10 pounds down 32 pounds to go!

Tuesday, March 03, 2009

If you're so smart...

I just read this thing about the so called "expert of 401(k)'s" taking a withdrawal from her plan to help pay for her sons wedding. Is there any better example of what is wrong with our country in the way we think about money. I'm completely disgusted but I'm extra special sensitive about it because I just paid off all my debts...again...and I did it by closing my 401(k). A while back, I can't find the post to be sure of the date, I paid off every last cent of my ridiculous hand to mouth debt. This is the debt that grew while I was making 9 dollars an hour and paying 600 dollars in rent every month. This is the debt I paid off all alone and in secret because my dying mother in her drug addled state said I was a burden on the family. I'm not making excuses, I could have moved home and I didn't (because obviously) and the decisions that got me where I was were all mine. Alas, I asked for a raise and I sold a bunch of stuff and I stopped buying everything but food and moved apartments. I'm trying to say that I worked really hard to change my life and the way I think about and use money. It was really nice being out of debt.

So, you're wondering what I did to get back in to debt to have to close my 401(k) to resurface. It's very simple. I took a no fee, no interest loan on one of my cards to start an IRA. One of the things about having no assets or children is that you have no write-offs when it comes to doing your taxes. I started an IRA to avoid paying a big ass tax bill to George I'm an asshole Bush. I took a calculated risk. I knew that I wouldn't be fired from my low paying job and I knew that I spent a certain amount to live and the math worked perfectly to do the advance and pay it off before the rate went sky high. Then I got a much higher paying job and my life fell apart.

I recently had to really think about a job that had a starting pay of 8.50 an hour. Do I want the security of having a job or do I want to be worth more than 8 dollars an hour before taxes. That sort of thing happens a lot now that I'm looking for work and I'm having a hard time making the decision. I mention it because making more money was really hard on my budget mentality. It should have been really easy to pay off that IRA loan and I didn't make it a priority because there was so much money coming in. Even when I wanted to quit I didn't make it a priority to pay off the advance. I let go of discipline when I had more money, I didn't just let it go I threw it away, which makes me wonder if I'd be better off at a walmart pay grade.

A few months ago I was starting to run out of time on my free loan and run out of prospects of getting a new job so I closed the 401(k). As part of my calculated risk strategy I knew I'd always have the IRA if the fit hit the shan. I chose the 401(k) instead of the IRA because the IRA is in cd's and can't lose money. It will never make me rich but it won't lose anything. The 401(k) was not only losing money in the markets but was worth so little as to not be worthwhile to hold on to, and it gives me no tax advantages for 2008...so it got closed. 2009 will have the deck stacked against it tax-wise, which is why I'm saving my ass off this year.

I'm looking at it like I made a decision and it went badly and I took the consequences. It's nice to be free again, it's nice to have a second chance to not be a moron. It's against all the rules of being in debt to use retirement money to pay yourself free. It's also against all the rules of common sense to lose money on an investment and a debt at the same time. Suffice to say when my time ran out I'd be paying %16 interest...no investment is making that rate right now with the possible exception of white slavery. Recently I looked at my checking account and there is a lot of money in it. I was forced back into my budget and now I have the cash to make an IRA deposit without using credit, at least enough to lower my tax burden. As much as I wish Mr. Obama good luck, I don't want to pay him 1,000 dollars when I could save it for the future.


Sugarcrook said...

Maybe I'm strange, but I think it's generally a good idea to clear debt as quickly as possible.

Can you use the loss of value in your 401k as a write-off for 2009 taxes?

Amy said...

Did I not say I'm an asshole for not paying that shit off because it was totally implied.

Lauren said...

You probably have 80,000 posts on how to get out of debt, but how did you do it the first time?