# borrow from 401K - and paying down mortgage?



## TexasMama

I have two financial questions for you.

First my viewpoint - I don't think we'll ever see my husband's 401K - he's 54 - I'm 52. We have about $35K in there.

We've stopped adding to his 401K to give us more money towards prepping since we're newbie preppers. 

But we're wondering if we should take out a loan against the money in there (yes - we know - we'd be paying interest) and use that money towards prepping stuff. (We do have a loan out already and we'd be refinancing it).

I know Dave Ramsey recommends not taking loans from your 401K - or at least he used to when we listened to him. 

However - as I said - we don't believe we'll ever see that money - perhaps we're paranoid.

Secondly - we're not sure whether to pay down some on our mortgage and get ahead a few months....OR....once again - use the money for prepping. We lean towards using the money for prepping till we get a year's worth of food stored and our ammo and stuff in place. 

My husband is retired military and his retirement pay covers our mortgage payment...his job is what we'll be using to pay other bills and prep with.

If we don't pay down more on the mortgage - we can probably put between $500 and $1000 (maybe more) towards prepping every month.

Thoughts?


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## Tweto

Never borrow against a 401K. Here's the problem, any money borrowed has to be paid back if or when you leave the company.

If all can do is pay down you mortgage it would not be worth it. I have known several people that have done that and have regretted it.

The only exception is if the laws for the 401K have been changed and I'm not aware of this law changing.


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## CulexPipiens

TexasMama said:


> ...
> 
> My husband is retired military and his retirement pay covers our mortgage payment...his job is what we'll be using to pay other bills and prep with.
> 
> ...
> 
> Thoughts?


Without knowing your situtation in more detail... you mentioned his job. Any option for you to get one (assuming you don't have one right now?) If so, then it sounds like you're living off of his incomes just fine so 100% of anything you make could go towards prepping or mortgage paydown or both,


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## Country Living

What Tweto said.

If your employer has matching contributions, you need to make sure you put in enough money to get the match - or you're losing free money. 

I know you're new to prepping and you want to jump right in - and that's commendable. You may want to direct that effort to making a thought-out written plan. Too many people just buy and buy and buy and found out they overspent or bought the wrong things.

You spoke of your husband's retirement and his current job; but, you never mentioned you had a job. If you're not working, you might want to get one and use those funds to either knock down the mortgage or use for prepping.

If you want to get ahead on your mortgage without much pain, send in extra money each month and specifically designate it to go to principle (not interest) and follow up on it each month to make sure they applied it correctly.


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## sgtrunningfool

The biggest problem of using your 401k is you loose the time value of that money


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## TheAnt

Personally I wouldnt START putting money into a 401k because I agree with you that you may never see that money. I also would not borrow against it for the reasons already mentioned (understand that I know little about 401k's).

For certain I would not try paying off your mortgage considering your situation as you described it. It sounds like you have enough money to cover your mortgage payments and prep off your other income. Keep doing that. Maybe try to save up some money (not in the bank) to pay off your mortgage later in one lump sum. If a personal SHTF happens (someone needs expensive medical or the car goes kaput) you might need that cash set off to the side to get past it unscathed. If a BIGTIME SHTF happens nationwide then you will probably not be the only folks with a mortgage you cant pay and nothing adverse will happen to you unless its happening to everyone else as well.

Dont get me wrong, I am all for paying off the mortgage but dont do it at the cost of your prepping. Just evaluate your prepping and make sure it is appropriate (i.e. you probably arent in a position to stockpile huge amounts of gold/silver -- if you had gold/silver I would probably sell it to at least pay off the mortgage... maybe  )


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## cnsper

You need to prepare for something to happen but you also need to prepare for nothing to happen. It is all just a guess. Leave it in there and let it gain what it can.

Sounds to me like either the job does not pay much or you are living beyond your means. I say that because his retirement takes care of the mortgage. I would get rid of your car payments and get some paid for cars.

Hell I just went back and read that if you do not pay down on the mortgage you can put $500 - $1000 per month towards preps. Hell that is a lot more money per month than most people can afford so you are doing fine.

I would say split that money between the mortgage and the preps. Or alternate it if you must.


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## Marcus

I have a different view on this that is primarily driven by the interest rate you'd be charged on the loan.

Earlier this year, I took out a loan against my 401k *since I found out the interest rate I'd be charged was 3.5%.* That's awful cheap money and yet it's a higher return than most money market or bond funds. I have my 401k invested in the money market fund since I believe we'll see a collapse in the bond bull market (so bonds have a significant capital risk) and possibly the stock markets as things deteriorate financially.

Additionally with some talk of the government taking over retirement accounts and offering annuities in their place, I felt that a wise man should reduce his exposure to this potentially devastating consequence.

I was also dismayed at the lack of any possibility that I could invest in PMs within the 401k itself.

I'll point out that 35K is an insufficient amount to have saved up for retirement given your ages. I have 3x that much in my 401k and I'm still a bit behind the curve and I'm a few years younger than y'all. And I have a pension and an IRA to boot.

If you choose to do this, there are only a few viable options to use the money.
Unless your mortgage is over 5 or 6%, I wouldn't put it towards the mortgage. If you do have a higher rate, I'd look at refinancing before I took out the loan.
If you carry a lot of credit card or consumer debt, I'd pay that off first since your return will equal the interest rate you're now paying.
If you're debt-free (other than your mortgage), you really only want to look at 3 possible investments: Food, PMs, and a BOL.

Buying food now will give you a return equal to future price increases in that food which was roughly 10% this year.
PMs will store your wealth in something that is portable and thus hard for the government to get their greedy hands on.
A BOL will give you a place to go when TSHTF and has proved to be a decent place to invest over longer time frames.
I'd also suggest keeping a substantial amount as an emergency fund since it'll help smooth out bumps in the road of life.

Every other type of prep stuff should be bought out of cash flow especially guns and ammo.


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## TexasMama

Thanks everyone. I don't work because my husband works a rotating shift and there would be times when we would barely see each other. Plus - I would probably push us in a higher tax bracket. My husband likes our lifestyle with me being home - and I like it too.

I wish we had more towards our retirement but we live pretty simply. My husband was military (enlisted) for 20 years and we didn't make the best financial decisions. He got out in 2002 and has been in the private sector since then. The 401K has been saved in the last 5 years or so. We were focusing on getting debt free and had two kids to put through college.

Thanks for all the input. When I say $500- $1000 per month to put towards prepping - I was being sorta modest. It maybe possibly be 2 times that now that we're tightening our belt and our van is paid off. 

The reason for taking money out of the 401K was to use towards a bug-out vehicle (like an old Suburban) and/or downpayment towards land/small cabin for a bug-out location. As I said, I don't think we'll ever see our 401K and we really believe that somehow or another Uncle Sam/Obama is gonna try to take it from us to give to someone who sat on their butt and didn't work.

Right now we're gonna work on "investing" in our food and guns and ammo and stuff we can use.


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## TheLazyL

In 11 years your husband (and you?) will be 65 and can retire. 

With only $35,000 in his 401K what funds will you be living on for your retirement? Remember Social Security is a "supplement" income.

You have $1,000 to S2,000 in discretionary funds per month.

Take 70% and pay off any and all credit card balances, then apply towards your mortgage.

Take 10% and put in savings. You should have at least 1 years of income saved.

Take 10% for tithing and/or towards community service.

The remaining 10% towards Prepping.

When ALL of your debts/loans are paid use half of the 70% for retirement (savings, 401K or whatever) and the remaining 35% for prepping.

You can NEVER get ahead by continually borrowing against the future (ie U.S. government).


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## TexasMama

The plan was to have our house paid off by retirement and have no debts. The only expenses would be electric, food, etc - normal stuff like that. We had hoped that since he has his military pension - which is currently paying our mortgage (about $1,000 per month) we'd live off that plus have the money we'd have invested by then (we were about to start putting 15% into his 401K and other investments for a minimum).

Once again though - this was pre-prepping and thinking about the need for prepping. At that point - we figured we'd be getting our 401K....now we think it will be gone - much like our social insecurity will probably be gone too.

Our current plan is to prep as much as we can right now towards sheltering-in. This is including the following things:

Food storage (highest priority at the moment) - we're not getting the freeze dried big cans, etc. -we're focusing on basics of what we eat and will eat and would like get at least 18 months of storage in place

Water Storage & purification for ourselves AND our garden/fruit trees
Guns/Ammo 

Sanitation backups 

Stocking up on OTC meds and fish antibiotics

Getting in place a solar generator

Getting back-up cooking methods in place (currently have the volcano stove - want to get the solar stove too 

There is more too - that is just off the top of my head. We are actively working towards getting a garden going (right now mainly potatoes and a few other things) with square foot gardening and have planted fruit trees and are planting berry bushes in the back yard too.

We had mainly looked at taking a loan against the 401K thinking there would be a collapse and we'd have it now to buy items like a bug-out vehicle (in case of an EMP blast or solar flare) and/or money towards a bug-out location. 

We don't have credit card debts - our van is paid off (finally) - but we are helping our son out with some of his student loan payments cause we weren't prepared to help him when he first went to college - so we're helping him now since we can afford it and he really can use our help.


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## sgtrunningfool

If you have refinanced your home recently it is worth looking at it because the rates are low right now. About half what they were 4 years ago


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## TheLazyL

TexasMama said:


> ... - we figured we'd be getting our 401K....now we think it will be gone - much like our social insecurity will probably be gone too....


401K gone...perhaps.

I believe al long as the Federal government is in existence so will be Social Security. Too many votes lost if they let SS go down the tube.


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## Marcus

TexasMama said:


> We don't have credit card debts - our van is paid off (finally) - but we are helping our son out with some of his student loan payments cause we weren't prepared to help him when he first went to college - so we're helping him now since we can afford it and he really can use our help.


There's a way to tie it together with what you're wanting to do- Give him a month's worth of food every month while you buy a month and a half's worth.


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## TheAnt

TheLazyL said:


> 401K gone...perhaps.
> 
> I believe al long as the Federal government is in existence so will be Social Security. Too many votes lost if they let SS go down the tube.


Perhaps you are correct and SS will be alive as long as the federal government is but if that is the case it will probably mean we are in QE46 and the money you are getting from SS will buy you a potatoe and a pinch of salt. One huge problem with current fiscal policy is that eventually it is going to make the dollar worth less and less until its worthless. Then it wont matter that you still get your SS cause it doesnt buy anything. The fed cant just print money forever without any consequences.


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## NaeKid

I have a question for you ... why would you borrow from Peter to pay Paul and then still have to pay Paul back .... 

Isn't that basically what you are asking to do with "borrowing" from your 401 to put into the house, but, then you still have to pay-back the 401 ... you wouldn't be any better off doing that ...


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## labotomi

The interest charged by a 401k loan is paid back to yourself, you only lose the appreciation of value for that portion during the time it's not invested.

Now, My year to date return on my 401k is 11.2% and my mortgage is 4.875%. It wouldn't be a smart move to lose about 6% in interest by juggling things around in that manner. This may not be the same situation you're in, so it's hard to give meaningful advice with out knowing the entire picture.


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## Dakine

labotomi said:


> The interest charged by a 401k loan is paid back to yourself, you only lose the appreciation of value for that portion during the time it's not invested.
> 
> Now, My year to date return on my 401k is 11.2% and my mortgage is 4.875%. It wouldn't be a smart move to lose about 6% in interest by juggling things around in that manner. This may not be the same situation you're in, so it's hard to give meaningful advice with out knowing the entire picture.


Exactly! and if someone is in a position where they feel they need to do this, it's at least an option.

And for people who said they would never contribute to the 401k, it's pre-tax dollars. I put in enough that I feel ZERO impact to my take home pay, and yet I'm still socking away "some dollars" until I can afford to put in more.

my suggestion is that if you take a loan out on the 401k fund, take as short a pay back period as possible, get it back in there and working for you, even if that means lowering the amount you want to borrow against your 401k

I am currently planning on dumping a lot from my 401k into gold back funds, we're allowed to make transfers like that in my plan but I've been so busy with EMT classes that I just haven't spent the time necessary to make it happen. Now i'm done, so it's a priority for tomorrow at best or next week at worst!

I will also probably use my 401k to help subsidize my down payment on buying a house. in my plan (not sure about all plans???) that is an allowable withdrawl to take and incurs no penalties or interest! And buying a house puts more of my money to work for me, than the 401k does sitting there unattended.


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## TexasMama

The thought of taking out money from the 401K was NOT to put down on the mortgage. I was talking about two completely separate things.

The 401K question was whether to take money out (which we probably won't see later on) to put into a BOL.

Paying the mortgage down was more along the lines of "If we have $X available...should we focus on paying the mortgage down OR focus more on prepping or perhaps just on having the $$ set aside for when the dollar collapses?"

Sorry that wasn't clear.


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## Padre

TexasMama said:


> I have two financial questions for you.
> 
> First


Why not just take it out, pay the fine, don't worry about the interest? I have a small 401k, as I have decided to plan for retirement via a scheme that does not have the federal governments finger prints all over it..., and I believe that 401Ks may be the obvious source of cash for the government if we suffer a catastrophic collapse of the economy. Also, as BO wants to raise my cap gains rate on my 401K I think I would like to deny him the pleasure of taxing me at the higher rate one day!



> Secondly - we're not sure whether to pay down some on our mortgage and get ahead a few months....OR....once again - use the money for prepping.


A mortgage is a secured asset which they COULD go after if you failed to meet payments. However, in the midst of a collapse its unlikely that the rule of law would be there for anyone to foreclose. Thus there is a risk in not being debt free on your mortgage. That being said, its certain that you will die if you don't have food for more than three weeks....

So I would say, stay current on the mortgage, maybe even get a month or two ahead of the game, but focus on prepps.


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## Dakine

TexasMama said:


> The thought of taking out money from the 401K was NOT to put down on the mortgage. I was talking about two completely separate things.
> 
> The 401K question was whether to take money out (which we probably won't see later on) to put into a BOL.
> 
> Paying the mortgage down was more along the lines of "If we have $X available...should we focus on paying the mortgage down OR focus more on prepping or perhaps just on having the $$ set aside for when the dollar collapses?"
> 
> Sorry that wasn't clear.


if you believe (as I do) that there's very little chance you'll ever actually get to receive the 401k plan that you're in, then making cash investments with it is a sound strategy as long as you do not open yourself to risk via paycheck deductions or some other problem.


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## invision

TexasMama said:


> The thought of taking out money from the 401K was NOT to put down on the mortgage. I was talking about two completely separate things.
> 
> The 401K question was whether to take money out (which we probably won't see later on) to put into a BOL.
> 
> Paying the mortgage down was more along the lines of "If we have $X available...should we focus on paying the mortgage down OR focus more on prepping or perhaps just on having the $$ set aside for when the dollar collapses?"
> 
> Sorry that wasn't clear.


The advise given above is all good about not taking from the 401K... $35 k isn't much... It might buy a small parcel of land for a BOL, but I wouldn't advice it.. That sounds like your only savings at this point. So I would keep that we're it is for a personal SHTF situation... You said your van is paid off, I am going to assume it is older and out of warranty, if you zero out the 401k, then if something major happens, you are stuck.

As for not having the job, if your serious about the prepping and are looking to get a BOL, or an older Suburban, then get a part time job somewhere, where that money could go on those payments... A suburban that is "older" isn't going to cost $30k, let along $10k...

Just my OP, best of luck


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## Cabowabo

I realize I'm a little young in this conversation. I'm only 22 with about 2 years active military service so far. 

You should talk to an accountant about the tax implications for clearing out your 401K. It could be a bigger hit then its worth. 

Also you need to figure out your full financial plan. We all talk about what will happen if SHTF, but you need to figure out what you will do if it doesn't. What your own financial plan is. Are you able to life off just his income should the pension be all you have with no other bills? What will happen to your husbands pension should he die before you? How will you support yourself after his death if their is no more pension? 
These are all questions you need to ask yourself. 

The Military teaches the philosophy of hope for the best prepare for the worst. While we all need to have preps to prepare for the worst. What will happen to you and yours should the worst never happen? 

The point of prepping is to get rid of the reliance on government. But your financial plan increases your reliance on the government. Also what is your plan should one of ya'll or both of ya'll become unable to work or care for yourselves? 

Just some stuff to think about.


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## PennyPincher

I used to joke with DH that when we got to retirement we would be living a wonderful life because of all our savings, we just needed to get there. Our retirement savings has nearly disappeared twice with the market fluctuations. Had we pulled our retirement savings out previously (like when he was laid off - 3x in 8 years) our home would have been paid for even after paying penalties and taxes on it. I shoulda/coulda/woulda..... I would take the money out in a heartbeat and pay off the house now if I could. I did what 'the pros' advised and we refinanced during one of those layoffs and took out money to live on. Now our home is worth much less than what we owe. We finally decided we didn't want the .gov telling us when and how we could get our money out of our accounts. We no longer add to retirement savings plans. We don't know the market or the people who run those retirement funds, we have no ability to control what happens in those 'investments' and instead now invest in ourselves.


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## Country Living

TexasMama said:


> I don't work because ...... I would probably push us in a higher tax bracket.


I'm not being a snit - seriously - I've never heard that reason for not working before now.



Cabowabo said:


> You should talk to an accountant about the tax implications for clearing out your 401K. It could be a bigger hit then its worth.


If it's a loan that's not paid back / if it's a withdrawal, then they're hit with federal tax plus a 10% penalty (if hubby isn't 59 1/2 at the time of the failure to pay / withdrawal / termination).



Cabowabo said:


> I realize I'm a little young in this conversation. I'm only 22 with about 2 years active military service so far......The point of prepping is to get rid of the reliance on government. But your financial plan increases your reliance on the government. Also what is your plan should one of ya'll or both of ya'll become unable to work or care for yourselves?


While you may be the youngest member on this board... you speak the wisdom of the ages. :beercheer:


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## DJgang

I wouldn't touch it. Just replacing bill for bill. 

Solar oven, what 200.00 bucks, there's your solar cooking.

Wood stove for home heating and cooking, what 2000.00? Or less or more? 

Getting the garden started, a tiller some elbow work, what 400.00? More or less?

Canner, start canning food what 100.00 more or less?

Won't need solar generation to survive. All of this easily paid for with a part time job at drug store or grocery store or local coffee shop. a part time job will it put you in another tax bracket. Hogwash. If it does it just means you'll get less tax back than you are use to and really shouldn't be giving up front anyway, but that's another thread.


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## TheAnt

PennyPincher said:


> I used to joke with DH that when we got to retirement we would be living a wonderful life because of all our savings, we just needed to get there. Our retirement savings has nearly disappeared twice with the market fluctuations. Had we pulled our retirement savings out previously (like when he was laid off - 3x in 8 years) our home would have been paid for even after paying penalties and taxes on it. I shoulda/coulda/woulda..... I would take the money out in a heartbeat and pay off the house now if I could. I did what 'the pros' advised and we refinanced during one of those layoffs and took out money to live on. Now our home is worth much less than what we owe. We finally decided we didn't want the .gov telling us when and how we could get our money out of our accounts. We no longer add to retirement savings plans. We don't know the market or the people who run those retirement funds, we have no ability to control what happens in those 'investments' and instead now invest in ourselves.


BINGO!

+10 characters


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## TheAnt

Country Living said:


> I'm not being a snit - seriously - I've never heard that reason for not working before now.(taxes)


I'm not trying to be a snit either... seriously... but you just wait and as taxes go higher and higher that reason will be heard more and more.

There is a value to having one or the other staying at home keeping the house in order. It SAVES money... especially when you have small children (which I dont believe the OP has). Money is not the only issue... you have to ultimately convert money/time/etc to value and see if there is a real increase in value to working even a part time job. I think our society seriously downplays the value of a homemaker (usually a housewife) -- I for one do not. My wife works harder at home than I do at work and the value she provides is GREAT!

Anyway, not getting on to you or anyone just possibly providing a different perspective.


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## NaeKid

If you get a job that does CUT (Cash Under Table) you can take that cash and use it to better yourself. I am not talking about anything illegal like being a drug-mule or drug-dealer or anything like that, just something "under the radar" .. winter-time, shovel a few walk-ways for cash. Summer-time, mow lawn for cash. Get a job at the local pub and pay your taxes on the declared-income like all good people do and hide the money from the TIP-jar under the mattress, not in a bank.

Getting $5 from 10 different house-holds (easy work) would give you an extra $50 per day a few days a week will not put you into a higher tax-bracket, but, it will go a long way to building that safety-net. If you have more time than money, turn that time into money by helping those who have more money than time ...


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## labotomi

TheAnt said:


> I'm not trying to be a snit either... seriously... but you just wait and as taxes go higher and higher that reason will be heard more and more.


I think some have a misconception about rising into the next higher tax bracket. When you earn enough money to put you into a higher bracket, it doesn't raise the tax % on your entire income, but just the portion in the higher bracket.

Ignoring any deductions/loopholes and assuming everything is taxable income. Someone making $100K and someone making 50K will both pay the same amount on that 50K, the person making $100K will pay a higher rate only on that part of his income that exceeds the value where the rate increases.

There are some income levels that affect deductions such as child care which is lowered by some amount at varying income levels. EIC has a point above which you can't claim it.


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## TexasMama

Thanks to everyone again for your posts. They are appreciated.

One of the things our family tends to focus on more than money (not saying that money is bad or evil) is the quality of our life. By my staying home - I can do things at home that save us money - we found that when I worked outside the home - we spent more on food, gas, etc and it seems like the more $$ we have - the less disciplined we are with it. 

The biggest concern with the 401K was not so much "needing it" as thinking we'd never see it anyway - get something out of it while we can. 

The whole thing about the house payment was not so much related to the 401K at all as much as it was "do we pay down more on the house or focus more on prepping".

Our decisions thus far have been to not touch the 401K. We're not going to be putting money into it right now - but instead - for this coming year at least - to use all the "extra" funds towards prepping. Perhaps once we have some of our goals met - then we'll go back to putting money into the 401K (which yes - his employer does match - but once again - we believe Obama is gonna find a way to steal that money).

As far as the house payment - we're gonna continue putting some extra towards the principle and continue with our plans to get it paid off before retirement - but use as much extra $$ towards prepping till we feel confident we've met the basic needs for prepping. 

And as far as me working - I may go back to work part-time next year if I find the right job as a merchandiser where I can control my own hours, etc - but as I said - we really tend to do better financially when I stay at home and watch every penny and save us money in other ways.


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## Dakine

TexasMama said:


> Thanks to everyone again for your posts. They are appreciated.
> 
> One of the things our family tends to focus on more than money (not saying that money is bad or evil) is the quality of our life. By my staying home - I can do things at home that save us money - we found that when I worked outside the home - we spent more on food, gas, etc and it seems like the more $$ we have - the less disciplined we are with it.
> 
> The biggest concern with the 401K was not so much "needing it" as thinking we'd never see it anyway - get something out of it while we can.
> 
> The whole thing about the house payment was not so much related to the 401K at all as much as it was "do we pay down more on the house or focus more on prepping".
> 
> Our decisions thus far have been to not touch the 401K. We're not going to be putting money into it right now - but instead - for this coming year at least - to use all the "extra" funds towards prepping. Perhaps once we have some of our goals met - then we'll go back to putting money into the 401K (which yes - his employer does match - but once again - we believe Obama is gonna find a way to steal that money).
> 
> As far as the house payment - we're gonna continue putting some extra towards the principle and continue with our plans to get it paid off before retirement - but use as much extra $$ towards prepping till we feel confident we've met the basic needs for prepping.
> 
> And as far as me working - I may go back to work part-time next year if I find the right job as a merchandiser where I can control my own hours, etc - but as I said - we really tend to do better financially when I stay at home and watch every penny and save us money in other ways.


I think you're making a mistake by NOT contributing to your 401k.

Because 401k is pretax earnings put into the account, if you elect for 2 or 3% of your income to be deducted, it will barely change your REAL take home pay, like less than $20. the money you put in lowers your taxable rate on the entire paycheck, so it's worth doing.


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## TexasMama

We were doing 3%....which was $100 every 2 weeks.

Once again - we just STARTED prepping. That extra $200 per month is going to be a help in putting up food storage, etc.


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## phxrising

TexasMama said:


> Our decisions thus far have been to not touch the 401K. We're not going to be putting money into it right now - but instead - for this coming year at least - to use all the "extra" funds towards prepping. Perhaps once we have some of our goals met - then we'll go back to putting money into the 401K (which yes - his employer does match - but once again - we believe Obama is gonna find a way to steal that money).
> 
> As far as the house payment - we're gonna continue putting some extra towards the principle and continue with our plans to get it paid off before retirement - but use as much extra $$ towards prepping till we feel confident we've met the basic needs for prepping.
> 
> And as far as me working - I may go back to work part-time next year if I find the right job as a merchandiser where I can control my own hours, etc - but as I said - we really tend to do better financially when I stay at home and watch every penny and save us money in other ways.


This sounds like a good plan, but I would reconsider contributing the minimum to get a match from the employer on your 401k. It also is a tax savings as well as the time value of money, and free employer match.


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## Marcus

TexasMama said:


> We were doing 3%....which was $100 every 2 weeks.
> 
> Once again - we just STARTED prepping. That extra $200 per month is going to be a help in putting up food storage, etc.


You may wish to check out http://store.lds.org/webapp/wcs/stores/servlet/Category3_715839595_10557_21158_-1_N_image_0 (a LDS site.) They do ship some bulk foods already in #10 cans for long term storage. You are a ways from the nearest LDS cannery or I'd suggest you visit.


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## Dakine

TexasMama said:


> We were doing 3%....which was $100 every 2 weeks.
> 
> Once again - we just STARTED prepping. That extra $200 per month is going to be a help in putting up food storage, etc.


I think your missing my point...

just to use round numbers....

You earn $10 an hour for 10 hours work, you earned $100
you put in nothing to your 401k plan
your taxable income is $100
uncle sam comes along and after all is said and done... you bring home $63

you make the same $100
you put in 3% to your 401k plan
your taxable income is $97
uncle same comes along and after all is said and done... you bring home $62

By lowering your taxable income by contributing PRE-TAX dollars you are taking home almost the SAME money as if you put nothing into your 401k

the benefit is, you now have some money in a delayed return account and even if the entire world collapses from a financial meltdown, you really "lost" next to nothing in your take home pay.


----------



## TexasMama

Dakine,

I get your point. Now let me share where I'm coming from - at least from the food storage side.

In the last 4 years (according to the LDS Preparedness Manual) - the price of groceries - at least for their recommended 1 year list - has gone up 33%. 

I was reading that - I'd also read somewhere about expecting wheat products to go up in January because of a bad year's crops or something (which will also affect meat, etc).

So I was going back through my grocery store receipts. Spaghetti - which is something we like a lot - and use a lot of ways - was $3.29 for a 4 pound package that my husband was buying. In my mind, as I started stocking up - I was thinking .83 per pound of spaghetti - and I was checking prices at places, etc. I go to the store - remember - this is about 2 weeks after he bought it for $3.29 - and it is now $3.89 for the SAME 4 pound package. 

That is about a 20% increase.

That is with one item - other items are either going up in price - or going down in size. Remember how you used to buy coffee in a 1 pound can? Now it is what - 13 ounces or something?

We want to have food stored up for a minimum of one year (we will probably shelter in although we are working on bug-out plans if need be). 

We're stocking up by using food from the grocery store and a rotation system for the cans, etc. (most items are dated 2014 and 2015). I'm buying some items that need to be cooked - others that don't.

We're eating from our storage and refilling it.

Let's say I take that $200 per month for....say 4 months - and build up my storage. 

I think that the value of my storage will be higher than the value I will have lost from a 401K that we "might" get someday. Maybe....

I just went to Walmart and did a MAJOR grocery run with my husband's bonus that we set aside (we have 80 hours taken out every year). I spent $397 and walked out with two grocery carts full of food - 385 items. A lot of it was canned fruit and canned ravioli type stuff (as a treat) and stuff like that. Some of it is for our son's Christmas present as we're putting together a tote of food for him to hopefully have a month's stockpiled.

I am betting that if I went to Walmart in 1 month or 2 months and bought the exact same items...I'd pay at least 10% more....minimum.

I do get your point - I really do. We used to put 8% of my husband's pay in our 401K for a year or two and then decided to drop it down to 3% (what they would match) and put the rest towards paying off the mortgage early so when we retire we won't have much for bills.

I don't mind losing a bit in our take-home pay right now (for let's say 6 months) if it means that later one we have food stored up.


----------



## TexasMama

I just wanted to add that we're mostly stocking up with food from the grocery store (we will be doing a garden this summer and we've planted fruit trees and berry bushes). 

I did sign up for the protein club with the Freeze Dry Guy - our first order was processed today. 

But I'm also working on dehydrating and learning how to can so I can buy foods on sale and prepare them myself.


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## TexasMama

Dakine - one last question for you.

Let's say the entire world does have a financial meltdown...which is what we tend to think will happen.

Do you really think our 401K will still be there? Even after things are brought back to some semblance of normal?

At least I know our food will be there...while we're eating it.


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## Dakine

TexasMama said:


> Dakine - one last question for you.
> 
> Let's say the entire world does have a financial meltdown...which is what we tend to think will happen.
> 
> Do you really think our 401K will still be there? Even after things are brought back to some semblance of normal?
> 
> At least I know our food will be there...while we're eating it.


No, the 401k gets vaporized, in fact they'll steal that before the "real" melt down goes public. It's the last liquid pool of cash left for them to take.

my point is that you lose nearly NOTHING by putting money into it, if you put in a very low percentage.


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## TexasMama

Ok then here is my question....

starting next year the company will match up to 3% and then do half-match on the 4th and 5th percent...meaning they'll give a total of 4%.

We were recently doing 3% - that was a touch more than $100 per payday. 

So...what would you do knowing what the company would match. 

I'm not saying we won't put in the 401K forever - we might put some in once we have some cash stored up in silver coins or whatever plus our food. 

And once again - the only reason for taking anything out of the 401K was to put a downpayment down on a bug out location...something we're going to put on hold because we are leaning more towards sheltering-in...but we do have some things we are looking into also.


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## labotomi

I agree with Dakine. I would always contribute up to the company match. Not doing so is giving up free money.

Your question about it being there in the future is valid, but I'd be wary of putting all your eggs in the complete meltdown basket. There's still other methods to get us out of trouble without totally destroying our monetary system.

My company offers several benefits related to finances.

1. 401k matching up to 7% (the match amount varies with the company profits). Of course this is purely voluntary. I always contribute the amount the company will match. 

2. Profit sharing. The company takes 10% of pretax profits and distributes this to the employees (weighted by yearly wages) and puts it our personal retirement account managed by Fidelity. We have about 30 funds that we have available to invest in or transfer in and out. It's still a retirement account, so it has the same basic rules as a 401k.

3. Stock purchasing. We can buy company stock (up to $300/week) with no broker fees and the company matches 10%. I can buy $330 worth of stock for $300 and sell it a week later. Makes tax preps difficult, but it's free money.

The 401k lowers my paycheck, but the increase in my 401k is greater and it lowers my taxable income.
The profit sharing is a wash. It dosen't affect my paycheck at all.
The Stock purchases lower my paycheck quite a bit, but it's made up by selling back those stocks on a regular basis. The 10% bonus takes away a lot of the risk of fluctuating prices.

You have to look at the big picture. Run some numbers through an online tax program once with the scenario of not putting anything into a 401k and then again with you putting in 3% into the 401k. 
Compare how much you actually made after taxes with both and then look at how much you would also have in the 401k if you were contributing.

Having the numbers makes it more clear when deciding what to do. If you're dead set on a total collapse happening, then do what you think it right for that case. Nothing's certain, that's why I prepare for many situations.


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## invision

TexasMama said:


> Ok then here is my question....
> 
> starting next year the company will match up to 3% and then do half-match on the 4th and 5th percent...meaning they'll give a total of 4%.
> 
> We were recently doing 3% - that was a touch more than $100 per payday.
> 
> So...what would you do knowing what the company would match.
> 
> I'm not saying we won't put in the 401K forever - we might put some in once we have some cash stored up in silver coins or whatever plus our food.
> 
> And once again - the only reason for taking anything out of the 401K was to put a downpayment down on a bug out location...something we're going to put on hold because we are leaning more towards sheltering-in...but we do have some things we are looking into also.


I would use the company match up to 5%... It's 4% free money, and the 5% is pre-tax so it won't effect the take home by much if any... I am a name brand buyer and a high end shopper to boot on this board... Yet, if you look at my food storage, you will find non-name brand items as well as freeze dried #10 cans. Why? Buying power is more on the cheaper stuff, which pretty much tastes the same... IF SHTF, then when you are hungry, spaghetti from one manufacture isn't going to matter... Its food, and you will eat it to survive, like it or not... my wife and daughter HATE fish... but even she said the other day, i would eat it if I had too...

Also, there are cheaper places than Wal-Mart - BJs, dollar store, Costco, Sam's Club, Alde, etc...


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## TexasMama

invision said:


> Also, there are cheaper places than Wal-Mart - BJs, dollar store, Costco, Sam's Club, Alde, etc...


Here we have Walmart - and HEB and Dollar Tree. We also have Family Dollar and Dollar General.

Don't know what BJ's is or Alde's - but Sam's and Costco are 180 miles away - one way. With our van - a tank of gas for the round trip is about $70...maybe a bit less.

I almost always buy generic. I try to only buy when an item is on sale. I might use coupons - I might not - it depends upon the price and if I know it will be lower if I get generic, etc.

For instance - we budgeted $1000 of my husband's bonus to put into food purchases to build our stock up.

I spent $397 last night at Walmart - for 385 items. That included 14 cases of fruit products, ravioli (a weakness - and some was for our son), soups, etc. We also bought 25 pounds of flour, 25 pounds of sugar, etc. I picked up a bunch of tomato puree and tomato sauce too for chili, etc. - so that is part of why the "count" is so high.

Today my daughter and I went to Dollar Tree - another $200 - most items were $1 and a few were 2/$1. I admit - I splurged here and got things like cheese crackers, etc. that my hubby likes (as part of his Christmas gift since they're a treat and we don't splurge often). I got a couple of hairbrushes and a couple of knives and stuff too since we could use them.

Then we went to the base commissary - not sure how many items - at least 90 items were cans of dog food for .39 (enough canned for 6 weeks - we use a mixture of cans and dry)....plus 15 cans of spaghetti sauce on sale for .69 each. Spent almost $200 there - once again - did a few splurges like a block of cheddar cheese for our son's gift box of food....and a few oatmeal cookie mixes which my husband likes.

My husband still can't believe how much I got for the money (individual item wise) and I still have a few more things to get. I'll be well under budget and we'll probably have at least a 3-4 month supply of food - if not more. It would be more than that - but a bunch of it is for our son's Christmas present (which he's thrilled about - he's also getting a shotgun and ammo).

Anyway - my husband looked at all the food and went, "If food was a bank - WOW - do we ever have a good savings account..".

Unlike most of you - we just don't believe our 401K will be there for us - even in a year or so. If you've read the "299 Days" series of books - you'll see how he uses an example of the government taking your money and then giving you "FCards" which are basically a form of ration card which you can use....supposedly...to access your money by buying food and gas.

Anyway - thanks again for the input. We're not taking out a loan and we *may* put money back into our 401K again once we meet certain basic goals.


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## BillS

Country Living said:


> What Tweto said.
> 
> If your employer has matching contributions, you need to make sure you put in enough money to get the match - or you're losing free money.
> 
> .


That free money is worthless after a stock market crash. Expect one soon. We haven't put a dime in my wife's matching 401k in over a year for that very reason.


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## BillS

TexasMama said:


> I have two financial questions for you.
> 
> First my viewpoint - I don't think we'll ever see my husband's 401K - he's 54 - I'm 52. We have about $35K in there.
> 
> We've stopped adding to his 401K to give us more money towards prepping since we're newbie preppers.
> 
> But we're wondering if we should take out a loan against the money in there (yes - we know - we'd be paying interest) and use that money towards prepping stuff. (We do have a loan out already and we'd be refinancing it).
> 
> I know Dave Ramsey recommends not taking loans from your 401K - or at least he used to when we listened to him.
> 
> However - as I said - we don't believe we'll ever see that money - perhaps we're paranoid.
> 
> Secondly - we're not sure whether to pay down some on our mortgage and get ahead a few months....OR....once again - use the money for prepping. We lean towards using the money for prepping till we get a year's worth of food stored and our ammo and stuff in place.
> 
> My husband is retired military and his retirement pay covers our mortgage payment...his job is what we'll be using to pay other bills and prep with.
> 
> If we don't pay down more on the mortgage - we can probably put between $500 and $1000 (maybe more) towards prepping every month.
> 
> Thoughts?


I wouldn't pay down the mortgage. I'd get fully prepped as soon as possible. If that means getting a loan from your 401k then go for it.

Down the road you could always pay back that loan early if you wanted to.


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## Country Living

BillS said:


> That free money is worthless after a stock market crash. Expect one soon. We haven't put a dime in my wife's matching 401k in over a year for that very reason.


It depends on the investment options in the 401k. There are more conservative choices in most plans.


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## arack

TexasMama said:


> Ok then here is my question....
> 
> starting next year the company will match up to 3% and then do half-match on the 4th and 5th percent...meaning they'll give a total of 4%.
> 
> We were recently doing 3% - that was a touch more than $100 per payday.
> 
> So...what would you do knowing what the company would match.
> 
> I'm not saying we won't put in the 401K forever - we might put some in once we have some cash stored up in silver coins or whatever plus our food.
> 
> And once again - the only reason for taking anything out of the 401K was to put a downpayment down on a bug out location...something we're going to put on hold because we are leaning more towards sheltering-in...but we do have some things we are looking into also.


You should definitely do up to the company match. You are losing free money by not contributing. Your 401k is safe, at least for now.


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## TexasMama

arack said:


> You should definitely do up to the company match. You are losing free money by not contributing. Your 401k is safe, at least for now.


Well, if someone can look into a crystal ball and guarantee me the 401K is safe for at least a year...we'll consider it.

Till then - we'll continue to put that money every payday towards prepping until we have our food/water storage, solar generator in place, ammo and guns stocked up, etc.

But once again -my personal opinion is that a year from today - the 401K will no longer be ours....two years at tops.


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## BillS

Country Living said:


> It depends on the investment options in the 401k. There are more conservative choices in most plans.


Stocks are a bad option. So are government bonds. Know of a 401k that makes investments in gold and silver? I don't.


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## Gians

*Clark Howard*

I've listened to Clark Howard http://www.clarkhoward.com/ on the radio and TV for quite a while. Consumer Reports usually has some good financial advice too, although they have strayed from the paying off a home early idea and I still think it's one of the best moves you can make. It saves tons of interest money, especially if you do it early in the loan. Perhaps rather than take a loan out against a 401k, you could just add a little each week to your preps. I'm sure most of the growing number of companies that are selling to preppers are no doubt investing their profits. I invested in a 401K type investment at work, there was no match but it lowered our taxes. It really came in handy to have that money in retirement, I only wish I'd maxed it out. Nobody knows what the future will bring, but if we're all here in one or two years it might be interesting to revisit this thread and see what actually transpired.


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## WWhermit

BillS said:


> That free money is worthless after a stock market crash. Expect one soon. We haven't put a dime in my wife's matching 401k in over a year for that very reason.


Money put into a 401K buys shares. When the stock market crashes, the value of those shares go down. You never lose the number of shares, just the value of said shares. When the market recovers, the value of those shares return. If you keep buying shares, especially when the market crashes, you are buying shares on the cheap.

During the stock market crash in the late 1920's and 30's, everyone sold when the market crashed. That's how you lose money. If you don't sell, you don't lose your shares. If everyone had instead waited until the market returned, which it did, they wouldn't have lost a dime. There are a few who continued to contribute during the crash, they would have tripled their investment within 7 years.

That free money is only worthless if you sell shares that are valued lower than you paid, and since they are matched, you've lost nothing.


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## munchkins

TexasMama said:


> I have two financial questions for you.
> 
> First my viewpoint - I don't think we'll ever see my husband's 401K - he's 54 - I'm 52. We have about $35K in there.
> 
> We've stopped adding to his 401K to give us more money towards prepping since we're newbie preppers.
> 
> But we're wondering if we should take out a loan against the money in there (yes - we know - we'd be paying interest) and use that money towards prepping stuff. (We do have a loan out already and we'd be refinancing it).
> 
> I know Dave Ramsey recommends not taking loans from your 401K - or at least he used to when we listened to him.
> 
> However - as I said - we don't believe we'll ever see that money - perhaps we're paranoid.
> 
> Secondly - we're not sure whether to pay down some on our mortgage and get ahead a few months....OR....once again - use the money for prepping. We lean towards using the money for prepping till we get a year's worth of food stored and our ammo and stuff in place.
> 
> My husband is retired military and his retirement pay covers our mortgage payment...his job is what we'll be using to pay other bills and prep with.
> 
> If we don't pay down more on the mortgage - we can probably put between $500 and $1000 (maybe more) towards prepping every month.
> 
> Thoughts?


It's really hard to do the budgeting nowadays that everything seems to fall off short. Maybe if I were on your situation I'd probably do everything I can like pay the mortgage while saving and find some other ways to earn more to pay off the mortgage and save again.
______________________________
http://www.loans-portal.com/adjustable-rate-mortgage-calculator/


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## Tweto

WWhermit said:


> Money put into a 401K buys shares. When the stock market crashes, the value of those shares go down.  You never lose the number of shares, just the value of said shares. When the market recovers, the value of those shares return. If you keep buying shares, especially when the market crashes, you are buying shares on the cheap.
> 
> During the stock market crash in the late 1920's and 30's, everyone sold when the market crashed. That's how you lose money. If you don't sell, you don't lose your shares. If everyone had instead waited until the market returned, which it did, they wouldn't have lost a dime. There are a few who continued to contribute during the crash, they would have tripled their investment within 7 years.
> 
> That free money is only worthless if you sell shares that are valued lower than you paid, and since they are matched, you've lost nothing.


Be aware that the financial people have been using the buy and hold (and this is what you are saying) sales platform for 50 years and it does sucker in enough investors to keep their jobs and business going in bad times.

The fault in buy and hold is that in today's world companies are going bankrupt at alarming rates and without notice. These are rare times, never seen before. I know to many people close to retirement that practiced buy and hold and lost everything or had almost nothing when they needed the money and could not wait the 10 years for their investments to get back to were they were a decade before. Every investors needs to watch over their own investments and make adjustments.


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## WWhermit

Tweto said:


> Be aware that the financial people have been using the buy and hold (and this is what you are saying) sales platform for 50 years and it does sucker in enough investors to keep their jobs and business going in bad times.
> 
> The fault in buy and hold is that in today's world companies are going bankrupt at alarming rates and without notice. These are rare times, never seen before. I know to *many people close to retirement that practiced buy and hold and lost everything or had almost nothing when they needed the money and could not wait the 10 years for their investments to get back to were they were a decade before*. Every investors needs to watch over their own investments and make adjustments.


This is very true. Stock based mutual funds, of which a good percentage of 401k plans are, are meant as a retirement fund, and as such, it will fluctuate, sometimes wildly, as seen in 2008 and 2009. This is the reason why it shouldn't be touched until you are ready to retire. Also, many retirement plans give the option of investing in stock or bond funds. As you near the retirement age, more of your investment percentage should be shifted towards bonds, which tend to be more stable, but less chance of a high yield, to protect you from losing the nest egg so close to your retirement.

A stock fund should be expected not to be touched for 10 years out, to account for a possible fall. When it does fall, 10 years would be enough time to recover. If you need money within 5 years, and still want to invest, a bond fund would be more appropriate. Lower yield, but still more stability. If you need money at any time, money markets or savings work well. It doesn't even keep up with inflation, but it's there when you need it, and fluctuations in the stock market don't matter at all.


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## CulexPipiens

Careful of "money market" and other low interest, but "stable" funds in your 401K. Most are quite heavily based in government bonds now. Federal, state and even municipal. Given the fragile state of most entities and their level of debt it is very scary. Think about it... if stuff starts to go bad, people pull out of the risky funds and move the money into stable funds... composed of gov/state bonds... so as the economy goes down the states start failing and there goes your stable fund. Don't think it can't happen? Look at how many cities have already defaulted this year. Keep in mind counties and states are in just as bad or worse financial condition. 

When I first heard about this I was doubtful but after checking my own, I found it was 93% fed, state and municipal bonds and 7% other.


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## WWhermit

I prefer a savings account to a money market account nowadays. You used to get 4-5% on money market accounts, 5 years ago or more. Now, less than 1%.

And they are based on bills, not bonds.


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## labotomi

BillS said:


> That free money is worthless after a stock market crash. Expect one soon. We haven't put a dime in my wife's matching 401k in over a year for that very reason.


As of the date you posted this it's been over two years (assuming you still don't contribute) since you stopped your contributions. In that two years the return of your investment would have been about 33% if you had matched the S&P index.

This is the problem with making predictions


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## PurpleHeartJarhead

Although I get the rationale, "less debt now means more money to put away," I would also caution against what you are saying. Not because I have faith in the markets with over 100 trillion in unfunded liabilities nationwide. Instead, I would cut your spending, and reallocate those savings to reducing your overall debt. 

Should things start showing signs, some would argue the signs are there, you can try and cash out before it gets really bad the Feds step in and freeze the banks. It's a gamble, but no more so than the markets in my honest opinion. 

Meanwhile, if you are still investing in a 401k, I would recommend finding that allows you to add precious metals. Not paper that says you have some metal, but gives you the real deal. It's just a hedge against losing everything. 





Sent telepathically through my thumbs to my iPhone using Survival Forum


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## crabapple

I am about your age.
I take loans on my 401-K to buy cars, start a business & buy land(5 acres).
I always pay it back in 48 months, the interest is less then any other loan & the interest is PAID to ME in MY ACCOUNT.
That is why I have used my 401-K for years for loans.
I do have 4.5X what you have in my 401-K, but the IRS will only let me borrow $50,000.00 minus what I owed in the last 12 months.
At 59.5 years, you can round your 401-K into other accounts.

I totally disagree with the ideal that we will not see the 401-K, in just 6 years from now.
I have heard the financial system will fall all my life & am prepared for it.
I am prepared for it not to happen in my life time, too.

SS will be here when warfare is gone, because more voter are living on or looking forward to SS. They can not stay in office if they hurt that many tax paying voters at once.


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## PurpleHeartJarhead

anntay said:


> Get a loan instead of taking out from retirement. This will end up leaving you with less money. You have to keep your investments in the industry even during negative times. This way many of us are opting installment loans rather than 401k loans.


I wouldn't think a person looking to use their 401k for paying off all their debts is looking to add to that debt. Trading a one loan for all your debt can be helpful, particularly if one has a lot of high interest credit. But if not, then the only thing they are trading is who they are writing their checks to while potentially extending the life of their overall debt.

If their 401k has enough to cover all of their debt and have money left over to reinvest, while they will lose the compounding effect of interest, they will greatly free up disposable income for reinvestment, one much more diversified perhaps.

While they may lose a shaky, future safety net, they will at least have a home, be debt free, if that net were to fail. So anyone who would do this is simply trading peace of mind now for a less tangible peace of mind backed by paper or fiat currency.

"Conventional thinking" no longer applies as you consider what our debt is doing.

Spending to GDP has only been higher during the Second World War. Debt was never more than the GDP, that was recently achieved milestone, barely mentioned, and we are adding to it not in increments but exponentially. Given that strain on our economy, yeah what the original poster is talking about, not so "off the wall" as maybe 10-12 years ago.

Sent telepathically through my thumbs to my iPhone using Survival Forum


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## Geek999

Generally mortgage debt is the cheapest borrowing you can do, so to replace a mortgage loan with some other type of loan will not be a good idea.


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## Caribou

Let me run some numbers. These are not meant to be accurate but only to make the point. Over a few years you put in $15,000 and you employer matches this in your 401k. You have made an additional ten grand off the investment over the years. The market crashes or the government takes half and you are left with only $20,000 of your original $15,000 investment. That would tic me off but I only lost profit. I don't think the government will take it all. Historically governments have only taken a percentage. 

The trick here is to diversify. Don't put all your eggs into one basket and don't put all your investments in one spot. Don't count on a government retirement. The Detroit municipal workers taught us that lesson. Don't count on banks. Cyprus taught us that one. Don't count on private retirement accounts. Poland? That doesn't mean not to have these investments but to diversify so that if one type of income gets hurt you can still survive.

How about paying off your house. That saved me from bankruptcy when I got sick once. Then get a BOL and when you finally get to move to the BOL turn your home into a rental. There are many ways to diversify.


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## PurpleHeartJarhead

Caribou said:


> Let me run some numbers. These are not meant to be accurate but only to make the point. Over a few years you put in $15,000 and you employer matches this in your 401k. You have made an additional ten grand off the investment over the years. The market crashes or the government takes half and you are left with only $20,000 of your original $15,000 investment. That would tic me off but I only lost profit. I don't think the government will take it all. Historically governments have only taken a percentage.
> 
> The trick here is to diversify. Don't put all your eggs into one basket and don't put all your investments in one spot. Don't count on a government retirement. The Detroit municipal workers taught us that lesson. Don't count on banks. Cyprus taught us that one. Don't count on private retirement accounts. Poland? That doesn't mean not to have these investments but to diversify so that if one type of income gets hurt you can still survive.
> 
> How about paying off your house. That saved me from bankruptcy when I got sick once. Then get a BOL and when you finally get to move to the BOL turn your home into a rental. There are many ways to diversify.


I know you said your scenario was not accurate so I'm not knocking the premise. I am only adding that you can lose principle as easily as interest.

It happens all the time. I used to have money in the markets, with both GM and Chrysler. I lost everything I had invested through them. Partially because of GMs mismanagement, and partially because of the Kangaroo Court that was Chrysler's bankruptcy where the investors were dismissed and the company was turned over to the union.

Diversify is right. I still have a small percentage in a 401K, but I am buying precious metals too.

Ever known gold or silver to be worth nothing? Me neither.


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## Caribou

PurpleHeartJarhead said:


> I know you said your scenario was not accurate so I'm not knocking the premise. I am only adding that you can lose principle as easily as interest.
> 
> It happens all the time. I used to have money in the markets, with both GM and Chrysler. I lost everything I had invested through them. Partially because of GMs mismanagement, and partially because of the Kangaroo Court that was Chrysler's bankruptcy where the investors were dismissed and the company was turned over to the union.
> 
> Diversify is right. I still have a small percentage in a 401K, but I am buying precious metals too.
> 
> Ever known gold or silver to be worth nothing? Me neither.


Yes, if you invest heavily in one stock, one industry, or through one company you can lose all those investments. If your 401k is focused in one or two stocks then yes it is very easy to lose it all. I know a guy that sold everything he could. What he could not sell he borrowed against as much as possible including his home. He took everything and bought Apple stock, early on. He made millions but that was a high risk roll of the dice.

Some years back there was trouble with savings and loans. Don't put all your cash in one bank or even one type of banking institution. Madoff taught us not to place too much of our investments through one company.

PM's, as you suggested, are a great investment. I might go heavier into PM's today than I would have in the past but I still would not put everything into one type of investment. Don't forget the government has come after gold in the past.


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## BillS

crabapple said:


> I am about your age.
> I take loans on my 401-K to buy cars, start a business & buy land(5 acres).
> I always pay it back in 48 months, the interest is less then any other loan & the interest is PAID to ME in MY ACCOUNT.
> That is why I have used my 401-K for years for loans.
> I do have 4.5X what you have in my 401-K, but the IRS will only let me borrow $50,000.00 minus what I owed in the last 12 months.
> At 59.5 years, you can round your 401-K into other accounts.
> 
> I totally disagree with the ideal that we will not see the 401-K, in just 6 years from now.
> I have heard the financial system will fall all my life & am prepared for it.
> I am prepared for it not to happen in my life time, too.
> 
> SS will be here when warfare is gone, because more voter are living on or looking forward to SS. They can not stay in office if they hurt that many tax paying voters at once.


We're going to see a huge stock market crash. It's reached historic highs and the market fundamentals are a disaster. Expect to see a 1929-style crash soon.

Bankrupt governments around the world have been seizing private retirement accounts and pension plans. After the stock market crash you can expect the federal government to force people to buy worthless government bonds because they're safer than being in the stock market.

The federal government is going bankrupt. They're reached limits on what they can borrow. They're reaching the limit on what the Federal Reserve can create out of thin air. Once the dollar loses its petrodollar status we'll see America become a third world country. When that happens nothing will be the same in America.

So to keep it simple, America is like a patient with stage 4 cancer: it has a 0-3% chance of surviving the next 5 years.


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## hiwall

> So to keep it simple, America is like a patient with stage 4 cancer: it has a 0-3% chance of surviving the next 5 years.


I like this statement


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## millertimedoneright

During the Chrysler and gm failures I actually made a killing. Sold out of them as soon as I heard they were failing and bought into ford as soon as they hit bottom. I believe I gave something like 1.18 a share or something like that and they are around 16 a share now. My only regret was not buying more but then again if I had they prolly would've went bankrupt. 


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## Dakine

BillS said:


> We're going to see a huge stock market crash. It's reached historic highs and the market fundamentals are a disaster. Expect to see a 1929-style crash soon.
> 
> Bankrupt governments around the world have been seizing private retirement accounts and pension plans. After the stock market crash you can expect the federal government to force people to buy worthless government bonds because they're safer than being in the stock market.
> 
> The federal government is going bankrupt. They're reached limits on what they can borrow. They're reaching the limit on what the Federal Reserve can create out of thin air. Once the dollar loses its petrodollar status we'll see America become a third world country. When that happens nothing will be the same in America.
> 
> So to keep it simple, America is like a patient with stage 4 cancer: it has a 0-3% chance of surviving the next 5 years.


The .gov is already bankrupt, on both fiscal and moral issues. Put a fork in them, they are done!!! oops, that means our goose is cooked too, that sucks! 

401k funds represent the last of the liquid pools of wealth for the .gov and the banksters to plunder. having money there should concern EVERYONE who has money there...

Obozo gets on the air and says "we're gonna offer the MyIRA" which is better than stocks, because it's secure, and it will increase its value... while the .gov + the fed churn out fiat currency to buy our own futures... and if we want "real" investors, the terms have to be super short, and the rewards have to be super stacked!

Are US citizens allowed to buy and own land in Canada? maybe I should look at a couple acres just the other side of the green line and buy an acre or two on our side in ID or MT as well... wishful thinking to try and get there from here tho if SHTF lol


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## TheLazyL

IMHO the only time it makes sense to "borrow" against your 401K is when the 401K returns are zero or worse. And ONLY if you can have the loan paid back in full when the returns start going back up.


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## TheLazyL

BillS said:


> ...The federal government is going bankrupt. They're reached limits on what they can borrow. They're reaching the limit on what the Federal Reserve can create out of thin air. ...


I respectful disagree. Since they create the laws and control the printing they can make as much money (borrow) as they want.


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## PurpleHeartJarhead

TheLazyL said:


> I respectful disagree. Since they create the laws and control the printing they can make as much money (borrow) as they want.


True enough, but there is nothing backing those loans (paper money = fiat currency). At some point, if as you say, they can borrow as much as they want because they make the laws, the value of that currency decreases. Look at the Weimar Republic as an extreme example, but one that could happen anywhere that the currency is backed solely in "faith."

We currently have a debt larger than the entire GDP. How do you pay off that debt if it is higher than what you make? By printing more money, you further deflate the value of the currency.

The problem with 99% of Americans, they don't understand, because we don't teach real economics anymore. We largely teach redistributive policies and call it economics.

A little mandatory Adam Smith reading would go a long way.

Sent telepathically through my thumbs to my iPhone using Survival Forum


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## LincTex

http://www.bankrate.com/finance/retirement/4-reasons-to-take-out-a-401k-loan-3.aspx 
Bankrate's 401(k) loan calculator shows you how much your retirement nest egg stands to lose if you borrow from your 401(k).

http://online.wsj.com/news/articles/SB10001424052702303848104579310352700938862
Using a 401(k) Loan to Pay for Mortgage a Refinancing
By Kelly Kearsley
Jan. 9, 2014 9:42 a.m. ET

http://www.cnbc.com/id/101419228
To make a reasonable assessment of whether it makes sense to use money from his 401(k) to pay off your mortgage, you really need to work with a financial adviser who can do a thorough analysis. You can find one in your area through the financial planning association at www.fpanet.org or the national association of personal financial advisors at www.napfa.org

How to Get Ahead by Using Your 401K to Pay Your Mortgage
http://howtomanguide.com/2013/05/financial/how-to-get-ahead-by-using-your-401k-to-pay-your-mortgage/
Thinking about borrowing against your 401K to payoff your mortgage?
Some finance experts will have you believing it's a bad idea, 
but we think it's one of the smartest financial moves you will ever make.


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## PurpleHeartJarhead

LincTex said:


> http://www.bankrate.com/finance/retirement/4-reasons-to-take-out-a-401k-loan-3.aspx
> 
> Bankrate's 401(k) loan calculator shows you how much your retirement nest egg stands to lose if you borrow from your 401(k).
> 
> http://online.wsj.com/news/articles/SB10001424052702303848104579310352700938862
> 
> Using a 401(k) Loan to Pay for Mortgage a Refinancing
> 
> By Kelly Kearsley
> 
> Jan. 9, 2014 9:42 a.m. ET
> 
> http://www.cnbc.com/id/101419228
> 
> To make a reasonable assessment of whether it makes sense to use money from his 401(k) to pay off your mortgage, you really need to work with a financial adviser who can do a thorough analysis. You can find one in your area through the financial planning association at www.fpanet.org or the national association of personal financial advisors at www.napfa.org
> 
> How to Get Ahead by Using Your 401K to Pay Your Mortgage
> 
> http://howtomanguide.com/2013/05/financial/how-to-get-ahead-by-using-your-401k-to-pay-your-mortgage/
> 
> Thinking about borrowing against your 401K to payoff your mortgage?
> 
> Some finance experts will have you believing it's a bad idea,
> 
> but we think it's one of the smartest financial moves you will ever make.


I don't disagree with you, particularly about seeing a financial adviser.

Where I do disagree with many people is that we are in such times that simple calculators showing investment growth opportunities don't factor in the wreckless spending politicians. They don't factor in debt larger than GDP, or 100 trillion in unfunded liabilities as a nation.

It's just my view that conventional wisdom is no longer conventional. All options and diversification should be on the table. Depending on ones particular circumstances, age and such, I don't think anyone can afford
not look at things from a more pragmatic point of view.

I hope to never be in a position where I have to make that choice, but one never knows. This has been an interesting thread to toss around.

Sent telepathically through my thumbs to my iPhone using Survival Forum


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## Dakine

PurpleHeartJarhead said:


> I don't disagree with you, particularly about seeing a financial adviser.
> 
> Where I do disagree with many people is that we are in such times that simple calculators showing investment growth opportunities don't factor in the wreckless spending politicians. They don't factor in debt larger than GDP, or 100 trillion in unfunded liabilities as a nation.
> 
> It's just my view that conventional wisdom is no longer conventional. All options and diversification should be on the table. Depending on ones particular circumstances, age and such, I don't think anyone can afford
> not look at things from a more pragmatic point of view.
> 
> I hope to never be in a position where I have to make that choice, but one never knows. This has been an interesting thread to toss around.
> 
> Sent telepathically through my thumbs to my iPhone using Survival Forum


Let's look at it from two opposite points of view:

A:
The financial system will remain intact regardless of what warning signs we see in the economy today, because TPTB will either create a solution or find common cause without alienating half the country into a civil war. They will NOT seize the 401k funds to fuel the runaway trainwreck already happening, and everything will work out just fine.

Therefore, if you borrow anything from your 401k now, you're definitely diminishing the returns that you will enjoy when your income is fixed, your options are fewer, and you need tax free money to spend.

B:
The financial system is already a zombie, it's only the willfully blind that refuse to believe it. You believe that your entire 401k fund is at risk, since .gov agencies have already said they are looking at "the legality of it being .gov managed" which means privatized and seized... basically you will get a bigger IOU note after the collapse, which will simply mean you get more of nothing.

If you "borrow" from your 401k you pay interest to... YOURSELF! yes, yes do in fact lose the equity that the amount you pull out would produce, if the funds were still there, but depending on what you buy, it could be quite a valuable conversion of fiat dollars into tools, wealth and security that you may not otherwise have an option for.

So lets look at that. Why would you want to borrow 401k, diminish the returns and still keep putting money back into 401k?

well as I mentioned before, you really lose practically nothing if you put in the minimum amount. it's offsetting your taxable income and you get some employer match if they offer that as a benefit, and you pay the 4-5% interest rate to yourself as opposed to a loan from a Credit Card check, or a traditional bank loan, or even just a cash loan from a friend or relative.

So what do you with the money once you have it? that helps define did you make a good decision to spend it elsewhere.

If you buy gummie bears and pop rocks because you think that is the way to score huge after the collapse, that may not work out really great...

If you start up a small business at home, which is really just a hobby that maybe pays for itself and keeps you interested in it, and potentially one day is a brand new revenue stream... now that is a very good candidate to consider if you dont have the capital to start it through other means.

Your purchases may also be influenced by tools that in a sharply declining or full out collapse are unobtainable... now those MAY POSSIBLY be a great investment. If they require the grid, they incur a lot of risk, what if the grid is down, or you don't have access to independent energy, or the grid is up, but you cant afford the expense of power as it's supplied during the new state of the state... Okay so be careful those things, but if it's a hobby type biz, that is self sustaining, or it's tools and things you will use, and can keep using to generate revenue, more than they will consume... that is a potentially good investment. Maybe more than offsetting what you would have gained even if there is no dollar collapse.

so.... borrowing 401k to purchase lotto tickets = bad, and spending on things wisely that you really will be able to leverage to improve your quality of life and increase revenue and sustainability = good.

make good decisions!


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## PurpleHeartJarhead

Dakine said:


> ...make good decisions!


If it were only so easy! That's what many of us are doing, hopefully, right? But we are generally like-minded people. The are a lot of people who aren't even asking the questions or considering the remotest of scenarios that would bring a lot of pain and discomfort to their lives.

I don't think the term "prepper" describes most of us either. I think planners and pragmatists are far superior adjectives as they don't espouse the all doom and gloom made popular by some TV shows and magazines.


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## TheLazyL

Dakine said:


> ...so.... borrowing 401k to purchase lotto tickets = bad, and spending on things wisely that you really will be able to leverage to improve your quality of life and increase revenue and sustainability = good....


Coworker borrowed against his 401K to purchase a John Deere gator and 2 new iPhones...Coworker drives the gator 3 blocks to work to "save" on gasoline....IMHO :nuts:


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## LincTex

As I watched the markets get really ugly before the fall of 2008, I quickly borrowed 50% (the max allowable) of my 401K and bought land with it. My 401K value plummeted shortly after.

I think I made a great choice at the time, and it seems to have paid off.


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## goshengirl

PurpleHeartJarhead said:


> I don't think the term "prepper" describes most of us either. I think planners and pragmatists are far superior adjectives as they don't espouse the all doom and gloom made popular by some TV shows and magazines.


I like that. I need to make a t-shirt that says ''Chief Planner & Pragmatist" to wear around the house.


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## partdeux

I withdrew from my IRA, paying taxes and penalties to partially fund purchasing our house. House has realized substantial growth in value. Had I left the money in the IRA, I would have more value. IRS taxes were paid out of income.

I own my house free and clear. If the market suffers a correction, I still own my house free and clear. If the market continues it's fiat growth, I would have missed out on that growth opportunity, but the house value also grows.

Given today's market, it was not the best financial move. We can't predict tomorrows market, but did I mention I own the house free and clear? LOL

It was attempt to diversify my portfolio, and I'm still pleased with the results. My only regret, I would not pick a house in this area today, as I would love to have some property to homestead on.


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## millertimedoneright

In my opinion the peace of mind of owning your home outright and having the extra spending money each month is worth what you "may" lose in your 401k overtime. I borrowed 10k out of mine and bought my current 2 story 3200 square feet home out right. 5k out of my own pocket and 6 months DIY remodeling and I have a nice home easily worth 5x what I have in it. I don't regret my decision one bit. When I sell this home and my other one that I lived in with my previous wife it should pay for my future homestead. 


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## goshengirl

Sometimes the numbers say that a certain move isn't the right move. But some values (like the peace of mind that you own your home, free and clear) can't be calculated in numbers.


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## Caribou

Making the best financial move isn't always about making the most money. Buying PM's is about security and so is having your home free and clear. In my late 20's I got sick. Had my home had a mortgage I would have lost it. 

When you factor in the finances consider the interest you are not paying for the next twenty years.


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## crabapple

partdeux said:


> I withdrew from my IRA, paying taxes and penalties to partially fund purchasing our house. House has realized substantial growth in value. Had I left the money in the IRA, I would have more value. IRS taxes were paid out of income.
> I own my house free and clear. If the market suffers a correction, I still own my house free and clear. If the market continues it's fiat growth, I would have missed out on that growth opportunity, but the house value also grows.
> Given today's market, it was not the best financial move. We can't predict tomorrows market, but did I mention I own the house free and clear? LOL
> It was attempt to diversify my portfolio, and I'm still pleased with the results. My only regret, I would not pick a house in this area today, as I would love to have some property to homestead on.[/QUOTE
> 
> It is better to borrow from a 401-K & save the IRA.
> That is what I did, but the house free & clear is a good thing too.
> I have a pension, social security,401-k,IRA, other stocks & investments,life insurance, 24 acres of land, a well, orchid & garden.
> I use the house as a tax break, but it is less each year.
> If the black hole of doom does not be fall us before i am 80 I will be fine.
> A $40,000.00-$50,000.00 loan every 48 months will not hurt my bank roll that much.
> If nothing happens & we all live on or off the grid by choice, not force, then my kids will get the fruits of my labor.
> That is if bad heath does not wipe it all out. I will gladly take a little lose to have some fun now, I work hard & thing a little fun is Okay!


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## LincTex

crabapple said:


> It is better to borrow from a 401-K & save the IRA.


Always the best option, if available.


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## Dakine

partdeux said:


> I withdrew from my IRA, paying taxes and penalties to partially fund purchasing our house. House has realized substantial growth in value. Had I left the money in the IRA, I would have more value. IRS taxes were paid out of income.
> 
> I own my house free and clear. If the market suffers a correction, I still own my house free and clear. If the market continues it's fiat growth, I would have missed out on that growth opportunity, but the house value also grows.
> 
> Given today's market, it was not the best financial move. We can't predict tomorrows market, but did I mention I own the house free and clear? LOL
> 
> It was attempt to diversify my portfolio, and I'm still pleased with the results. My only regret, I would not pick a house in this area today, as I would love to have some property to homestead on.


Actually, you don't own your house. You don't own anything.

What happens if you don't pay your property tax? Why should you PAY a TAX on something you ALREADY OWN???

If you don't pay your TAX, they will CONFISCATE your property and sell it to satisfy the debt to the .gov

All of this happens DAILY on property that is "OWNED".


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## WWhermit

A lot of views, saying a lot of things. Mostly, what I read is what we should do in case the stock market has a huge crash. 

Those that have money in 401k plans will lose the value of that plan until it recovers. If it doesn't recover, as some predict, it will be due to a crash that is so catastrophic that it wipes out the world economy, not just the US, since our stock market directly effects the rest of the world's money.

In my opinion, those that have cash stashed away, if this scenario plays out, won't be able to use it. If the economy tanks, so does the value of the cash.

Precious metals? Really? Here's the problem with investing in gold and silver coins and such; if cash means nothing, then I feel the only thing that will be worth trading as a commodity is something that people can actually use. Food, ammunition, skills, a trade, etc. If I have food, and someone comes to me with gold, and the other with ammo, guess who's getting the food? Not the gold guy.

My point is, like many have said, we have to prepare for all scenarios here. My 401k plan is for if all goes well and I reach retirement age. About 12 years away. Will it happen? I don't know, and neither does anyone else on the planet!

I am stocking ammo, food, I will invest in land soon that will produce for me, and I am learning trades that I can use to barter with, in case the economy does crash.

I will tell you this, though, if the World Economy crashes to the point that the US Dollar, and our stock market is worthless, the only thing that will give you the slimmest chance of survival is a trade of goods. And learn to shoot.


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## bkt

WWhermit said:


> Precious metals? Really? Here's the problem with investing in gold and silver coins and such; if cash means nothing, then I feel the only thing that will be worth trading as a commodity is something that people can actually use. Food, ammunition, skills, a trade, etc. If I have food, and someone comes to me with gold, and the other with ammo, guess who's getting the food? Not the gold guy.


Let's distinguish between barterable items and a long-term stable store of wealth. Tampons, condoms, cigarettes, fish hooks, and booze are barterable items. Gold and silver and other metals are long-term stable stores of wealth.

Economic catastrophes are historically not apocalyptic Mad Max events where civilization never recovers. They're painful events lasting months or years. After the recovery, whenever it is, it would be nice to have some wealth that isn't susceptible to the machinations of central banks and frail fiat currency.


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## WWhermit

bkt said:


> Economic catastrophes are historically not apocalyptic Mad Max events where civilization never recovers. They're painful events lasting months or years. After the recovery, whenever it is, it would be nice to have some wealth that isn't susceptible to the machinations of central banks and frail fiat currency.


I do agree with you, however if things do go south, I just don't see anything short of at least a decade long catastrophe. When looking at the Global Economy, most of the major economic powers are tied together, meaning what happens in China directly affects our economy, and vice versa. Also true with the EU, Australia, Taiwan, etc.

The last major depression that sank the US was 1929. It affected the rest of the world, but not on a huge scale. Now, if something major hits the US, the rest of the world will feel it.

Let's face it, we're all on this website for a reason, and it's not because we see a sunny, bright future for us. I'm in my mid-40's. If there is a collapse similar to what we're preparing for, I don't think I, or any of the rest of us, would live long enough, even in my 80's, to see the end of the recovery. For that, I think precious metals would be useless. For investing when things are great, sure, just like stocks, etc. For disasters, unless I can melt it down for ammo, or eat it, I won't need it.

As always, just my opinion.


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## Caribou

WWhermit said:


> I do agree with you, however if things do go south, I just don't see anything short of at least a decade long catastrophe. When looking at the Global Economy, most of the major economic powers are tied together, meaning what happens in China directly affects our economy, and vice versa. Also true with the EU, Australia, Taiwan, etc.
> 
> The last major depression that sank the US was 1929. It affected the rest of the world, but not on a huge scale. Now, if something major hits the US, the rest of the world will feel it.
> 
> Let's face it, we're all on this website for a reason, and it's not because we see a sunny, bright future for us. I'm in my mid-40's. If there is a collapse similar to what we're preparing for, I don't think I, or any of the rest of us, would live long enough, even in my 80's, to see the end of the recovery. For that, I think precious metals would be useless. For investing when things are great, sure, just like stocks, etc. For disasters, unless I can melt it down for ammo, or eat it, I won't need it.
> 
> As always, just my opinion.


I think that early on, for many like yourself, you may be right. I am not selling my last pound of rice for a pound of gold.

For thousands of years gold, silver, copper, and if I remember correctly, bronze were minted into coins. This is money. If you are only forty then you don't remember when the US was on the gold standard. What we have now is fiat. In effect it is a loan to the government. Not only is it interest free but through inflation we are being taxed to loan it to them. In ancient Egypt an ounce of gold would buy a lot of wheat. Today an ounce of gold will still buy a lot of wheat. Even in ancient Japan where rice was used as money silver and gold still had great value especially since water, mold and rodents were not a threat.

Money is convenient, that is why it exists. Are you going to pack a hundred pounds of potatoes around incase you want to purchase something. How many heads of lettuce are you going to take in trade. I'll gladly take a head or two of lettuce if I have something small to get rid of but the next guy better have something else like say, silver. The PM's are a storage of wealth. Gold has always had value.

If you ever change your mind about PM's make sure you have your food, land, tools, supplies, and skills first.


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## bkt

WWhermit said:


> Let's face it, we're all on this website for a reason, and it's not because we see a sunny, bright future for us. I'm in my mid-40's. If there is a collapse similar to what we're preparing for, I don't think I, or any of the rest of us, would live long enough, even in my 80's, to see the end of the recovery. For that, I think precious metals would be useless. For investing when things are great, sure, just like stocks, etc. For disasters, unless I can melt it down for ammo, or eat it, I won't need it.
> 
> As always, just my opinion.


No problem - you do what works for you and yours. I'm always prepping in ways that don't involve precious metals. In fact, I rarely buy PM these days because there are other prepping items I'd like to have.

That said, a lot of the gold and silver I own are more than 100 years old. That stuff doesn't get stale.  We're about the same age and it may be we never see a time when we can happily exchange silver and gold for the next new currency. But I have kids and they will have that opportunity.


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## WWhermit

Totally agree. Everyone has their own style of prepping, and their own priorities.

Whatever the path, what I think is important is to have several avenues of prepping, and investing in the right things, at the right time. Don't buy gold at it's highest, don't buy meat or veggies to can unless it's on sale, if you're going to buy land, don't do it at the height of the market, etc.


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