Aug. 14, 2024
55: Should I Pull From My 401K To Cover An Emergency?
Ever wondered if tapping into your 401k or 403b for emergencies is a wise move? Discover the crucial considerations and potential pitfalls of early withdrawals. This episode challenges you to critically assess whether your situation truly merits dipping into your retirement funds and explores viable alternatives. We promise you’ll walk away with a deeper understanding of when and why to think twice before making such a financial decision.
Watch this episode in video form on YouTube: https://www.youtube.com/channel/UCP55O4Ku4dukHcK0kExhpcA
Watch this episode in video form on YouTube: https://www.youtube.com/channel/UCP55O4Ku4dukHcK0kExhpcA
To apply to be a guest on the show, visit:
If you’d like to leave us a question to be answered during future episodes, you can do so at:https://www.speakpipe.com/thesugardaddypodcast
You can email us at: thesugardaddypodcast@gmail.com
Be sure to connect with us on socials @thesugardaddypodcast we are most active on Instagram
Be sure to connect with us on socials @thesugardaddypodcast we are most active on Instagram
Learn more about Brandon and schedule a free 30-minute introductory call with him here: https://www.oakcityfinancial.us
Buy us a coffee: https://buymeacoffee.com/thesugardaddypodcast
Please remember to subscribe, rate, and review.
Chapters
00:00 - Withdrawing Money From 401k
12:20 - 401k Plan Loans
Transcript
WEBVTT
00:00:00.239 --> 00:00:05.772
Now, also, the one thing that's taken to mind is that not all 401k plans are the same and not all the rules are the same.
00:00:05.772 --> 00:00:16.155
So when I hear somebody say they want to just withdraw money from a 401k plan when you're actively an employee, you might not even have the option just to withdraw money.
00:00:16.155 --> 00:00:29.068
Now, when you do withdraw money from a 401k plan prior to being 59 and a half years old, more than likely you are going to be assessed a 10% penalty for early withdrawal, so you do need to take into account.
00:00:29.088 --> 00:00:46.411
So that's right off the bat, that's right off the bat and if you have pre-tax contributions then you are going to pay taxes also in the amount that you withdraw.
00:00:46.411 --> 00:00:49.655
Hey babe, what are we talking about today?
00:00:50.481 --> 00:01:12.719
Well, we got a great question in our DMs about pulling out money from your retirement to cover an emergency, and so I'm going to read this message to you and then I need you to answer it, because I bet that there are several people who have thought, hey, I need to cover this emergency.
00:01:12.719 --> 00:01:13.965
I wasn't prepared.
00:01:13.965 --> 00:01:25.588
Or maybe an opportunity has come along, like hey, there's this house and I need a down payment, but I wasn't where I needed to be for my down payment, like, can I pull out of my 401k or 403b?
00:01:25.588 --> 00:01:34.308
So I think it is relevant because, I mean, I know, even I've had that question of like what if I needed to dip into this?
00:01:34.308 --> 00:01:38.867
But most of us have heard, no, you never want to pull from your retirement.
00:01:38.867 --> 00:01:42.487
So let me read this question and I definitely want your expertise on this.
00:01:42.728 --> 00:01:42.950
Okay.
00:01:44.542 --> 00:01:52.549
So I have a family member who had an emergency and was telling me that she wanted to withdraw from her 401k for this emergency.
00:01:52.549 --> 00:01:54.828
I told her she should never do that.
00:01:54.828 --> 00:02:05.228
My reasoning not to is that it will negatively impact her tax return and she will need to put it back in the 401k on top of fees accrued.
00:02:05.228 --> 00:02:10.391
So my question is what are your thoughts on withdrawing from a 401k?
00:02:10.391 --> 00:02:12.580
How can this impact your tax return?
00:02:12.580 --> 00:02:14.705
What types of fees are involved?
00:02:14.705 --> 00:02:21.346
What other options do you recommend for an emergency that will give access to funds within a few days or a week?
00:02:21.346 --> 00:02:25.712
And example, like a line of credit on your home, possibly?
00:02:25.712 --> 00:02:26.735
What do you think?
00:02:26.735 --> 00:02:27.581
I don't know.
00:02:27.581 --> 00:02:31.009
I was just always told never to dip into your 401k.
00:02:31.009 --> 00:02:31.912
Thanks so much.
00:02:33.341 --> 00:02:34.905
No, I think that's a really good question.
00:02:34.905 --> 00:02:38.382
I think it's one that probably has crossed a lot of people's minds.
00:02:38.862 --> 00:02:39.043
Right.
00:02:39.343 --> 00:02:41.188
So let's start with.
00:02:41.188 --> 00:02:44.942
You know the adage that you always hear don't ever withdraw from a 401k plan.
00:02:44.942 --> 00:02:47.663
Obviously, that's not the ideal scenario.
00:02:47.663 --> 00:03:04.901
Main reason being is that the power of compound interest so having put money in there year after year after year, and then the interest gaining interest on top of interest is one of the biggest pluses you can have from an investing standpoint, just in general, all right.
00:03:04.901 --> 00:03:14.611
So if you don't have to dip into that, because the idea for these accounts is that it is for retirement, when you do get of retirement age, obviously you don't want to take money from there if you don't have to.
00:03:15.762 --> 00:03:18.650
Right, because our younger selves are taking care of our older selves.
00:03:19.060 --> 00:03:19.421
Exactly.
00:03:19.461 --> 00:03:21.269
By investing in our retirement accounts.
00:03:21.800 --> 00:03:25.389
But the reality is that things happen, you know.
00:03:25.751 --> 00:03:26.331
Life be life.
00:03:26.599 --> 00:03:29.590
Life happens and sometimes you don't have any other options.
00:03:29.590 --> 00:03:36.906
So in the scenario where there are no other options, I am not going to shame someone, for you know having to do that.
00:03:36.906 --> 00:03:38.746
That's not how I operate.
00:03:38.746 --> 00:03:43.090
Also, it doesn't do any good to shame someone about that.
00:03:43.090 --> 00:03:49.645
But the biggest thing is a shame-free environment, that, but the biggest thing is a shame free environment, yeah, but the biggest thing is that it all depends First of all, what is the emergency?
00:03:50.740 --> 00:03:55.368
That's the key that I thought was missing, Like what is the emergency and what was the amount?
00:03:55.368 --> 00:03:56.481
Are we talking?
00:03:56.481 --> 00:03:59.811
I need five thousand dollars, twenty thousand dollars, one hundred thousand dollars.
00:03:59.811 --> 00:04:01.681
We don't know at this point.
00:04:02.122 --> 00:04:18.130
So I think what is the specific emergency makes a big difference, because I think sometimes not that I am the person who is to define all emergencies for each individual, but let's be honest, some people say an emergency and it's really not an emergency.
00:04:18.360 --> 00:04:20.327
Those cute boots at the store that went on sale.
00:04:21.442 --> 00:04:25.713
So is this an emergency, where this is a dire situation, all right.
00:04:25.713 --> 00:04:29.250
So in this scenario, we're just going to assume that it is All right, right.
00:04:29.250 --> 00:04:48.516
First thing is, when people say that I have to dim to my 401k plan, I do a little pushback and is there any other place that you could get money from, whether that be, you know, some other type of I'm assuming in the scenario you don't have an emergency fund, or even if you do, because you're a little bit of money in there, something or another, so you don't have to pull out quite as much.
00:04:48.516 --> 00:04:51.497
All right, so let's look at some other options.
00:04:51.497 --> 00:04:53.317
Do you have family members, you know?
00:04:53.317 --> 00:04:56.908
Could you possibly, you know, borrow some money from your parents, or whatever it may be?
00:04:56.908 --> 00:05:01.547
Look at all the possible options that may be available to you now, you know.
00:05:02.088 --> 00:05:13.557
so sometimes you might not have any other that the money, she would need, the money within a couple of days or a week.
00:05:13.557 --> 00:05:18.995
So again, some of the processes where, like, maybe you take out a home equity line of credit, like a HELOC.
00:05:18.995 --> 00:05:23.918
Yeah, that's not going to be a quick process, that's not going to be a quick process, so I think time is of the essence here.
00:05:23.918 --> 00:05:29.182
So again, we don't know what the actual emergency is, but that is one of the caveats there.
00:05:29.543 --> 00:05:34.404
Yeah, so that makes a difference also because you know if you do own a home and you do have equity in your home.
00:05:34.404 --> 00:05:37.307
These are, you know, scenarios you could weigh out.
00:05:37.307 --> 00:05:42.369
You know, obviously with the home equity line of credit there is interest involved, Same with the home equity loan.
00:05:42.369 --> 00:05:46.550
You know you do have sometimes the options of a cash out refinance.
00:05:46.550 --> 00:05:50.653
Obviously that wouldn't be the best scenario, probably now because interest rates are high.
00:05:50.653 --> 00:06:07.976
But looking at all options that you have first and seeing, you know maybe which one makes a little bit more sense, maybe a little bit easier to get the money maybe less of a detriment in the longterm of doing you know the specific route.
00:06:09.060 --> 00:06:12.524
Now, also, the one thing that's taken to mind is that not all 401k plans are the same and not all the all the rules are the same.
00:06:12.524 --> 00:06:21.735
So when I hear somebody say they want to just withdraw money from a 401k plan, when you're actively an employee, you might not even have the option just to withdraw money.
00:06:21.735 --> 00:06:33.033
Now, when you do withdraw money from a 401k plan prior to being 59 and a half years old, more than likely you are going to be assessed a 10% penalty for early withdrawal.
00:06:33.033 --> 00:06:34.701
So you do need to take into account.
00:06:34.721 --> 00:06:35.444
So that's right off the bat.
00:06:35.463 --> 00:06:36.226
That's right off the bat.
00:06:36.226 --> 00:06:46.062
And if you have pre-tax contributions, then you are going to pay taxes also on the amount that you withdraw, and what is going to be taxed is ordinary income tax.
00:06:46.062 --> 00:06:50.928
So let's just say, hypothetically you needed to withdraw $10,000 and you were able to do that.
00:06:50.928 --> 00:06:53.733
You're going to pay taxes on that $10,000.
00:06:53.733 --> 00:07:01.622
And it's just going to be as if you made an additional $10,000 for that year and then, in addition to that, you would have a 10% penalty on top of that.
00:07:02.324 --> 00:07:15.721
So also then, do you have to consider the 10,000 or, excuse me, the 10% penalty into the amount that you're taking out, because you need to then cover that amount that's being taken.
00:07:15.721 --> 00:07:25.392
Like if I needed $10,000, but I'm being taxed 10%, then I actually need to be taking out more than $10,000 to make up for that added percentage.
00:07:25.454 --> 00:07:26.357
It could possibly depend.
00:07:26.357 --> 00:07:33.925
So most of the time they are going to withhold 20% for the taxes Now, whether or not you have to withhold the additional 10% penalty.
00:07:33.925 --> 00:07:44.379
Sometimes you have the option of going ahead and doing that now, or you have the ability to just not do it at that point in time and you're going to have to do it when you file your taxes.
00:07:45.279 --> 00:07:46.565
So how do you know which-.
00:07:47.000 --> 00:07:58.701
It'll show you the process, whether it's done online or online through your portal that you have, for whoever your provider is, or if you're calling in to process this, then they would be able to, you know, walk you through those steps.
00:07:59.083 --> 00:08:02.432
Like, and they would just say you don't have the ability.
00:08:02.512 --> 00:08:21.389
Ideally, and I say ideally because I, as someone who, early on to start out their finance career, has worked in a call center for 401k plans, where you know you call in to get information about your 401k plan or do whatever you were talking to me I could tell you that there is a wide variance and the level of knowledge of those individuals who are doing the job.
00:08:21.389 --> 00:08:28.581
As someone who I think you know I was on the better end of doing that job, I definitely worked next to people who should not have been doing that job.
00:08:29.163 --> 00:08:55.368
Which you know what's funny and I'm going to call this out because one of the things that we often do and you do it as well is, if you want to verify certain information with certain you know entities right, like if you're calling into Fidelity or wherever your plan might be once you have your answer, hang up and call again, because you're going to get another person and they might tell you something very different, and then you're going to be like, oh crap, what do I do?
00:08:55.368 --> 00:09:08.729
I need to do a little bit more research, versus just taking 100% of what somebody tells you again, like at a call center, and them saying, yes, this is what it is, and then you trusted them and they kind of screw you over.
00:09:09.240 --> 00:09:18.073
And, like I said, you can get someone in a call center that is extremely knowledgeable, but often the first person you're talking to is not a licensed advisor at all.
00:09:18.073 --> 00:09:28.495
There's simply someone who was hired for the job and they have some knowledge base in 401k plans and maybe how that specific plan works, but they are not an advisor.
00:09:28.495 --> 00:09:29.841
That is not the first person you're talking to.
00:09:29.841 --> 00:09:30.000
Now.
00:09:30.000 --> 00:09:37.802
You could be passed along further along, depending on what your question, to a licensed advisor, but the first person you're talking to at the call center is not a licensed advisor.
00:09:37.802 --> 00:09:39.605
I can guarantee you that.
00:09:40.347 --> 00:09:44.504
Have you been listening to our podcast and wondering how am I really doing with my money?
00:09:44.504 --> 00:09:47.231
Am I doing the right things with my investments?
00:09:47.231 --> 00:09:49.923
Am I on track to reach my financial goals?
00:09:49.923 --> 00:09:51.687
What could I be doing better?
00:09:51.687 --> 00:10:06.942
If you answered yes to any of these questions, then it's time for you to reach out to Brandon to schedule your free yes, I said free 30-minute introduction conversation to see how his services could help make you the more confident moneymaker we know you could be.
00:10:06.942 --> 00:10:08.645
What are you waiting for?
00:10:08.645 --> 00:10:16.183
It's literally free and at the very least, you'll walk away feeling more empowered and confident about your financial future.
00:10:16.183 --> 00:10:17.827
Link is in our show notes.
00:10:17.827 --> 00:10:19.351
Go, schedule your call today.
00:10:19.351 --> 00:10:26.799
So the first thing you need to find out is can I even withdraw from my 401k?
00:10:26.860 --> 00:10:27.181
Correct.
00:10:27.181 --> 00:10:30.030
So you need to find out the details of your specific 401k plan.
00:10:30.030 --> 00:10:35.590
Now, sometimes some 401k plans do allow you to have what's called a hardship withdrawal.
00:10:35.590 --> 00:10:43.986
What it allows you to do is withdraw money from your 401k plan If you qualify for certain types of hardship, you know.
00:10:43.986 --> 00:10:50.549
One of the big ones I could think of is like medical expenses or, if you're about to, you know, before closing your home, stuff of that nature.
00:10:50.549 --> 00:11:00.653
So not every reason qualifies and, depending on the reasoning, you might have to actually provide supporting documentation to show that this is a valid reason.
00:11:00.653 --> 00:11:03.229
So you just can't necessarily call in and make up a reason.
00:11:03.780 --> 00:11:10.399
So again, this might not fall in the category of I need money in the next few days, correct, or a week, correct, okay.
00:11:10.600 --> 00:11:22.932
Now, the one thing that I do implore people to do is that, instead of looking for just simply to withdraw money, is to possibly see if you have the ability to do a 401k plan loan.
00:11:23.573 --> 00:11:24.095
What does that mean?
00:11:24.480 --> 00:11:28.207
So it's just simply taking a loan from your 401k plan and paying it back.
00:11:29.230 --> 00:11:30.513
Through your paycheck, correct?
00:11:30.513 --> 00:11:34.910
And what are those limitations or stipulations?
00:11:34.980 --> 00:11:52.037
So, the limitations for most plans is going to be that you have access to either 50% of your vested balance or up to $50,000, whichever is less 50% of your vested balance or $50,000, whichever is less yes.
00:11:52.039 --> 00:11:53.515
So, for example, let's just say because let's just say, like you have a total of $50,000, whichever is less yes.
00:11:53.515 --> 00:12:11.490
So, for example, let's just say because let's just say, like you have a total of $50,000 in the account, even if you have $50,000 in the account, you only have access to 50% of that, if it's best in balance, because you don't, like I said, it's either 50% or $50,000, the lesser of the two.
00:12:12.120 --> 00:12:13.826
And I can just take it in one lump sum.
00:12:18.980 --> 00:12:20.203
You can, so you have to look at your plan, all right.
00:12:20.203 --> 00:12:25.143
So, like I said, some plans I would say on average, most plans maybe allow you to have two loans at a time, so you have to take that into account as well.
00:12:25.644 --> 00:12:29.601
Two loans from the same 401k plan, correct, oh, interesting.
00:12:29.601 --> 00:12:32.264
So like if something happens now and then something happens later.
00:12:32.563 --> 00:12:34.125
Correct and if you still have money available.
00:12:34.125 --> 00:12:41.374
Because if you max out yeah, if you max out the amount that you can get on the first loan, then you don't have the second loan available because you don't have any money that you could take.
00:12:41.955 --> 00:12:45.854
And then when you pay back your first loan then you would have access.
00:12:46.254 --> 00:12:47.477
Then that clears that loan off.
00:12:47.477 --> 00:12:58.551
Now sometimes there might be a waiting period so you might pay off a loan and you might have 30 day waiting period before you can actually get a, before that loan is, quote unquote, wiped off of you know your record even though you paid it back.
00:12:59.331 --> 00:12:59.993
Interesting.
00:13:00.113 --> 00:13:02.375
And it's also like with with the 401k plan loans.
00:13:02.375 --> 00:13:07.581
Most of the time you can have up to five years max that you can pay it back.
00:13:07.581 --> 00:13:14.474
So basically, payments are taken out of your paycheck every pay period and the maximum time frame you could do that is five years.
00:13:14.474 --> 00:13:21.922
So that would lower the amount that each payment is that's coming out of your paycheck and you also have most plans allow you to also pay it back in a lump sum early.
00:13:22.129 --> 00:13:46.846
But I always tell people to make sure you have all the details before you take the loan out, because I look at someone's plan and if they have the availability to do a five-year max and they could pay it back early, I often choose the five years max, even if they don't need it, because it gives them flexibility so that they have the five years if needed, because if something else comes up and they don't want to be stretched thin in regards to the payments, they have that five-year period with the lower payment.
00:13:46.846 --> 00:13:53.673
But if they are collecting money on the side and building up a savings, then they can always pay that loan off early if they have that option.
00:13:53.673 --> 00:13:59.150
But I always make sure that that option is available to them first, because some of these plans don't allow you to pay loans off early.
00:13:59.150 --> 00:14:03.714
It's all about finding the specific details of your 401k plan.
00:14:03.734 --> 00:14:04.914
Okay, so I just want to be clear.
00:14:04.914 --> 00:14:16.501
You would take a loan from yourself, because this is your retirement account, your 401k, and then coming out of your paycheck would be the payment back to yourself, correct?
00:14:16.522 --> 00:14:17.222
To your account.
00:14:17.222 --> 00:14:19.823
So it's based upon the amount that you pull out.
00:14:19.823 --> 00:14:22.485
But then there also is an interest rate attached.
00:14:22.505 --> 00:14:23.746
I was going to say I can't imagine.
00:14:23.746 --> 00:14:24.326
This is free.
00:14:24.547 --> 00:14:25.687
Well, it is free.
00:14:26.370 --> 00:14:27.153
Well, because it's yours.
00:14:27.153 --> 00:14:27.875
But what's the interest?
00:14:27.875 --> 00:14:27.956
The?
00:14:27.975 --> 00:14:29.220
interest rate is going back to you.
00:14:29.220 --> 00:14:32.011
The interest rate is based upon the current interest rate environment.
00:14:32.011 --> 00:14:33.852
But that interest is paid back to you.
00:14:33.852 --> 00:14:34.833
It's not paid to the company.
00:14:35.375 --> 00:14:43.701
And then how do you, once you put in like I want to pay this back in five years, that automatically will deliver a payment for your paychecks.
00:14:44.020 --> 00:14:47.443
So most of the time, what you can do is that you can basically model what the loan would look like.
00:14:47.443 --> 00:14:58.312
So if you go into your online portal for your provider of your 401k plan and you're like I want to take out a loan, it would show you on the online portal one if you have one available to you.
00:14:58.312 --> 00:15:00.056
So let's just say you have one available to you, you select the amount.
00:15:00.056 --> 00:15:04.322
It'll show you the amount that you have eligible for and then you can choose the amount that you need.
00:15:04.322 --> 00:15:16.404
And then you also choose the time period in regards to paying it back, and if you choose five years, it'll show you what each payment would be coming out of your paycheck prior to submitting it and actually taking the loan itself.
00:15:17.130 --> 00:15:20.697
Now you've taken the loan, you're paying yourself back every paycheck.
00:15:20.697 --> 00:15:23.941
Are you still also contributing to Depends?
00:15:23.941 --> 00:15:26.289
Okay, everything always depends.
00:15:26.289 --> 00:15:28.317
Well, it does, because every plan is it's your favorite thing.
00:15:28.470 --> 00:15:33.702
Well, the thing is, every plan is different and it's based upon what the employer is willing to pay for.
00:15:33.702 --> 00:15:45.644
So if you have a very robust 401k plan where you have a lot of options of what you can invest in you have all of these bells and whistles to it your employer is paying more for that plan than the other person who has like five things they can invest in and has just the bare bones.
00:15:45.644 --> 00:15:47.677
That plan costs less money to the company then.
00:15:47.677 --> 00:15:53.783
So it all depends on what your company is willing to invest in the plan for its employees.
00:15:54.370 --> 00:15:57.240
So let's say you have a quote unquote good plan.
00:15:57.240 --> 00:16:06.482
Is it likely that you could be paying your loan back while still also putting contributions in and getting that company match, if you have?
00:16:06.503 --> 00:16:07.344
one, for example.
00:16:07.344 --> 00:16:08.206
That is a possibility.
00:16:08.690 --> 00:16:09.572
So then is there.
00:16:09.572 --> 00:16:16.274
If that was the scenario we're talking about, is there a downside to taking that loan?
00:16:16.549 --> 00:16:18.876
Except for that, the amount is not compounding.
00:16:18.876 --> 00:16:19.577
Well, yes.
00:16:19.839 --> 00:16:20.841
That's the downside, yeah.
00:16:20.970 --> 00:16:24.981
So the money that you had taken out is no longer in the account to grow.
00:16:24.981 --> 00:16:29.341
So if you had you know, let's say you did the max you took out $50,000.
00:16:29.341 --> 00:16:32.197
That's $50,000 that is no longer in your account to grow.
00:16:32.817 --> 00:16:34.722
Right, okay.
00:16:34.722 --> 00:16:40.663
What else do we need to know about taking out money from our retirement accounts to pay for things?
00:16:41.169 --> 00:16:43.951
I mean, honestly, that's the biggest thing pay for things.
00:16:43.951 --> 00:16:44.794
I mean, honestly, that's the biggest thing.
00:16:44.794 --> 00:16:48.892
So the one other thing that I also try to tell people to think about, too, is that this is the one thing I think is the biggest thing that's overlooked.
00:16:48.892 --> 00:16:55.676
When taking out a 401k plan, loan In this environment, with you know, our generation, how long are you going to be at that employer?
00:16:57.720 --> 00:16:58.822
Oh, talk about that.
00:16:58.922 --> 00:17:01.594
Because people, nowadays you switch jobs.
00:17:01.594 --> 00:17:06.364
You know fairly quickly it's not like, oh, I'm going to be at this job for 15, 20 years.
00:17:06.364 --> 00:17:11.343
You might be at the job for a year or two before a better opportunity comes along and you switch employers.
00:17:11.343 --> 00:17:25.415
Now with a 401k plan loan, what ends up happening is that if you have a loan out and your employment is terminated whether that's you switching jobs or you being laid off or fired, whatever it may be- you then have to pay the loan back in.
00:17:25.435 --> 00:17:27.845
You then have to pay the loan back Exactly In full.
00:17:27.845 --> 00:17:28.607
You have to pay the loan back in full.
00:17:29.351 --> 00:17:36.182
So if you took out $50,000, and you've paid back 10 and you have still a $40,000 balance outstanding and you switch jobs.
00:17:36.182 --> 00:17:38.865
You are now on the hook for the $40,000.
00:17:38.865 --> 00:17:52.361
Now you don't have to pay it back, because then what ends up happening is that if you don't pay it back, you aren't able to.
00:17:52.361 --> 00:17:56.290
Then you now have done a $40,000 withdrawal and now you're looking at paying the taxes on the $40,000 withdrawal and also potentially that 10% penalty.
00:17:56.212 --> 00:18:05.170
Okay, so when in the message she was talking about the tax implications, those are some of those items to think about, because it's essentially income that is going to be taxed.
00:18:05.210 --> 00:18:13.648
So basically, if you left your employment in the middle of an outstanding loan balancing your 401k plan and you were not able to pay it back, you have now essentially turned that loan into a withdrawal.
00:18:14.672 --> 00:18:20.711
Hmm, is there anything that the company could then do to kind of come after you for the fact that they?
00:18:20.932 --> 00:18:21.693
It's the IRS.
00:18:21.693 --> 00:18:24.080
It has nothing to do with the company, it's your money.
00:18:24.309 --> 00:18:24.631
Okay.
00:18:24.872 --> 00:18:26.436
It's the IRS that's doing all this.
00:18:26.436 --> 00:18:27.318
The company's not doing this.
00:18:27.318 --> 00:18:30.435
The company's not asking for you to pay them back, okay.
00:18:30.435 --> 00:18:42.660
No, it's an IRS guideline in the sense of now I've seen that you've taken $40,000 out that you have not paid back in, so you owe the IRS for the taxes and the potentially the 10% penalty.
00:18:42.961 --> 00:18:46.324
And we know how lovely it is to do anything with the IRS.
00:18:46.525 --> 00:18:47.746
Yeah, this has nothing to do with the company.
00:18:48.250 --> 00:18:50.776
Okay, wow, all right.
00:18:50.776 --> 00:18:53.201
Well, are we missing anything?
00:18:59.730 --> 00:19:00.532
Is there anything else you want to share?
00:19:00.532 --> 00:19:01.396
I mean, that's I would say that's the high.
00:19:01.416 --> 00:19:02.962
I wouldn't even say high level, because we got, honestly, deeper into the weeds.
00:19:02.962 --> 00:19:04.569
But that is the basis of what you would need to think about.
00:19:04.569 --> 00:19:09.730
The biggest thing, and which is why I take it, even, you know, kind of a step further back, is that.
00:19:09.730 --> 00:19:13.144
That's why it's so important to focus on having that emergency savings.
00:19:13.144 --> 00:19:17.536
You know a lot of people unfortunately at the sacrifice of investing.
00:19:17.536 --> 00:19:20.222
They, I mean at the sacrifice of savings they invest instead.
00:19:20.222 --> 00:19:20.910
Now.
00:19:20.910 --> 00:19:31.101
Investing is extremely important and you should be doing it, but not at the sacrifice of saving money for something that's going to happen tomorrow, Because, as we've talked about before, investing is a long-term play.
00:19:31.101 --> 00:19:46.865
So 10, 20, 30 years into the future that's what you're looking at when you're investing, and if you can't make it through an emergency tomorrow, investing 20 years into the future is not going to be beneficial to you Right, and we know there's really always something right.
00:19:46.905 --> 00:19:49.394
There's a broken appliance, there's something with the car.
00:19:49.394 --> 00:19:50.397
I mean what?
00:19:50.397 --> 00:19:53.710
Just last week you had another car thing right.
00:19:53.849 --> 00:19:56.474
Which cost us $547.
00:19:56.474 --> 00:19:58.097
I mean it literally.
00:19:58.097 --> 00:20:04.576
There is always something that you need to be prepared for, but if you have an emergency fund, use it.
00:20:04.576 --> 00:20:20.624
I think a lot of people once there is an emergency, a true emergency not you know, the purse that you've been eyeing is on sale but a true emergency people then have a hard time using that money for said emergency and like that's literally what you've been saving it for.
00:20:20.624 --> 00:20:24.320
So don't feel bad using it, because that's what it's for.
00:20:25.070 --> 00:20:29.162
And also, too, like you know we, how much money do you need for this emergency?
00:20:29.162 --> 00:20:31.198
So we're just assuming that it really is an emergency.
00:20:31.198 --> 00:20:32.515
How much money do you need?
00:20:32.515 --> 00:20:40.633
Because if you don't even have enough money in your 401k plan to access that you can access for this emergency, it doesn't even make sense to pull the money from there.
00:20:40.633 --> 00:20:50.789
So, for example, say you need 50,000, but all you have is 20,000 and it's throwing $20,000 out of your 401k plan and paying the penalties and taxes on that.
00:20:50.789 --> 00:20:54.560
Is that going to help you at all when you still have $30,000 that you need there?
00:20:54.560 --> 00:21:01.396
So that's also taking a step back and looking at the entire situation and what is best way to deal with that situation.
00:21:01.396 --> 00:21:10.452
Because we do have an episode coming up where we spoke with a bankruptcy attorney and it really changed our mindset around sometimes filing bankruptcy in certain scenarios.
00:21:10.955 --> 00:21:12.744
Yeah, that's going to be an incredible episode.
00:00:00.239 --> 00:00:05.772
00:00:05.772 --> 00:00:16.155
00:00:16.155 --> 00:00:29.068
00:00:29.088 --> 00:00:46.411
00:00:46.411 --> 00:00:49.655
00:00:50.481 --> 00:01:12.719
00:01:12.719 --> 00:01:13.965
00:01:13.965 --> 00:01:25.588
00:01:25.588 --> 00:01:34.308
00:01:34.308 --> 00:01:38.867
00:01:38.867 --> 00:01:42.487
00:01:42.728 --> 00:01:42.950
00:01:44.542 --> 00:01:52.549
00:01:52.549 --> 00:01:54.828
00:01:54.828 --> 00:02:05.228
00:02:05.228 --> 00:02:10.391
00:02:10.391 --> 00:02:12.580
00:02:12.580 --> 00:02:14.705
00:02:14.705 --> 00:02:21.346
00:02:21.346 --> 00:02:25.712
00:02:25.712 --> 00:02:26.735
00:02:26.735 --> 00:02:27.581
00:02:27.581 --> 00:02:31.009
00:02:31.009 --> 00:02:31.912
00:02:33.341 --> 00:02:34.905
00:02:34.905 --> 00:02:38.382
00:02:38.862 --> 00:02:39.043
00:02:39.343 --> 00:02:41.188
00:02:41.188 --> 00:02:44.942
00:02:44.942 --> 00:02:47.663
00:02:47.663 --> 00:03:04.901
00:03:04.901 --> 00:03:14.611
00:03:15.762 --> 00:03:18.650
00:03:19.060 --> 00:03:19.421
00:03:19.461 --> 00:03:21.269
00:03:21.800 --> 00:03:25.389
00:03:25.751 --> 00:03:26.331
00:03:26.599 --> 00:03:29.590
00:03:29.590 --> 00:03:36.906
00:03:36.906 --> 00:03:38.746
00:03:38.746 --> 00:03:43.090
00:03:43.090 --> 00:03:49.645
00:03:50.740 --> 00:03:55.368
00:03:55.368 --> 00:03:56.481
00:03:56.481 --> 00:03:59.811
00:03:59.811 --> 00:04:01.681
00:04:02.122 --> 00:04:18.130
00:04:18.360 --> 00:04:20.327
00:04:21.442 --> 00:04:25.713
00:04:25.713 --> 00:04:29.250
00:04:29.250 --> 00:04:48.516
00:04:48.516 --> 00:04:51.497
00:04:51.497 --> 00:04:53.317
00:04:53.317 --> 00:04:56.908
00:04:56.908 --> 00:05:01.547
00:05:02.088 --> 00:05:13.557
00:05:13.557 --> 00:05:18.995
00:05:18.995 --> 00:05:23.918
00:05:23.918 --> 00:05:29.182
00:05:29.543 --> 00:05:34.404
00:05:34.404 --> 00:05:37.307
00:05:37.307 --> 00:05:42.369
00:05:42.369 --> 00:05:46.550
00:05:46.550 --> 00:05:50.653
00:05:50.653 --> 00:06:07.976
00:06:09.060 --> 00:06:12.524
00:06:12.524 --> 00:06:21.735
00:06:21.735 --> 00:06:33.033
00:06:33.033 --> 00:06:34.701
00:06:34.721 --> 00:06:35.444
00:06:35.463 --> 00:06:36.226
00:06:36.226 --> 00:06:46.062
00:06:46.062 --> 00:06:50.928
00:06:50.928 --> 00:06:53.733
00:06:53.733 --> 00:07:01.622
00:07:02.324 --> 00:07:15.721
00:07:15.721 --> 00:07:25.392
00:07:25.454 --> 00:07:26.357
00:07:26.357 --> 00:07:33.925
00:07:33.925 --> 00:07:44.379
00:07:45.279 --> 00:07:46.565
00:07:47.000 --> 00:07:58.701
00:07:59.083 --> 00:08:02.432
00:08:02.512 --> 00:08:21.389
00:08:21.389 --> 00:08:28.581
00:08:29.163 --> 00:08:55.368
00:08:55.368 --> 00:09:08.729
00:09:09.240 --> 00:09:18.073
00:09:18.073 --> 00:09:28.495
00:09:28.495 --> 00:09:29.841
00:09:29.841 --> 00:09:30.000
00:09:30.000 --> 00:09:37.802
00:09:37.802 --> 00:09:39.605
00:09:40.347 --> 00:09:44.504
00:09:44.504 --> 00:09:47.231
00:09:47.231 --> 00:09:49.923
00:09:49.923 --> 00:09:51.687
00:09:51.687 --> 00:10:06.942
00:10:06.942 --> 00:10:08.645
00:10:08.645 --> 00:10:16.183
00:10:16.183 --> 00:10:17.827
00:10:17.827 --> 00:10:19.351
00:10:19.351 --> 00:10:26.799
00:10:26.860 --> 00:10:27.181
00:10:27.181 --> 00:10:30.030
00:10:30.030 --> 00:10:35.590
00:10:35.590 --> 00:10:43.986
00:10:43.986 --> 00:10:50.549
00:10:50.549 --> 00:11:00.653
00:11:00.653 --> 00:11:03.229
00:11:03.780 --> 00:11:10.399
00:11:10.600 --> 00:11:22.932
00:11:23.573 --> 00:11:24.095
00:11:24.480 --> 00:11:28.207
00:11:29.230 --> 00:11:30.513
00:11:30.513 --> 00:11:34.910
00:11:34.980 --> 00:11:52.037
00:11:52.039 --> 00:11:53.515
00:11:53.515 --> 00:12:11.490
00:12:12.120 --> 00:12:13.826
00:12:18.980 --> 00:12:20.203
00:12:20.203 --> 00:12:25.143
00:12:25.644 --> 00:12:29.601
00:12:29.601 --> 00:12:32.264
00:12:32.563 --> 00:12:34.125
00:12:34.125 --> 00:12:41.374
00:12:41.955 --> 00:12:45.854
00:12:46.254 --> 00:12:47.477
00:12:47.477 --> 00:12:58.551
00:12:59.331 --> 00:12:59.993
00:13:00.113 --> 00:13:02.375
00:13:02.375 --> 00:13:07.581
00:13:07.581 --> 00:13:14.474
00:13:14.474 --> 00:13:21.922
00:13:22.129 --> 00:13:46.846
00:13:46.846 --> 00:13:53.673
00:13:53.673 --> 00:13:59.150
00:13:59.150 --> 00:14:03.714
00:14:03.734 --> 00:14:04.914
00:14:04.914 --> 00:14:16.501
00:14:16.522 --> 00:14:17.222
00:14:17.222 --> 00:14:19.823
00:14:19.823 --> 00:14:22.485
00:14:22.505 --> 00:14:23.746
00:14:23.746 --> 00:14:24.326
00:14:24.547 --> 00:14:25.687
00:14:26.370 --> 00:14:27.153
00:14:27.153 --> 00:14:27.875
00:14:27.875 --> 00:14:27.956
00:14:27.975 --> 00:14:29.220
00:14:29.220 --> 00:14:32.011
00:14:32.011 --> 00:14:33.852
00:14:33.852 --> 00:14:34.833
00:14:35.375 --> 00:14:43.701
00:14:44.020 --> 00:14:47.443
00:14:47.443 --> 00:14:58.312
00:14:58.312 --> 00:15:00.056
00:15:00.056 --> 00:15:04.322
00:15:04.322 --> 00:15:16.404
00:15:17.130 --> 00:15:20.697
00:15:20.697 --> 00:15:23.941
00:15:23.941 --> 00:15:26.289
00:15:26.289 --> 00:15:28.317
00:15:28.470 --> 00:15:33.702
00:15:33.702 --> 00:15:45.644
00:15:45.644 --> 00:15:47.677
00:15:47.677 --> 00:15:53.783
00:15:54.370 --> 00:15:57.240
00:15:57.240 --> 00:16:06.482
00:16:06.503 --> 00:16:07.344
00:16:07.344 --> 00:16:08.206
00:16:08.690 --> 00:16:09.572
00:16:09.572 --> 00:16:16.274
00:16:16.549 --> 00:16:18.876
00:16:18.876 --> 00:16:19.577
00:16:19.839 --> 00:16:20.841
00:16:20.970 --> 00:16:24.981
00:16:24.981 --> 00:16:29.341
00:16:29.341 --> 00:16:32.197
00:16:32.817 --> 00:16:34.722
00:16:34.722 --> 00:16:40.663
00:16:41.169 --> 00:16:43.951
00:16:43.951 --> 00:16:44.794
00:16:44.794 --> 00:16:48.892
00:16:48.892 --> 00:16:55.676
00:16:57.720 --> 00:16:58.822
00:16:58.922 --> 00:17:01.594
00:17:01.594 --> 00:17:06.364
00:17:06.364 --> 00:17:11.343
00:17:11.343 --> 00:17:25.415
00:17:25.435 --> 00:17:27.845
00:17:27.845 --> 00:17:28.607
00:17:29.351 --> 00:17:36.182
00:17:36.182 --> 00:17:38.865
00:17:38.865 --> 00:17:52.361
00:17:52.361 --> 00:17:56.290
00:17:56.212 --> 00:18:05.170
00:18:05.210 --> 00:18:13.648
00:18:14.672 --> 00:18:20.711
00:18:20.932 --> 00:18:21.693
00:18:21.693 --> 00:18:24.080
00:18:24.309 --> 00:18:24.631
00:18:24.872 --> 00:18:26.436
00:18:26.436 --> 00:18:27.318
00:18:27.318 --> 00:18:30.435
00:18:30.435 --> 00:18:42.660
00:18:42.961 --> 00:18:46.324
00:18:46.525 --> 00:18:47.746
00:18:48.250 --> 00:18:50.776
00:18:50.776 --> 00:18:53.201
00:18:59.730 --> 00:19:00.532
00:19:00.532 --> 00:19:01.396
00:19:01.416 --> 00:19:02.962
00:19:02.962 --> 00:19:04.569
00:19:04.569 --> 00:19:09.730
00:19:09.730 --> 00:19:13.144
00:19:13.144 --> 00:19:17.536
00:19:17.536 --> 00:19:20.222
00:19:20.222 --> 00:19:20.910
00:19:20.910 --> 00:19:31.101
00:19:31.101 --> 00:19:46.865
00:19:46.905 --> 00:19:49.394
00:19:49.394 --> 00:19:50.397
00:19:50.397 --> 00:19:53.710
00:19:53.849 --> 00:19:56.474
00:19:56.474 --> 00:19:58.097
00:19:58.097 --> 00:20:04.576
00:20:04.576 --> 00:20:20.624
00:20:20.624 --> 00:20:24.320
00:20:25.070 --> 00:20:29.162
00:20:29.162 --> 00:20:31.198
00:20:31.198 --> 00:20:32.515
00:20:32.515 --> 00:20:40.633
00:20:40.633 --> 00:20:50.789
00:20:50.789 --> 00:20:54.560
00:20:54.560 --> 00:21:01.396
00:21:01.396 --> 00:21:10.452
00:21:10.955 --> 00:21:12.744