Breaking up with your 401k | Good Money

Jacob Imam and guest Alex Renn take a look at the practicalities, the insecurities, the sacrifices, and the excitement of actually closing a 401k.
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[@Kinson09]

Your video is helping me with discernment of emptying my 401K at age 34 - you gave words to my thoughts that have been beneath the surface for so long. We can pay off our house, add onto it for my aging mom and in-laws, and then what, I do not yet know. Thank you, Jacob and Alex!

[@ibanezdudeck]

It takes more responsibility and discipline but I think there's a lot of advantages to taking that 5-10% of your paycheck and using it to pay off your house or using it to buy back some of the valuable things like land, businesses, etc from the corporations that own more and more of it. A 401k is just a money pot, a small business or rental house has non-monetary value like providing employment or a home for friends and family and can be passed on.

[@Kinson09]

@@ibanezdudeck thanks, yes. Amen.

[@jedediaharnold3401]

You should consider posting the email Jacob sent about closing the 401k and link it in the description

[@tpangle17]

My biggest takeaway from this is that someone has advised me to take my family's money, give it to someone else for the productive part of my life (which they will then hold hostage at gunpoint to the tune of 25%), and then I get access to it again when I've simply kept my head down obeying the market system for 40 years and denying much charitable work and community building that I *would* have participated in had I had full access to my money.

[@Seethi_C]

But then your family would have nothing when you die

[@darinward3256]

Don't forget that you also will gain access to the full equity of your house and all of the appreciation that comes with that much sooner. There are also some interesting things you can do with cash out refinances of your house once you have that much equity which will give you access to large amounts of money quickly to do magnificent things with.

[@SK-no2rn]

You're trying to argue for both sides of the coin, which is illogical. First, you aren't gaining more appreciation by having the full equity. With rates in the 2s that are LOWER than inflation, you are losing money in real terms by paying it off early. Second, if you can do "some interesting things with cash out refis" then why did you pay it off early in the first place?

[@Kitiwake]

Dude... You can still work. Isn't that much more important than all the imaginary tinsel pension funds that might be used for who knows what?. And it's your money. So don't ever stop working. You can then continue to contribute constantly to the common good.

[@Kitiwake]

@@Recusant_ where is that to be found? Who made that up? There is nothing anywhere that says that. We are expected to contribute to the common good and to not arbitrarily cease work. That's Catholic theology.

[@SK-no2rn]

The most illogical approach I found in the whole video was the imaginary savings of $50K of interest by paying off your house early. My house has a 2.25% rate while inflation is well above that meaning I have a free loan, I can also refinance if rates go lower. When you pay off your super low rate mortgage, you lose the ability to capitalize on lower rates in addition to all the excess capital you could have for free. So if I have a 300K house with 225K principal at 2.25%, I could either pay it all off now and avoid $40K in interest OR I could invest that $200K I have now and end up with a hell of a lot more than 200K+40K in 15 years. It made sense to pay off your house early when rates were 6-8-10+% and inflation was 3%. You were losing lots of money to inflation. But now...why would you pay off something faster when inflation is higher? When the prices of cars, durable goods are groceries are going up 5% but your interest is only 2.25%, you are losing TONS of buying power down the road.

[@travischapman6763]

I was interested in this channel before it became ways of throwing money away supposedly supported by faith. We’ll be supporting these guys later in life when the well runs dry.

[@Kitiwake]

That carries a big assumption on your behalf... That they won't work and be productive for the rest of their lives... Which they will...as I hope you will. Don't be so afraid..God is our first priority ie, no strange gods. God has a plan for them... and for you.

[@travischapman6763]

@@Kitiwake You won't be productive the rest of your life. In a time when wise saving and an average effort at work allows you to not lean on others allows everyone more freedom to help those who need it, including our own aging parents who hopefully have saved wisely themselves to make find care and services easier on us. Saving money to eventually stop having a requirement of paid work to live allows you to have more time for your family and community. I just tried to listen to insurance, and I couldn't, I'm unsubscribed from all. Another situation of "what do you plan on doing when you get to a situation where you needed this?" Answer: lean on everyone who has always had insurance and now has money to help instead of paying their own much smaller co-pays and co-insurance fees. We have retirement so we don't just work for an employer (versus more fulfilling but not lucrative work) and insurance so we can afford healthcare costs before we are able to save up money for a $200,000 to mulitmillion dollar hospital say. Throwing money away like this is like the story of the guy ignoring the boat and helicopter when his house is flooding.

[@haronsmith8974]

@@Kitiwake It should be sinful to promote such financial illiteracy to people under the guise of faith.

[@thamill3826]

We can’t make enough to live when we’re 74 and live in nurses are expensive. Unless one of your kids is a nurse this is difficult today. Maybe invest in gold, or buy a house and downsize and use the money from the larger house for a nurse if you need it? I just feel like there’s imprudence in calling on people to possibly be destitute for the last 20 years of their life. Unless you have a lot of kids (and still they might not be able to afford round the clock nursing if you need it)

[@thamill3826]

Nursing homes are terrible. Cheap ones are worse. Just don’t be imprudent. Or have a lot of kids (> 5)

[@Kitiwake]

How are you sure that you ll " need" a nurse? Why can't you live a healthy lifestyle and shorten those odds considerably. Ask God and the intercession of the saints for all your needs and trust in Him completely. And yes . Have a lot of kids.

[@thamill3826]

@@Kitiwake that just seems like a lack of prudence. I’m just saying, you might need a nurse and not be able to work for the last 20 years of your life. It’s not uncommon. If you feel it doesn’t apply to you don’t plan for it.

[@thamill3826]

@@Kitiwake that just seems like a lack of prudence. I’m just saying, you might need a nurse and not be able to work for the last 20 years of your life. It’s not uncommon. If you feel it doesn’t apply to you don’t plan for it.