I'm a 44 year old single parent in a dead-end job. I make $44k per year, no hope of promotion, no insurance benefits. I have a monthly house payment of $1,600 and I am 2 months behind. Friends keep telling me to cash in my pension/profit sharing (about $200,000), pay the house off, and start over. Is this a good idea?
2007-12-07 11:20:04 · 9 answers · asked by Allan N 1 in Business & Finance ➔ Personal Finance
I forgot to mention that I would have to quit my job in order to receive pension/profit sharing proceeds.
2007-12-07 11:23:25 · update #1
Even without the 10% penalty and income taxes on the withdraw, this won't solve your problem. Your house payment is currently at 44% of your gross income. You simply can't afford the house even without a mortgage. Don't forget you still have property taxes with or without a mortgage. Looking for a better paying job is a good idea. Keeping the house is not.
2007-12-07 13:33:13 · answer #1 · answered by STEVEN F 7 · 0⤊ 0⤋
Cashing in pension money is never a good idea. What happens when you turn 65? How are you going to replace that money in little over 20 years? Unless you plan to work until you are 90.
You mention your dead-end job. Have you "tested the waters" in the employment market? Sometimes people have more and better skills then they give themselves credit for. Maybe the perfect (and better paying) job is out there. Talk with a career counselor.
In the meantime, perhaps your best option with the house is to sell it if at all possible. I know people don't like to give up their homes. But if you get any profit off of that, put it in savings to help defray the cost of a nice apartment, you may be doing yourself some good.
2007-12-07 11:28:15 · answer #2 · answered by Angie 6 · 0⤊ 0⤋
Do not cash in your pension. You need to lower your living expenses and obviously can't afford the house payments. Call the mortgage company and try to work something out with them. They really don't want your house, they want you to keep it, and they may have a way to help you. Failing their helping you, I suggest you sell the house and rent if you have to. Meanwhile you can start looking for a better job. Just don't cash in your pension.
2007-12-07 16:55:28 · answer #3 · answered by Bette 5 · 0⤊ 0⤋
check out doughroller.net or daveramsey.com for more ideas. but, you definately need to get back on track paying the house note. accept reality- for today. it is ony today that the the job is a deadend. once you accept the facts it is much easier to move in another direction. create a 6 month evaluation. use a pros/cons list. remeber, it can always get worse(look at me- i am in iraq). if you are a generally negative or depressed person accept that as fact as well. but, if you have just some bad experiences and are now stuck, being divored and in debt, you can still change it.stay focused and postive. baby steps to organizing your entire life. and always remember, it can always be worse.
don't cash out the pension but do get caught up on the house note. also, free adice is good but paid financial advise is even better. even a $100 to the pension broker you use is worth more than losing the house.
2007-12-07 11:42:27 · answer #4 · answered by misfitter 3 · 0⤊ 0⤋
Look at it this way...
Your payment is $1600. which means you have to earn about $2200 to make that payment.
If you got a job for $30K you'd be ahead, because there is no house payment.
However, and this is a big HOWEVER... there are tax consequences and penalty with the withdrawal. That $200K is really $140K.
Moreover, your retirement is gone...
Can you refinance your mortgage and get a smaller payment?
The real solution may be difficult.. sell the house.
It is apparently too big.
Look at the cost of the insurance you are paying vs a lower paying job w/ bennies
2007-12-07 11:39:57 · answer #5 · answered by beckoningsubstitutes 5 · 0⤊ 1⤋
Please don't sell your future for it.
You may have to let go of your house though -- hopefully the proceeds will cover the rest of the mortgage -- rent and save the difference for future rainy days.
After that is settled, you may want to look around for a new job, and when you've got enough in the bank and you're back on your feet, you can try buying a house again.
2007-12-07 11:34:18 · answer #6 · answered by Claudia 2 · 1⤊ 0⤋
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2016-12-10 15:56:03 · answer #7 · answered by Anonymous · 0⤊ 0⤋
That might be a good idea since you say it's a dead end job. 44 isn't necisarily to old to start a new career.
2007-12-07 11:28:23 · answer #8 · answered by T.O. 2 · 0⤊ 2⤋
i know it sounds really good but but don't you pay penalty and don't all your money there's got to be another way really think about first talk to a tax adviser first
2007-12-07 11:31:52 · answer #9 · answered by lucky star 4 · 0⤊ 0⤋