

[elmro]

When I started my first career job at age 22 and contributing to my 401k, my director (mid 40s) gave me a piece of personal advice - he told me how he raided his 401k to pay for his house. He told me down the line I might think thats a good idea but he said it was one of the worst mistakes of his life!

 

[SoulAssassin]

Originally posted by: elmro
He told me down the line I might think thats a good idea but he said it was one of the worst mistakes of his life!

I was about to say the same thing...borrowing against your 401k for a house is one of the worst mistakes you could ever make. Please, please don't do it. Either man up and recognize that you need to work hard to maintain the lifestyle you have now or sell your house and buy something equal to the equity that you have.

Oh, yeah, you don't mention you're age but if you're truly decades away from retirement and you're already pushing 300k in retirement savings then good job...keep it up.

 

[BigJelly]

Originally posted by: thedarkwolf
Sell the house and buy a $200k house. If you can't buy a decent house in your area for $200k move. You've already decided to make a life change anyway might as well go all out.

best argument in this thread

If money isn't important to you, then a smaller house isn't that important either. Furthermore, if you decide that you don't like your job, you can quit but with a bigger nest egg. Sounds like a win/win to me.

 

[JEDI]

Originally posted by: elmro
When I started my first career job at age 22 and contributing to my 401k, my director (mid 40s) gave me a piece of personal advice - he told me how he raided his 401k to pay for his house. He told me down the line I might think thats a good idea but he said it was one of the worst mistakes of his life!

did he say why it was a mistake?

 

[classy]

Man less money is not going to make you happy and most low paying jobs are the most stressful.

 

[j00fek]

its not worth it

 

[bctbct]

Rule #1

Never touch your retirement account

Rule #2

Never touch your retirement account

 

[TipsyMcStagger]

after taxes and penalties for early withdrawl, wouldn't you end up paying around 140k for the 90k you wanted for the house.

 

[Malfeas]

90k at 10% tax free growth(rough market average) over 20 years is 605475. So my advice is no, don't raid your 401k

 

[iversonyin]

I believe you can roll 10k over to an IRA and use that to pay off the house- penalty free. If you have a spouse, thats $20k.- that is if you haven't done it before .

Just notice that your monthly expense is way high. You can't quit, try to find something to do part time. IT consulting, fixing other people's computers, helping small businesses set up networks.

Also, if you are healthy, maybe you should cut some health insurance and add deductible. You can raid 401k if you ever get into hardship and has a lot of medical expense.

Reading your other post, this is more of an emotional issue...sort of like a mid life crisis...you just need to explore some options as to where to go with your life. Your finance is in top shape.

 

[Injury]

If you're still seriously considering doing this after everyone advising you not to, you should probably sit down and figure out all the actual numbers here...


How much you'll pay in taxes, if there is a fee for paying your house off early, the comparision of the value of your house over the time it takes you to pay it off versus the loss in intrest and profits earned from missing 90K over your estimated couple of decades and get all the possible numbers you can... then decide if you should do it.

When we're talking about "playing" with $90k+ here, you owe it to yourself to do your homework as far as you can rather than just diving in and hoping it was the best choice.

All in all, it sounds like you're just getting a little burnt out. Maybe ask for some different responsibilites at work and see if the change of pace can pick up your spirit.

 

[JEDI]

thx everyone for your input.

I've decided NOT to pay off my house.

I guess i will sell it, even though I loathe paying 6% to a real estate agent for a few hrs of work. Plus i probably need to spend $10k in repairs. (ie: rotten wood, cracked drywall, New A/C system).

wonder the globe for something fulfilling... (Peace Corps or something similiar?)

 

[DaWhim]

Originally posted by: JEDI
thx everyone for your input.

I've decided NOT to pay off my house.

I guess i will sell it, even though I loathe paying 6% to a real estate agent for a few hrs of work. Plus i probably need to spend $10k in repairs. (ie: rotten wood, cracked drywall, New A/C system).

wonder the globe for something fulfilling... (Peace Corps or something similiar?)

peace corps will be a good start.

 

[AnonymouseUser]

Why not refinance the remaining balance to a longer term? Yes it will cost more in the long run, but reduces your monthly payments and you won't have to touch your retirement to do so.

 

[turunturun]

Obsolete at this point, but he said it was a ROTH 401k in OP. Principal contributions can be withdrawn at any time without penalty.

 

[alrocky]

Originally posted by: turunturun
Obsolete at this point, but he said it was a ROTH 401k in OP. Principal contributions can be withdrawn at any time without penalty.

I currently have $300k in my 401k/Roth.

Actually sounds like 401(k) and ROTH.

OP made the right decision and didn't raid the 401(k). The ROTH contributions could have been used without penalty or tax.