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Not surprising.
First!
This is sad like watching a crackhead. Few dumber financial moves. The 401K is protected from bankruptcy! The people should walk away and keep their retirement in tact. Give up the McAlbatross.
of course they are still spending: life liberty and the pursuit of happiness thru shiny things.
Jesus people are stupid. I realize some people want to hold on but at some point it's time to just say fuck it and move on...
And to think I was pissed when i found out the IRS didn't increase the contribution amount for 2008...
Chris
I thought there were only a few specific allowances for borrowing against 401k. And aren't there penalties involved if not paid back in a certain time frame?
Yes there are often huge penalties. That's why this screams desperation.
the key to understanding the economy is to not overthink how stupid the average person is
My 401k limits the amount that can be borrowed to 50k. I'm not sure if that's standard or not.
What's really funny(ok not funny), is that many people will probably find themselves upside down in their 401k's, since the value can go down, and likely will since many of these 401k's hold toxic paper and equities that might be taking a good beating in the future.
I'm leaving mine in, but I'd still feel better if the most 'conservative' funds my particular 401k offers weren't still showing as about 40 percent invested in aa and lower mortgage-backed securities and one of the "wrap' issuers listed for them wasn't also in the news being sued for sneaking mortgage-backed securities into the conservative packages for its own investors. State Street.
I'd guess a lot of people simply don't trust that their 401k is going to be any better represented at their retirement date than their Social Security money.
You know the wolves eat the sheep first before turning on each other, when the winter's looking long and deep.
Sometimes it can be quite rational to borrow from your 401k- but sadly, as most here note, the uses seem to be mainly paying off debt and something akin to check kiting that passes for modern household finance.
Didn't ACA cover a bunch of credit card and vehicle instruments too?
Someday this war's gonna end...
As real estate continues to plunge and an ugly recession takes hold in 2008 what will myopic'living beyond their means Americans' do to continue their buying sprees ?
Honestly, can we get some people on TV telling people it is better to start over than tap your retirement. Retirement 401K's and the like can't be raided in bankruptcy. Just file for BK and start over, don't ruin your future.
How sad, Goldman has a $20billion bonus pool and the janitors that clean the place are tapping 401K's to pay the interest on the CDO's they hold in level III assets. Ughhhhhhhhhhhhhh
Whisperer
Hardship withdrawals aren't borrowing. You can withdraw money from your 401(k) with a 10% penalty plus and face taxes as if your withdrawal were ordinary income for the following reasons:
1. to buy a primary residence
2. to prevent foreclosure or eviction from your home
3. to pay college tuition for yourself or a dependent, provided the tuition is due within the next 12 months
4. to pay unreimbursed medical expenses for you or your dependents
You can also withdraw money without penalty if:
1. You become disabled.
2. You are in debt for medical expenses that exceed 7.5% of your AGI
3. You are required by court order to give the money to a spouse or dependent.
4. You lose your job or retire and are 55 or older.
5. You lose your job or retire and set up a payment schedule to withdraw the money over the rest of your expected life and do so for at least 5 years or until you turn 59 1/2.
NOTE: I'm not an investment professional, so don't act on what I say.
The last several years I have been a volunteer tax counselor/preparer for the Tax-Aide program for low income earners and seniors. Each year I see several taxpayers who owe a 10% penalty on funds taken out of 401(k)s and similar accounts. In the course of trying to find a justification that may abate the penalty I have found that its about 50-50 whether they needed the money, penalty-be-damned, or were sent the funds from a former employer who didnt want to carry a small account on their books (and they werent aware of the 60-day rollover requirement).
I checked IRS statistics and found that every year about 5 million tax filers pay this penalty, a very large fraction of those who report taking any money from a retirement program.
Ill keep an eye out this tax season to see there is any change in the trend, but any real impact probably wont have an effect until 2008.
I wonder if the automatic enrollment that started last year had any significant effect on the MBS market, giving it a bit more time before there were no more buyers.
That's the only reason I have a measly 401k at all. Though I was up over 30% this year from investing in Fidelity Natural Resources fund.
This article says:
The survey finds that nearly 20 percent of companies have seen increased hardship withdrawals from 401(k) accounts, often to cover mortgage payments or to avoid personal bankruptcy.
That sounds bad, but in reality we can only make sense of what 20% means if we know how many companies saw a decrease in the number hardship withdrawals over the same time period. I doubt that hardship withdrawals are balanced, but it would be nice to know the difference.
Also, what is the relative size of the typical withdrawal from the 401(k), and how has it changed over time? If these are tiny withdrawal, then it's a troubling trend but might only be a drop in the bucket in reality.
I'm as much a chicken little as anyone, but there is a lot of missing information here that would allow one to properly interpret these data.
With home equity extraction slowing, consumers are turning to other sources for cash, like credit cards and 401(k) withdrawals.
They need to learn how to consume less.
I borrowed from my 401K to pay my property taxes last year.
Be careful how you view 401K borrowing. My situation since 2002 was that 0% credit card offers with no balance transfer fees were too good to pass up, especially since I had unusually large expenses (house downpayment, wedding, ring, furniture, etc.) Rather than decrease my 401K, Roth, and IRA contributions, I let my credit card balance grow from daily expenses. My backup plan, if necessary, was always to take out a loan from the 401K when the 0% financing train ended. It didn't really end till 2007, so I took out the 401K loan at what I think is a peak in the market, and will be dollar cost averaging back in for the next 4.5 years. I'm paying myself 9.25% interest, and I'm fully aware that the interest portion is going to be double taxed--originally from taxed money, and again on withdrawal. But the deferred taxation on the 401K earnings should more than recover that in 20-30 years. Just like "toxic" loans are helpful to some people, some people are using their 401K responsibly.
Just to clarify..
There are two issues here.. borrowing money and using your 401K as collateral.. OR performing a hardship withdrawal.
Those are different things.. and as someone mentioned, there's usually a cap on hardship withdrawals ($50,000).
One of my young guys borrowed $50,000 from his 401k last September and shorted the financials including the mortage insurers and turn it into $250,000 as of last week.
Now he is bitching about all the income tax he owes for 2007.
.
dammit.. i meant a cap on borrowing money and using your 401K as collateral.
what does a pint of blood go for these days? I'm thinking I may go long blood.
Why raid 401k's instead of collateralizing loans against them? Wouldn't you save a lot of deferred taxes by borrow against an IRA instead of liquidating a chunk of it?
what does a pint of blood go for these days? I'm thinking I may go long blood.
Going long blood is a bad move. It's a supply and demand issue.
There will be plenty of blood in the streets soon enough.
All 401(k) hardship withdrawals aren't bad, especially for low-income people.
Let's say you are poor and can't really afford to contribute to your plan. Here is what I would tell you:
Put the money into the plan anyway. Let's say you put in $2,000. Let's say your employer matches it 50 cents on the dollar. Under the Saver's Credit (now permanent), the federal government matches it 50 cents on the dollar (up to $2,000 personal contribution).
So, now you have $4,000 in the plan. Awhile later, you claim hardship, withdraw it all and pay tax at 15% plus a 10% penalty (25% total). You still have $3,000 left, $1,000 more than you would have had by doing nothing!
The problem is that you can't do this every year because there are restrictions on personal contributions (deferrals) after taking hardship withdrawals.
"Going long blood is a bad move. It's a supply and demand issue.
There will be plenty of blood in the streets soon enough."
Nah, people will pay a lot for packaging, sterility, all that silly stuff. I think it's a bold move.
Seriously, though. After consumers raid the 401Ks, is that the end? Is that the last stop on the gravy train?
Or will somebody come up with a cool "reverse mortgage" on the human body, where they get first call on any organs you don't need after you kick it?
Why raid 401k's instead of collateralizing loans against them? Wouldn't you save a lot of deferred taxes by borrow against an IRA instead of liquidating a chunk of it?
My hope would be that people are withdrawing because they have a real hardship.. and they just could not afford to make any more monthly payments (like they would have to if they borrowed against their 401K).
If your 401k is invested in the Titantic, with the only other option being the Exxon Valdez....seems perfectly rational to cash it out to me. A haircut of only 10% could be one hell of shrewd investment decision.
an absolute onslaught of...hardship withdrawals and loans out of 401(k)s
Mu-ha-ha-ha!
MEW ebbing, now 401K plans... what will consumers use next to get cash?
Guns!
Ho ho ho!
Or will somebody come up with a cool "reverse mortgage" on the human body, where they get first call on any organs you don't need after you kick it?
bob,
one could always sell forward their life insurance policy (you'll be dead anyhow).
Depending on how old you are.. I'm sure there's someone willing to pay a certain percentage of the ultimate payout..
fortworth,
No. You pay no tax on the 401(k) loan amount. You deduct no interest or principal on the loan payback. Assuming that your 401(k) would have earned 9.25% on the borrowed amount anyway, it's a wash. No more or less money in the plan. No more or less taxes owed.
Hilarious, that CalPERS is considering upping their allocation to private equity, real estate, and commodities, now:
Calpers May Move $29 Billion Out of Stocks and Bonds (Update1) - Bloomberg.com
California very much deserves what it has coming next year, and the year after, and the year after...
eli,
I hear you can make a killing on viatical settlements...
hahaha.. right from the google's mouth:
JG Wentworth pays Cash Now For your Life Insurance Policy
I knew it existed.. just didn't think they would be advertising on Google.
CR,
Under LABELS: may I suggest adding : "Destruction of the Middle Class".
Might get you a guest appearance on Lou Dobbs.
Yeah this isn't a good sign, but the article stikes me as a wee bit slanted:
The survey finds that nearly 20 percent of companies have seen increased hardship withdrawals
This tells me that means the OTHER 80% either stayed at last years level or decreased.
we have seen an absolute onslaught of people trying to do hardship withdrawals and loans out of 401(k)s," Mark Anderson, CFO of Granite City Electric
'Scuse me? "Granite-City-Freaking-Electric"? Is that the best they could find? I think FIVE more cases would constitute an 'absolute onslaught', at least on percentage basis, for G City Electric.
Where is CR with his charts when we need them? I'd like to see number of 401k 'hardship withdrawals', by month.
Bonus points if he can overlay a trendline of 'number of wedding rings offered for sale on eBay'.
Well, the MEW's had to start closing down.
It all needs to re adjust to a little more sane state.
When are spending cash at such a rapid state, what ya gonna do.
Bail them out?
They have to learn to stop the cash burn ,on their own.
Rich
You seem to have misunderstood my comment, Rich. Contributions to your 401K are pre-tax. When I used my 401K loan money to pay for my consumption, I used pre-tax money to pay for these items. So I have to replenish my loan from my taxed money. There is misinformation circulating (Suzie Orman, et. el.) that any 401K loan is double taxed. This is only true if you ignore the fact that you bought things with tax-free money. However, the interest that you pay yourself on your 401K loan IS taxed twice--from after-tax dollars (as opposed to pre-tax dollars from your income), and again when you withdraw.
Schnaps,
I was wondering that too. When, what, why, how much?
I'll bet 5% are divorces.
"California very much deserves what it has coming next year, and the year after, and the year after..." - jg
Why? What did California ever do to you or is it that you are just sick and tired of those damn lazy California slackers getting back 71-2 cents on the dollar in relation to their federal tax contributions over the last 20 years? With that in mind do you want to rethink the idea of California getting what it deserves?
"hahaha.. right from the google's mouth:
JG Wentworth pays Cash Now For your Life Insurance Policy
I knew it existed.. just didn't think they would be advertising on Google.
"
Eli, thanks for showing me a slice of Hell I didn't know existed. :-
Guys, u all need to take a look at below article.
how key inputs CRUDE OIL - in PPI [Producer Price Index] is determined each and every month.
FSU Editorial: "The Invisible Hand" by Rob Kirby 12/13/2007
People pulling money out of 401k's should be a big hit on the equities market.If this is true, than why is the stock market up around 8% for the year? Something doesn't add up...
Is this the logical conclusion to a consumer-based economy?
I don't have health insurance, a pension, savings, or equity, but I live in a 3000sq. ft. house, drive a Mercedes, and watch football on a 42" plasma TV. And I can almost make the minimum payments on all of that each month!
The American dream.
Granite City Electric CFO- "What has happened with housing and the economy has really blown up for people at the lower end of the spectrum."
"Yes," said Conjure Bag, "it's all those unwashed subprime people who are causing us so much paperwork."
This story would be much more interesting with total % of raiders, as well as the average magnitude of the raid. "Absolute onslaught" from one CEO isn't terribly informative.
Um, how about how we don't really have much of a savings rate anymore.
This is of course another sign that the way we function in America is undergoing a drastic change, whether you like it or not, and that one had best start preparing for a different investment climate.
Like, um, if the 401k perpetual money machine starts going in reverse, Wall Street might not have parking places for all of that debt, equity, and whatnot that they sell.
Someday this war's gonna end...
Perhaps it would be useful for some here to Google "Middle Class Squeeze" and Yale University.
While it may be comforting to fantasize that everyone outside of Wall Street parks a Hummer in their 6400 square foot McMansion bought with a NINJA loan, the documented fact is that middle-class income has not increased in this country for a long, long time, while the costs of a middle-class lifestyle have skyrocketed--housing, insurance, education, and so on. Joe Sixpack is spending a far, far greater share of his income on necessities than his dad did.
The benefits of increased productivity have accrued almost entirely to the rentier class, and the very top of that.
The bottom line, of course, is that the rentiers have now killed the goose that laid their golden egg--American consumers. And shortly, they, too, will begin to starve to death.
Unfortunately I am too tech challenged to do a link, but Daniel Gross on Slate has an article comparing the FED response to teh subprime to FEMA's response to Katrina and asks readers to submit their own analogies. I can't think of a group more suited to this challenge than CR commenters.
so when do i win for having lots of cash on hand?
Sort of on-topic:
A friend of my fiancee's who is a "real estate agent/investor" was complaining about how tight her finances are these days. After using MEW money to fund paying off credit cards several different times and to buy a second property, she can't get that one last hit that she needs to keep the ball rolling. The money quote this week was "I have equity in my house, why won't they give me a loan?" I don't think she understands the profound shift in lending that has occurred right under her feet.
I've read stories about people like this, but to actually know somebody that just doesn't understand how finance works (i.e. MEW money has to be paid back, and the bank may want to know how they're getting theirs) is just astonishing. The good news is that it helps the future wife to understand why her nesting instinct is not being satisfied by rushing out to pay top dollar for a lousy property (this is in Santa Barbara) only to be left living on the ragged edge financially.
Now if I could only get myself to be as disciplined about spending less time on CR like l've been about going into debt, I could get some things done in life. The comments and explanations here are the best there is. Thanks to everyone who helps me understand what's going on a little better each day.
"The bottom line, of course, is that the rentiers have now killed the goose that laid their golden egg--American consumers. And shortly, they, too, will begin to starve to death."
An increasing number have been putting their money and investments overseas to avoid the crash that, in the back of their mind, they always knew was coming and always knew they helped cause. But everybody was doing it, so hey, why beat yourself up?
I wonder how many of the people walking away from $2 million McMansions (now worth $1.2) have a couple of million parked in European or Asian securities? According to my accountant neighbor -- not a few.
quartz,
Is the Fed the New FEMA? | Newsweek Voices - Daniel Gross | Newsweek.com
Cheers,
Thanks, Misean!
As has been noted twice, there is a big difference b etween borrowing and a hardship withdrawal.
As I recall, you can borrow the lesser of 50% or $50,000.
Not many people upside down on their 401k's.
As far as the dollar impact, I would imagine that the most likely to either take a loan or hardship withdrawal are taking out smaller rather than larger amounts. Just like people who have $5,000 in one and changes jobs is a lot less likely to roll over.
paul_in_sb ,
A term I heard frequently from my parents and others growing up but have not heard in many years may come back into vogue.
The term is : "House poor"
Citi is bringing it's SIVs on balance sheet...check the WSJ for more info as the story unfolds.
The shares aren't moving much on the news. Yet.
Check the WSJ for updates & the full story.
Eli, thanks for showing me a slice of Hell I didn't know existed. :-
bob,
If I hit 65 and I have a life insurance policy loaded up... I'm calling up JG Wentworth (or whoever it is then), I'm going to say to them... "I'm eating a bucket of fried chicken, smoking a pack of cigarettes and drinking a gallon of Mad Dog 20/20... do you want to buy my life insurance policy!? I need more booze, and i got no more cash!!!"
I'm hoping that'll get me a big payout. Maybe I'll drop in an aside about how the diabetes took my brothers and sisters too soon..
OT - from WSJ:
"Citigroup plans to consolidate its structured investment vehicles onto its balance sheet. Full article coming soon."
Who needs a damn M-LEC anywho!
usa today thing on hardship withddawals - for those who think it's penalty free, perhaps not so much:
In a terrible bind? Tapping your 401(k) may not be smart - USATODAY.com
An increasing number have been putting their money and investments overseas to avoid the crash
Yep, in the "foreign fund" option of the 401k.
I seriously doubt these nouveau riche planned very well. They spent like party would go on forever.
I wonder how many of the people walking away from $2 million McMansions (now worth $1.2) have a couple of million parked in European or Asian securities?
Um, what's going to hold those up, Hannukah gelt?
It is actually very rare for CP defaults, but they do happen
"Since 1972, when Moodys began rating CP programs, 45 issuers have defaulted on roughly $4.3 billion of rated and unrated CP. Historically, the U.S. market, the world's largest,
has contributed the lion's share of defaults (31.1% since 1982). However, since 1992, only one rated USCP issuer, Mercury Finance Company defaulted. From the mid-1990s on, the bulk of CP defaults have been non-US issuers in nascent markets throughout Europe, Asia, and Latin America."
Moody's Investors Service
Commercial Paper Defaults and Rating Transitions, 1972-2000
Am I the only one old enough to remember the Reichmann Brothers and Canary Warf?
Darth Toll said: "People pulling money out of 401k's should be a big hit on the equities market.If this is true, than why is the stock market up around 8% for the year? Something doesn't add up..."
Tell me about it.
This board is so reactionary, so far behind events it's getting...well, silly.
People did pull money out of the markets...in August.
"...Stock funds posted an outflow of $12.27 billion in August, compared with an inflow of $11.56 billion in July. Among stock funds, world equity funds (US funds that invest primarily overseas) posted an inflow of $1.72 billion in August, vs. an inflow of $14.91 billion in July. Funds that invest primarily in the US had an outflow of $13.99 billion in August, vs. an outflow of $3.35 billion in July."
404 : Page Not Found
Honest to God, it's frustrating here. Everybody looking at a train that's already wrecked and hyping each other up about how much worse it's going to get?
It would be funny, if it weren't for the all the people who are being massively misled by reading this blog.
Sebastia
Forgive this annoyingly long copy/paste job..
Here's a neat e-mail I got from optionsXpress today... looks like they're moving all the "cash" that used to sit in Money Market Funds (whatever available balance you had for trading) into sweeps that flow through FDIC Insured deposit accounts.
Not that it matters much to me.. I told them years ago that I didn't want some "cash equivalent" mmf.. and that they should hold my cash as a regular deposit.. anyhoo, here it is:
Dear Eli,
I would like to make you aware of some important changes that optionsXpress, Inc. is making to the investments that we offer for the automatic investment or "sweep" of available cash balances in your brokerage account. optionsXpress will soon no longer offer certain money market mutual funds ("Money Funds") as sweep investment options for available cash balances in your account. If your account is an entity account such as a corporation, partnership limited liability companies, or certain not-for-profit organization , the changes in this letter do not apply to you. If you have questions about whether your entity account may participate in the FDIC Sweep Program, contact us at 1-888-280-8020.
What is changing?
Beginning on January 14, 2008, your Money Fund shares will be sold and the proceeds will be invested into interest-bearing deposit accounts (the "Deposit Accounts"). Thereafter, all sweep-eligible funds will be swept through the Insured Network DepositSM service into the Deposit Accounts at one or more banks (each a "Bank") set forth on the Priority List (the Priority List will be available on the optionsXpress Web site before January 14, 2008). These Deposit Accounts are eligible for Federal Deposit Insurance Corporation ("FDIC") insurance as described below.
What do I need to do?
If you agree to the designation of the Deposit Accounts as your new sweep investment, you do not have to do anything at this time funds remaining in your Money Fund on January 14, 2008 will be automatically transferred to the Deposit Accounts.
If you do not wish to have your funds swept to the Deposit Accounts, you may choose not to have your available cash swept at all and instead, you will receive credit interest at our current rates, in which case, you must notify us by email at info@optionsxpress.com by the close of business on January 11, 2008.
Where can I find more information?
This letter and the FAQs provide a brief summary of the changes to your sweep investment options. More information is available in the linked Booklet describing these changes in greater detail. View Booklet Here. This Booklet includes information on the following:
* Transition from Money Fund to Deposit Accounts;
* Operation of the Insured Network Deposit service;
* Determination of interest rates;
* Sweep investment options;
* Fees to optionsXpress;
* Benefits to optionsXpress and Banks;
* FDIC insurance; and
..continued...
* SIPC insurance
Please review this Booklet carefully, and do not hesitate to contact us should you have any questions about this change. Visit Online Options, Stock and Futures Investing at optionsXpress for additional information about the sweep investments we continue to offer and to adjust your individual election.
We appreciate the opportunity to continue to serve your financial needs.
Sincerely,
Ned Bennett
CEO
optionsXpress, Inc.
Peter, olympic was junk.
At least so I recall.
also canuck stuff technically.
But hey, junk is junk.
I think I am only going to start investing in VICEX.
That seems to be the only steady return;-}
Someday this war's gonna end...
Eli - One of the more interesting sub-sets of life insurance buy-outs happened with people who had AIDS. They sold their policies to companies (name of this is viatical settlements). Then the companies sold the policies to investors. And then a funny thing happened. New drugs came along - and AIDS patients whose life expectancies had been 2 years were now 10 or more. Needless to say - a fair number of these viatical settlement companies went under (because their actuarial models were based on data that was no longer sound).
I guess this has something in common with mortgage backed securities. There are lies - damned lies - and then there are statistics! Roby
I think the Titanic is a better analogy than a train. People on deck felt a bump, but it didn't spill their champagne. Waiter- more champagne!
put it on my credit card
I think 401k's will eventually be raided anyways. And not by the owners! Any large pool of money from a number of diversified sources always gets looted to a certain extent, at some point, in this country's history.
Peter, olympic was junk
It was both -- and syndicated loans as well -- but the part that had the financial world briefly panicked was the $600+ million in CP that it defaulted on. Biggest CP default in history up until that point, as I recall. But, yeah, it was unrated.
""Honest to God, it's frustrating here. Everybody looking at a train that's already wrecked and hyping each other up about how much worse it's going to get?
It would be funny, if it weren't for the all the people who are being massively misled by reading this blog.""
Sebastian
Sebastian | 12.13.07 - 6:55 pm
You know, you're right. It's allllll good now! Wrong. The situation is much more like a stone skipping off the surface of water, the 1st bounce has the biggest interval, the 2nd less, and so on in shorter and shorter intervals until it's weight overcomes any momentum and it sinks below the surface.
Gee, I thought that just because everyone had a job meant that the economy was going to be just fine.
I guess that was wrong, just like all the other bull spin.
The benefits of increased productivity have accrued almost entirely to the rentier class, and the very top of that.
The bottom line, of course, is that the rentiers have now killed the goose that laid their golden egg--American consumers. And shortly, they, too, will begin to starve to death.
Markel
Some of us have been warning about this for years. It will be entertaining to watch the REVOLUTION unfold.
Oh, the REVOLUTION is here, it's merely harnessing participants.
Oh, the REVOLUTION is here, it's merely harnessing participants.
dotcommunist
In the case of revolutions past performance is a strong indicator of future outcomes and when/if the revolution is here, it will be HARVESTING participants - most of all they eat their own, damnit.
-K
Before we all get too excited about 401K withdrawals, remember that they are only worth something if you can exceed inflation in your returns.
If not best to get them now.
Also, if you have assets, then BK is not a real option.
And paying 24% on Credit cards while getting 6% on a 401K balance is not economically justified.
Darth Toll said: "People pulling money out of 401k's should be a big hit on the equities market.If this is true, than why is the stock market up around 8% for the year? Something doesn't add up..."
I think the market (excluding financial stocks) has held up despite the credit crunch because the money that has flowed out of debt instruments has made its way into large company equities, particularly those with strong export sales. Think about it-if you're a hedgie or other money manager, your clients aren't paying you hefty fees to park their money in T-bills at 3 %. So which has a better risk/benefit ratio, some MBS backed by houses or shares of Honeywell or Boeing backed by cash flow and factories? Wouldn't shock me to see the market (or at least the industrial, healthcare, and other non-financial sectors) go higher, particularly now that the Chinese can buy in.
I read where Congress introduced legislation this week to allow penalty free 401K withdrawals,up to 25,000, if the intent was to use the money to stay in your home...
So you pull money out of an asset that has a reasonable chance of being higher 3-5 years from now and put it into one that has virtually none? That makes sense
"JG Wentworth pays Cash Now For your Life Insurance Policy"
Extra bonus if you put your head in the guillotine right there at the office. That way they don't have to come looking for you on a dark night.
Taking money out of a retirement plan to "avoid bankruptcy" is foolish. File, then take out the money. Retirement funds, IRAs, 401ks and so on are exempt in bankruptcy.
According to the survey cited, about half of plan participants who withdrew from their 401(k)s this year used the money to pay their mortgage.
Sebastian,
Since you are the only one here who really knows what's going on, could you please give the misled people on this board your sage analysis of the following graph and how the worst is already behind us?
http://bp1.blogger.com/_nSTO-vZpSgc/Rx-d7ImUOhI/AAAAAAAABdM/BNQzRl76buw/s400/Mortgage-Rate-Resets.png
masaccio..are you sure? I thought this was just in the state of Florida
thx.
Generally speaking, IRAs and 401 are exempt from bankruptcy. If you are broke, then you may want to play that game of doing a BK and keeping your retirement.
But if you have assets, that may not be an options. Say out of work but you have equity in the house. Loans are almost impossible because, gasp, you have no income. Selling the house may not be an option if you have a family and children in school.
Finally remember that if you divorce, your spouse can get up to 1/2 of it.
If we do hit hyperinflation, it will not be worth much anyway.
In this case, the grasshopper may be smarter than the ant.
call me stupid but this is what I did, with backgrond info. I've owned the home for 9 years, bought it before the bubble (Florida) w/ 40% down pmnt, never MEW'ed or HELOC'ed, just paid off principle. Dropped it from 70,000 to 35,000, a large chunk of which came from a tiaa-cref retirement acct. cashed in at summer's peak last July. Low cost Re-fi'd at 6% and now my monthly bill is less than 200$ for 2700 square feet. My cash flow has increased by almost 400$...
just in time to pay the burgeoning property tax and insurance bill.
I thought I was saving my ass but...
I should have waited for the bail out, I guess...
damn, hate it when that happens...
NEVER underestimate American consumers.
They are like a heroin addict, they keep injecting until they die.
If they will buy a chia pet or a clapper, they will surely pull money out of their 401Ks. I think Americans have become the dumbest group on the planet.
It is as I expected: the greedy and stupid American consumer won't quit until they have not a dime in their name and no more credit available. People are just that stupid!
Of course, the rest of us - the smart people - get to contend with runaway inflation thanks to endless debt in place of income and the Fed's policies, as well as having to endure the very slow deflating of the housing Bubble (affordable housing?! How terrible - the serfs might have some freedom!) and the coming recession/depression/hyperinflation/whatever.
I think we're all rather tired of being stuck with the bill produced by the idiots in this nation.
JG Wentworth pays Cash Now For your Life Insurance Policy
Not usable in FL, NV, NJ or CO (which leaves out a goodly portion of the MEW crowd).
That is simply insane. 401k money is not yours, it belongs to your future self, who may well be broke and in a wheel chair.
The end of the pension system was seriously a blow to alot of people. Sure you can and should make more money in a 401k than the 4.5% or whatever a pension pays, but the freedom just allows far too many people to lynch themselves.
"what does a pint of blood go for these days?"
When I was donating alot, I found out the hospital chargeback was over $200.
"MEW ebbing, now 401K plans... what will consumers use next to get cash?
Guns!
Ho ho ho!"
Actually I think they'll use politicians, then guns.