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wooottt I got a job offer!!!

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Originally posted by: z0mb13
Originally posted by: Skoorb
Yes, take advantage of it. No, you won't be ahead if you take it out in 5 years unless the market flies right up. The penalty is 10% slashed off the 401k AND THEN you pay full taxes on it. It's bad, bad, bad to cash out retirement early. And, of course, that 4% will vest slowly over time, and not right away.

On the one hand I want to shake your hand for thinking about this, and on the other I want to crush your hand in a vice for doing what so many damned people do, which is cash out their 401k pre-retirement. If you want a house in five years you can save for it in _another_ account. You need to save for retirement _now_. The earlier the better.

Anybody who is not contributing to their 401k to the extent required to maximize employer contributions should be basically put to sleep.
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thanks for the inputs folks!

ok I guess I will put 4% in 401k, and save whatever I can for downpayment on a house
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Yes. 42% of dickweeds--I mean people--cash out their 401k when they change jobs, intsead of rolling it over. This sort of insane attitude ensures they are part of the 75% of people who, by the age of 55, have a scant ~$50k to their retirement. Such losers, unless they have a pension (few people our age will have one worth mentioning) ensure reliance upon the charade that is social security. Don't be one of them.

 
Originally posted by: z0mb13
ok I guess I will put 4% in 401k, and save whatever I can for downpayment on a house
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Don't you drive a BMW 330? Getting a less expensive car would be a good start.
 
Take advantage of the 401k but only for retirement. Also you should be able to save 10k a year for 5 years for a down payment on a house. I'm not thinking of where you live so i don't know your cost of living. So adjust wherever from my recolection you dont need to pay PMI if you have 20% of the down payment or you can pay PMI which is .5% a year until you have enough equity in your house that would meet a 20% down payment.

Mutual funds, stocks, have fun. Oh and if you can go back and take a course called engineering economy most useful course that a college could offer.
 
Originally posted by: Glavinsolo
Take advantage of the 401k but only for retirement. Also you should be able to save 10k a year for 5 years for a down payment on a house. I'm not thinking of where you live so i don't know your cost of living. So adjust wherever from my recolection you dont need to pay PMI if you have 20% of the down payment or you can pay PMI which is .5% a year until you have enough equity in your house that would meet a 20% down payment.

Mutual funds, stocks, have fun. Oh and if you can go back and take a course called engineering economy most useful course that a college could offer.
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I know exactly the idea of compound interest.. what I am asking about the 401k plan was the exact penalty I will get if I take the money out before retirement
 
I know exactly the idea of compound interest.. what I am asking about the 401k plan was the exact penalty I will get if I take the money out before retirement
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Most plan administrators consider home purchase to be a qualified reason to borrow against your 401k, which is far less of an issue than withdrawing the funds outright. You designate an assumed rate of return on the loan and essentially pay back your 401k with interest from your check, albeit with after-tax funds. Just make sure your employer doesn't have rules making you ineligible to participate in the plan if they consider it a "hardship" loan because then you're again losing the 4% match.

While others here might say you should never take a loan against your 401k for any reason, I have to disagree. Since once you're in retirement you still need a place to live, taking money out now to get started (and hopefully the mortgage paid off before you retire) to me isn't a bad thing. Just don't go overboard and use the 401k money to buy more house than you need. Investing is after all just deferred spending, and if you're going to buy a house anyway it doesn't matter if you take a loan now to put towards the mortgage or take out normal withdrawals in retirement to pay the mortgage.

Again, your priorities should be (1) basic life needs like food (2) 401k match (3) building an emergency fund (4) paying down debt if any (5) saving for a house (6) discretionary spending, and (a distant 7) loans from a 401k to buy a house if you have no other alternative for getting together the down payment.
 
you are going to be a financial analyst and you are asking the forum if you should take 4% free money?
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Originally posted by: dsfunk
let me make it easy for you

you will not take the money out

you will contribute 4% of your salary and get it matched

you will save other monies for your house

congrats
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2 posts that I couldn't have done any better myself.
Maybe you should be the financial analyst.
 
I believe some employers will null the matching funds if you withdraw before you are vested, which for me was 5 years. I may be confused... but... something to check on.

As others said, save other money for the house, or put less down at that time. Probably will be a buyers market in 5yrs with the real estate market just waiting to bust, imo. Who knows.

 
Hmmm...the job I will be offered shortly matches 2/3 up to 6% of your salary, and it's vested immediately. That's cool I guess.
 
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