Take loan for parts or be patient? - Mustang Evolution

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Old 03-05-2014, 12:36 AM   #1
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Take loan for parts or be patient?

I have the option to take a no-penalty loan against my 401k in which all of the interest (3%) goes directly back into my fund and it's payroll deducted for anywhere from 6 months to 5 years. Essentially I would be paying myself for borrowing my own money.

I hate the stock ride height that my '14 GT has. I'm very tempted to take the money and use it for BC Racing coil overs and supporting mods like LCAs with relocation brackets and an adjustable panhard bar. I loved the BC coils when they were on my MR2, and I don't want to get in a situation where I'm not satisfied with just springs.

So basically it would be $30/week for one year. Should I be not let my impatience get the best of me? Or just say fck it, because racecar?
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Old 03-05-2014, 12:49 AM   #2
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I'd just save up on the side. Don't take money out. You will see it as an opportunity to take out even more.
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Old 03-05-2014, 12:52 AM   #3
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I'd just save up on the side. Don't take money out. You will see it as an opportunity to take out even more.
I realized this issue as I was typing, lol. My schedule is changing next week to a more manageable one thankfully. I've been missing a lot these past few months because I was working first, second AND third shifts, with Mondays and Fridays off. As of next week I'll be back to all third shifts, which I love, so I'll be able to save more.
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Old 03-05-2014, 06:57 AM   #4
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Do it, because race car. If you feel safe financially by taking this option, why not? If you're really having any doubts though, may not be the right choice.
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Old 03-05-2014, 07:05 AM   #5
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I'm mainly looking for any pros/cons that I haven't found yet. I'm young, actually 25 next month, now is the time to take risks. My company doesn't do layoffs, so my termination would be due to my own stupidity. There's plenty in my 401k to cover the loan should something happen. It will build my credit without any effort on my part.

However it is a risk, which is a big con. Saving up on the side would take longer, as I'd keep buying smaller parts as I went rather than make my goal because of my impulsive nature.

I was all for this until a few friends with different retirement plans kept telling me not to do it. They can't fathom the concept of "no penalty" and think I'll get taxed into the ground for withdrawing funds.
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Old 03-05-2014, 07:50 AM   #6
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If you do have to withdrawl there is a 20% tax and up to 15% penalty depending. So that is steep. I am saving as I go and using tax money plus any bonuses. Stage one done. I could borrow for suspension stage now but going to save. I am 39 if that means anything... with 3 little pony's in the house but no Mare, lol.
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Old 03-05-2014, 07:54 AM   #7
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Take it from an old guy 3% over a year is not much even if you have another 20 or 30 years to pay into your 401K. The way the market is right now you would loose. I have taken out a loan against my 401K to redo remodel my house, I figure I will get it back because I will be paying it back at 4% and the increase value of the house. If you put it into your car will you get a return on it? I figure I will need to have a little over a million saved up to keep the standard of living I have gotten used to. You are alot younger and will need almost double that. If I live to 90 I will run out of of income, which is more and more common these days.

So here is something you can do that will get you the mods to the car pretty fast and will not hurt you in the wallet. Take an envelope mark it with Car Mod Money each week put in your extra cash in this case $30 or more in 10 weeks you will have $300 ready to go the more you stuff in the envelope the faster you will get there. I do this all the time and you will be surprised how fast it adds up when you really want something. The other thing I do is buy Walmart Gift cards or Gift cards from other stores I want to buy something from when I have the extra cash I buy them when I get enough to get that flat screen TV or what ever I go in and buy it with the gift cards. Sort of a poor mans lay away.
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Old 03-05-2014, 07:56 AM   #8
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That's the beauty of it being a loan. It isn't considered a withdrawal since I will be paying it back, so there is no tax or penalty. Any bonuses that I get from here on out will go towards paying the car off. I should have done that with the tax return as well, but now my exhaust is damn near perfect. I'm 24, single, no children, no rent or mortgage and no student loans, so my tax returns suck and I get the shaft on payday too, but less expenses.
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Old 03-05-2014, 08:10 AM   #9
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Originally Posted by Mlarv5 View Post
Take it from an old guy 3% over a year is not much even if you have another 20 or 30 years to pay into your 401K. The way the market is right now you would loose. I have taken out a loan against my 401K to redo remodel my house, I figure I will get it back because I will be paying it back at 4% and the increase value of the house. If you put it into your car will you get a return on it? I figure I will need to have a little over a million saved up to keep the standard of living I have gotten used to. You are alot younger and will need almost double that. If I live to 90 I will run out of of income, which is more and more common these days.

So here is something you can do that will get you the mods to the car pretty fast and will not hurt you in the wallet. Take an envelope mark it with Car Mod Money each week put in your extra cash in this case $30 or more in 10 weeks you will have $300 ready to go the more you stuff in the envelope the faster you will get there. I do this all the time and you will be surprised how fast it adds up when you really want something. The other thing I do is buy Walmart Gift cards or Gift cards from other stores I want to buy something from when I have the extra cash I buy them when I get enough to get that flat screen TV or what ever I go in and buy it with the gift cards. Sort of a poor mans lay away.
I've gotten so used to using my debit card that I never carry cash anymore. I do have the option to open a separate account with another bank that offers payroll deductions through my company as a kind of hidden savings account. I put $50 of my check in savings the day I get paid every week, and anything I have left over at the end of the week goes in as well, and I don't touch it unless it's an emergency. Right now I'm depositing 10% of my check every week into the retirement, plus private stock in the company. I understand 3% over a year is basically nothing, but it means no penalty and I'm really not spending any extra to pay it back.

We all know cars are horrible investments. We're in this for ourselves, not the next guy. No matter what we do to these beautiful machines, they will never be worth what they were the day before. I want to do this before I get a house in the next year or two because all of my money will go into customizing that as well.
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Old 03-05-2014, 08:19 AM   #10
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Quote:
Originally Posted by KSconvert View Post
I've gotten so used to using my debit card that I never carry cash anymore. I do have the option to open a separate account with another bank that offers payroll deductions through my company as a kind of hidden savings account. I put $50 of my check in savings the day I get paid every week, and anything I have left over at the end of the week goes in as well, and I don't touch it unless it's an emergency. Right now I'm depositing 10% of my check every week into the retirement, plus private stock in the company. I understand 3% over a year is basically nothing, but it means no penalty and I'm really not spending any extra to pay it back.

We all know cars are horrible investments. We're in this for ourselves, not the next guy. No matter what we do to these beautiful machines, they will never be worth what they were the day before. I want to do this before I get a house in the next year or two because all of my money will go into customizing that as well.
I think I would hit the emergency fund for the loan before the 401K but that is just me. When you get the house you will be doing work to it and that would be a better 401K hit.
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Old 03-05-2014, 08:28 AM   #11
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I think I would hit the emergency fund for the loan before the 401K but that is just me. When you get the house you will be doing work to it and that would be a better 401K hit.
Most of the people I work with that take 401k loans use them for Vegas (lol, seriously) or to pay off higher interest loans/credit cards. As far as the house goes, that's still a year or two away. I'm already going broke in my head thinking of all the things to do to it. I've been watching DIY videos for the past week just on finished concrete. Countertops, sinks, cast-in-place tubs, flooring, *****g everything. Thankfully I have a few friends that will do contract work for beer, and I used to do hardwood flooring a few years back, so I can at least find comfort in that I'll be saving money on the labor side of things.
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3.73 gears, Roush AB, BBR O/R x-pipe, JLT intake, BMR panhard bar, BMR lowers and brackets, FRPP 47# injectors, Lund E85 tune, SR springs, MGW shifter, 416rwhp/393rwtq
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Old 03-05-2014, 02:24 PM   #12
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Take loan for parts or be patient?

Quote:
Originally Posted by KSconvert View Post
Most of the people I work with that take 401k loans use them for Vegas (lol, seriously) or to pay off higher interest loans/credit cards. As far as the house goes, that's still a year or two away. I'm already going broke in my head thinking of all the things to do to it. I've been watching DIY videos for the past week just on finished concrete. Countertops, sinks, cast-in-place tubs, flooring, *****g everything. Thankfully I have a few friends that will do contract work for beer, and I used to do hardwood flooring a few years back, so I can at least find comfort in that I'll be saving money on the labor side of things.

Haha. I've been doing the same thing dude. I'm 26 and bought my house two years ago and I'm planning on finishing my basement this year. I have a buddy I work with who use to build houses so him and I are going to tackle the whole thing. Looking to save a ton of $$$$ this way.
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