tag:blogger.com,1999:blog-538734877165581694.post489995536043698086..comments2023-04-03T03:36:10.172-07:00Comments on Toward Mustachianism: I have a confession to make: 401k loanMustachian Acolytehttp://www.blogger.com/profile/07084560871262302396noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-538734877165581694.post-34954390232210289282012-02-14T14:18:04.689-08:002012-02-14T14:18:04.689-08:00I've been considering your comment and I belie...I've been considering your comment and I believe you are right. Either you're spending your tax free money (with a 401k loan) and paying it back in with taxes now or your spending after tax money and contributing pre-tax to the 401k, same net result.Mustachian Matthewnoreply@blogger.comtag:blogger.com,1999:blog-538734877165581694.post-83029123383790526812012-02-07T17:37:33.389-08:002012-02-07T17:37:33.389-08:00I've thought about that and I don't think ...I've thought about that and I don't think it's a gotcha, though if I'm wrong I'd like to know why. Imagine the alternate case: you get to pay back your 401k loan with pre-tax money. Now you paid into the 401k with pre-tax money, got to take the money out and use it without paying taxes, and then repay it with additional pre-tax money. That strikes me as a pretty obvious loophole, no?Mustachian Acolytehttps://www.blogger.com/profile/07084560871262302396noreply@blogger.comtag:blogger.com,1999:blog-538734877165581694.post-41528015686286135092012-02-07T16:57:38.656-08:002012-02-07T16:57:38.656-08:00The other problem you noted in your writeup but di...The other problem you noted in your writeup but didn't call out as a problem is that you're paying back yourself with after-tax money. Therefore you're paying tax twice, once when you pay your loan back and again when you withdraw your money at time of retirement. I used to watch Suze Orman regularly and she used to harp on this one a lot.Mustachian Matthewnoreply@blogger.comtag:blogger.com,1999:blog-538734877165581694.post-79949134400837326012012-02-01T12:41:15.811-08:002012-02-01T12:41:15.811-08:00Hey Gwen,
Whoah, that's a cautionary tale if ...Hey Gwen,<br /><br />Whoah, that's a cautionary tale if ever I heard one, and not something I considered. That is a really good point! With debt generally the obligation can stick around much longer than the reason you got it in the first place.Mustachian Acolytehttps://www.blogger.com/profile/07084560871262302396noreply@blogger.comtag:blogger.com,1999:blog-538734877165581694.post-42092098304291419022012-01-30T09:22:11.483-08:002012-01-30T09:22:11.483-08:00I agree with you on the "use RRSP for home do...I agree with you on the "use RRSP for home downpayments". In Canada, as a first time home buyer, we can use up to 20k, but it must be put back into the RRSP equally (or faster) over the next 17 years. <br />Fast forward 9 years, I'm divorced, no longer have the house, nowhere near as much in RRSP as I had, and still have the liability of paying them back. My own financial plans have changed since I bought that home, and I do regret taking that money out.Sheryl C.https://www.blogger.com/profile/09293613380338917890noreply@blogger.com