401K / Stock help / house help

[timmus0382]

I am fairly new to all this. For the past 5 years or so I have been in the dark. I didnt see the need for a tv and i never listened to the news on the radio. I would always change the station any time I heard a news update. None of my friends or family ever talked about what was going on. Then just a few months back I started listening to Rush and Glen and it was shocking to say the least. I never had any idea how bad things were. They have got me nervous so I started buying silver like crazy when it was around $30 an ounce. I now know I really missed the boat on that. I have been saving pennies for years now and I am glad for that and I have recently really steped up my game. But is that enough? I didnt think so, so I started hoarding food that will last a long time. It has become almost all consuming.


Now I'm getting to the point where I'm almost ready to tap into my 401k and my MCD stock. Do you guys think its a good idea or bad idea? I was looking at some of the numbers and if i cashed in either of the two I will be paying around 30% in taxes, and after the market crashes it wont be easy to start droping loads in when everything is on sale if I'm out of it. I was also thinking of selling my house that I am renting out to someone. I could use all this extra money to buy silver. The problem I am having here is not being able to enter quickly back in to the market when it starts to recover from a pending crash and I'm not sure I will even make up the 30% losses in tax penalties from my paper investiments. I hear all this stuff about silver hitting $80 an ounce but really who is going to buy that from you so you can make a profit and get back in the market just before it starts to regain strength from a crash? I can't see anyone buying silver from me at $80 an ounce when they know its just going to go down when the market comes back to life. I'm having a really tough time deciding what to do with my money. I'm really new to all this and I hope I can make the right decissions. Any guidance would be greatly appreciated.

[frugalcanuck]

I would personally not sell McD stocks because depending on the size of the crash its a very cheap place to eat for a short time... expensive for the long term because of the health implications and they make money and pay a dividend. I wouldnt sell the house if you are making a profit off of it. ie. income is more than mortgage. taxes, and maintainance. Just think how few people will be able to afford a house once their money becomes worthless. The 401k... Im Canadian so Im not too sure.. If its like a RRSP Registerd Retirement Savings Plan then you might want to start getting some profits out now if you think taxes are going to rise and buy silver.

Thats what I think. We should prepare for both scenarios. A collapse of society or the economy picking up with peace and stability throughout the world. That said Im not even close to being an expert in anything related to the economy.

[beauanderos]

None of us can answer for you, because we don't know all of your individual circumstances. However, if I were in the same position, I would sell if possible and rent, housing is going to continue into an ultimate low, dropping another 40 to 50%, into 2013 or 2014. The stock market is NOT where you want to be. You seem confident that it will recover at some point. That is naive, the only thing keeping the market alive is the Plunge Protection Team and excessive liquidity from quantitative easing... all that money leads to asset inflation leading people to think the market is rising, but they are manifesting nothing but nominal gains, because adjusted to inflation, or compared to gold, the DOW is going DOWN; insiders are selling like crazy. Maybe they know something you don't? I have taken a loan before from my 401k (and repaid it) in order to buy more precious metals, that is something you could consider doing if you don't want to liquidate, pay an early withdrawal penalty, and taxes. Congressional muttering is in the early stages to implement confiscatory statutes that would essentially wrest all control of your 401k away from you by forcing your participation in treasury purchases to fund our bloated and unaffordable budget and national debt. I would do whatever I could to maximize my participation in acquiring physical precious metals, held in your own possession, while the prices are still cheap. Dollar cost avg into them, but remember that summer time is traditionally the weakest months thus the lowest prices. We are going into hyperinflation, and if you are a landlord you won't be able to raise rents fast enough to make it worthwhile to maintain that income stream, nor will your renters be able to pay rents if hyperinflation occurs, they'll be doing everything they can just to eat and drive... and will probably just squat in your home until you are forced to evict them. Go to Silverseek.com and listen to the weekly radio shows on its sister site Goldseek.com You are playing a new game now, forget the old rules of what was wise traditionally. Get your mitts on as much silver and gold as you can, as quickly as you can, at practically any cost (using cash, preferably, as opposed to credit). You are not buying precious metals to "make a profit," you are saving your money (literally) in a form of real money, and fabulous wealth will accrue to those who recognize that fiat is worthless, and act accordingly, before the masses wake up and follow the leaders.

[argent_pur]

Hey Tim,

First of all, you're making the assumption that a price rise in silver will occur in a vacuum. That's not likely---when silver (and gold) rise, you can bet the prices of other commodities will do so as well. People were buying gold at $275/oz. and they're still buying it at $1400+ because there's more than enough liquidity "out there" to do so.

Second, you sound pretty strung out. Not a good time to make a major financial decision

Thirdly, I'd keep the 401K, saving yourself the taxes and penalties. Why not just diversify into silver and make it a part of your overall holdings? We are not looking at the end of America, only the end of our over-lofty standard of living. Rome crashed, Athens crashed, France Crashed....they're all still here, people still live there. I will say, though, that keeping some supplies on hand in case of local shortages or whathaveyou is a good and prudent idea.

[beauanderos]

Hey Tim,

We are not looking at the end of America, only the end of our over-lofty standard of living. Rome crashed, Athens crashed, France Crashed....they're all still here, people still live there.

Are those Visigoths peering over your fence?

[barrytrot]

For goodness sake don't put all your eggs in one basket, especially when it requires instantaneously destroying at least 30% of your eggs by dissolving your 401k early!

Just maintain discipline and live on a bit less and use THAT MONEY to buy bullion.

And if you want to get really cheap bullion start sorting cents or nickels!

[argent_pur]

Hey Tim,

We are not looking at the end of America, only the end of our over-lofty standard of living. Rome crashed, Athens crashed, France Crashed....they're all still here, people still live there.

Are those Visigoths peering over your fence?

My fence is rusty and jagged, the lawn full of roots, and I've seen a rather sinister-looking garter snake traversing my backyard lately....I double-dog-dare those goths

[Treetop]

barrtrot's advice is very sensible, perhaps the most prudent. I feel much more like beauanderos though. I think we are in new waters and will have a major "reset" so to speak. We have been riding a generational bubble essentially, along with watering down our dollar to the point there is major talk of replacing it as the reserve currency, we've exported a solid chunk of our production and so much more. I see generational issues, but like argent pur said, its not the end of the world. whatever happens though clear heads will prevail.

Ive got to disagree with beaunderos on housing though. I bought th cheapest place i could that was still a good building not on the bad side of town. this isnt possible everywhere. If hyper inflation does hit id hate to be a renter. will the landlord expect rent to track inflation? set the place up as monthly or even weekly after your lease runs out? will the landlord loose the place because renters couldnt make regular payments, and whoever buys it kick folks out ? to many variables. for me its all about taking control of as many variables as possible. so owning my home even if it declines in value is more then worthwhile to me.

having a store of food is great. what about growing some? well if its your land anyway. you can put in fruit or nut trees, rhubarb or strawberries, berry bushes etc. all PASSIVE things unlike actual crops. you can do crops to or simply pil manure and organic matter in case you have to later. im not even saying things will get bad enough youve got to grow food, only that it is a variable you can choose to control. either partially or completely. Also if your married and you or the spouse looses work, growing the food can somewhat make up for the lost income if you do it well.....

As far as investments, I wouldnt trust the stock markets now myself. theres going to be many winners, there always are even in the worst of times but things appear to be artificially inflated. so Precious metals are the way to go imo. Certainly make up your own mind, but if I were you id be more then willing to pay 30 percent to transfer to PMs. I tried to get various friends and family to do so in 2007 and no one listened. they would of all been multiples better off by now. Its only gotten more pressing since then not less. this has only begun imo.

[Lemon Thrower]

1. don't panic, but plan.
2. reduce expenses. put your savings in silver.
3. 401k
- not all plans allow you to take a distribution while you are still employed unless you demonstrate a hardship.
- first baby step is to stop contributing to it.
- second baby step is to take the max loan.
- taxes - you need to think intelligently about the taxes. first, the money in your 401k was never taxes so it appears 30% larger than it really is. In other words, its going to be taxed inevitably, so incurring a tax to take it out of the 401k and MCD and putting into silver is not the end of the world. If you are not 59 etc, you may get hit with a 10% penalty. Now, Obama is eventually going to raise taxes, probably by 5+%, so by withdrawing today you lock in today's presumably lower rate. Yes you pay taxes but in my view its less than 5% more than whay you otherwise would have paid. Yes there is a cost, but the benefit is more control over your money and less risk to govt confiscation.

[68Camaro]

Some good food for thought above, for you timmous.

Another to-do for you. Be sure you read and understand your 401K options. Many are fairly constricted. But some (I'm fortunate) are fairly wide open. While they have tightened the fund switching frequency rules in the basic plan I not only have a new commodity fund to consider in the basic plan, but I can also move money into a brokerage account where I can buy/sell (with a trading fee) as I would at any of the conventional places like Schwab or ScottTrade etc. If you have any of those options available, pulling your money out might not make sense, unless you have a conviction that things are not just getting really bad, but the worst. In the brokerage account you could buy things like Sprott's physical gold and silver funds. You wouldn't be able to touch it, but you would at least know the PM exists.

[Lemon Thrower]

68Camaro - features like that are quite rare, esp at larger companies. You are very fortunate. Agree that if you have that sort of plan then its best to keep the money inside.

[beauanderos]

68Camaro - features like that are quite rare, esp at larger companies. You are very fortunate. Agree that if you have that sort of plan then its best to keep the money inside.

Those are called Self Directed Brokerage Accounts and Fidelity refers to them as Brokerage Link. I have one inside both Fidelity and TDAmeritrade. If either of those companies is your trustee, you should be able to apply with some simple paperwork, for one of these accounts. You can then trade a huge number of equities, funds, ETF's, etc, without tax consequences until such time as you withdraw your money. Even so, I have been considering myself regarding liquidating one of these accounts and placing the entirety into more silver. But I'm of an age where I can withdraw without penalty. Does anyone know if, once you start to withdraw, you have to do so in equal increments? Can you withdraw say half... and then set up the remainder over ten years?

[Lemon Thrower]

there are tremendous record-keeping requirements for that sort of 401k so if a company does not already offer it they won't. Few companies offer this and its mostly small companies.

i don't know the answer to your tax question. i do know that for 401ks and regular roths there is a date by which you must take a taxable distribution or else you get taxed. the idea is that the tax deferral is not permanent, just until "retirement." you can take a series of even distributions as one strategy, and this can keep you in a lower tax bracket. if i had to guess, i'd say the requirement kicks in at age 70, but if you want to start taking distributions do it now. you really do not want to get bumped into a higher bracket because you could end up with unanticipated alternative min. tax problems.

[Tourney64]

I can tell you what I have done. Reduced my 401K contributions to the max that my employer matches. That was a huge reduction I made a few years ago when I was contributing the max 18% + $5k catch up due to my age. I have taken the extra money and paying sown on the mortgage. I am also investing heavily in silver, food storage, and copper pennies.

[Treetop]

I can tell you what I have done. Reduced my 401K contributions to the max that my employer matches. That was a huge reduction I made a few years ago when I was contributing the max 18% + $5k catch up due to my age. I have taken the extra money and paying sown on the mortgage. I am also investing heavily in silver, food storage, and copper pennies.

Im not singling you out, but folks in similar situations as you who own their home really should consider landscaping with edible plants, trees and bushes. It doesnt HAVE to be any more work then caring for any other landscape, and you may be surprised the amount of food you can grow like that. edible berries on bushes where youve got non edible bushes now, and similar things. I should probably start a thread on it actually. If all you have is a city lot, or a few acres, you can do such things without any lifestyle changes, its not like gardening or doesnt have to be is my point.

[beauanderos]

The only problem I see with being self-supporting and gardening on your own property is that it's only useful if things get bad... but not too bad. Otherwise human rabbits and deer will trample your fences and make off with all the produce that your hard efforts produced. But that's no reason not to get started.

[Treetop]

Its useful for any situation really. who couldnt benefit from free food? If things got real bad, sure people would try to take it..... but some things are only harvested in a short window, so that can be limited even without fighting people over it. also in such situation hopefully youve gather family and friends and either have storage or can protect your crops. gather what you can from the landscape later if you wish. honestly depending on where you live theres also a WIDE range of things you could grow that most others simply would not know are food. some places can do this better then others, but i can do it even here in the semi desert mountains of new mexico. Im talking various plants useful for greens, little to nearly unknown berries and fruits and nuts, beanlike seed from trees, grasses with harvest able grainlike seed that have not been domesticated. It can get as complex as you like, I was really only talking transferring landscaping to edible landscaping earlier but if truly harsh times are a concern of yours, you can indeed prep for food production within such times, in most areas.... I should think out the best way to form it and start a thread on it, so folks realize the possibilities.... see if anyones interested...

[Lemon Thrower]

I can tell you what I have done. Reduced my 401K contributions to the max that my employer matches. That was a huge reduction I made a few years ago when I was contributing the max 18% + $5k catch up due to my age. I have taken the extra money and paying sown on the mortgage. I am also investing heavily in silver, food storage, and copper pennies.

my employer matches but I have not contributed in 2 years.

i have taken the max loan from my 401k.

i have not paid down my mortgage. my mortgage is at 5%. i get a deduction for the interest so my after-tax cost of the mortgage money is only about 3.3%. in contrast, i came close to doubling my money in silver last year.

i have a 30 year mortgage. silver is now at 27 times face value. that means a dollar of silver in 1964 is now worth only about 3 cents 46 years later. another way to look at that is a 7.5% compound deterioration in the value of a dollar. so you don't have to assume things go off a cliff with hyperinflation, which they may. I know the dollars that I use to repay the mortgage 30 years from now are going to be worth much much less. so i'm using current dollars and buying silver, and preserving the purchasing power of those dollars. I'll use future, less valuable dollars to repay the mortgage. I'm not repaying it any earlier than i have to. in fact, if i could get fixed rate money on a home equity loan i would do that.

[timmus0382]

Wow this is all really great information guys. I really appreciate the help. I have many things to think about. First on the list.... build a 12' barbed wire eletric fence around my garden. I ould go mote but crocks are hard to find in Maine.

[TXTim]

The only problem I see with being self-supporting and gardening on your own property is that it's only useful if things get bad... but not too bad. Otherwise human rabbits and deer will trample your fences and make off with all the produce that your hard efforts produced. But that's no reason not to get started.

That's why some of your assets should be invested in quality weapons and ammo.

[shinnosuke]

The only problem I see with being self-supporting and gardening on your own property is that it's only useful if things get bad... but not too bad. Otherwise human rabbits and deer will trample your fences and make off with all the produce that your hard efforts produced. But that's no reason not to get started.

That's why some of your assets should be invested in quality weapons and ammo.

And, it should go without saying, lots of time learning how to shoot them, straight being the preferred direction in almost all cases.

[Mossy]

... but some things are only harvested in a short window, so that can be limited even without fighting people over it.

This is very much the case with many crops. Either the crop is harvested when it's ready, or it's cattle fodder (if you are lucky).

honestly depending on where you live theres also a WIDE range of things you could grow that most others simply would not know are food.

I see Wolfberry around all the time. That's Goji berry. I've never seen anyone harvesting them.

Dogwood, Cotoneaster, and pyrocanthus are supposed to be edible, although not something great tasting. The recommended method of preperation is to cook and strain, and mix the juice with something that tastes better. Also recommended that only small quantities be eaten at a time. (Several plants used as regular parts of the diet can cause problems if you eat too much of them, spinach and sorel for example.) I've also read that some are supposed to be halucinagenic. The seeds, perhaps?

True Rowans are listed as edible when cooked and used in Britain about the same way cranberries are.

Yeah, this subject is worth a thread, over in "Non-Metals Necessities and Things To Think About"?

[stevkc]

This post is so ridiculous, I'm assuming it is a joke.

If it is not a joke, then the best advice would be stop doing this:

Then just a few months back I started listening to Rush and Glen and it was shocking to say the least. I never had any idea how bad things were.