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to borrow or take from IRA?

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michigan_jim
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to borrow or take from IRA?  Reply with quote  

Hello smart people. My age is 66. SS income (wife's and mine) plus pension are enough to meet bills and expenses, including 5% mortgage (6 yrs to go). Supplemental income from sales provides a little breathing room to eat out, help the kids occasionally and spoil my grand daughter a bit. We live modestly, have no CC debt or any payments other than mortgage. Wife and I both drive older, but reliable cars.

Less than 50K in IRA, mostly in bonds. After taking hit 2-3 years ago in stocks, it is all in bonds with minimal but acceptable growth in last year. Medicare Advantage (for time being) is reasonable. House (worth maybe 250K) is in great shape, new roof, new siding, new windows, new flooring over last few years, mostly new appliances, heating, etc. Being very mechanical I can fix practically anything until I get too old or lazy to do physical stuff.

Yesterday, I totaled my car (no injuries and it was other guys fault; he admitted it to cop). I'm not in any hurry to get a replacement because I can use my wife's. She may grumble because she can't just run to visit grandkids (close by) or go shopping, but it's not really a problem and I'm around a lot. However, I won't push my luck with her by declaring, "we only need one car".

No way do I consider a new car. I know cars well and confident of finding a perfectly good and reliable used for under $10K (never been burned on a car deal in my life). I expect insurance to give me something but not much considering my car was high miles. However, I will find a great car at a great price though which may take a month or so.

My questions:

Do I borrow from credit union at a relatively low interest and buy a car?
Do I take it 10K out of my IRA to buy car? (Withdrawal will be subject to income tax.)

Is it better to buy a car with today's money (current value) or borrow and pay back with future, possibly inflated dollars?

I view IRA as emergency money anyhow. I have 6 yrs to go on a level term life insurance, which would pay the house off 4 times over and would leave my wife comfortable.
Post Fri Nov 05, 2010 2:23 am
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coaster
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Borrow it from the credit union, but don't put your house up for collateral; the IRA could serve as collateral if needed.
Post Fri Nov 05, 2010 5:32 am
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MrCashFlow
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Glad to hear you're doing ok after the accident.

I haven't had a car note since 1998. Personally I don't see the point anymore in having one. Seems like a waste of money to me being that they depreciate as soon as you drive off the lot.

If you're going to borrow, borrow from the credit union. They usually have a car buying program like UBS (United Buying Service) that provide extra perks only to credit union members.
Post Thu Nov 11, 2010 1:54 am
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jessb
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I agree- you should borrow from from your credit union. I would consider the IRA as an emergency fund. Can you live with only 1 car?

No fake signatures - thanks
Post Sat Feb 05, 2011 3:10 am
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Don't borrow from an IRA. First, you'll have to pay a tax penalty. Secondly, if you take out the money, you'll lose all the dividends, interest, etc. that money would have made until you retire.

See Proof. You can make free money online.
Post Mon Feb 14, 2011 4:19 am
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david14
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Flowers Toronto  Reply with quote  

Caretakers – You may be sending flowers to someone who is not conscious or capable of enjoying them fully. However, sending flowers is a great way to let caretakers in this situation know you’re thinking of them as well. And, they may be in need of a boost even more than the patient.
Post Wed Feb 16, 2011 4:29 pm
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RichS
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Use the proceeds from your accident as a down payment and finance the rest of the loan from the credit union. Your IRA should only be used to supplement your income for things that you "really" need. Since your wife already has a car you "really" don't need one but to keep peace I understand you will have to get another car.

Do not take 10K out of your IRA. You will not be subject to any penalties because you are past 59 1/2 but you will incur income tax. Also you can't use an IRA as collateral for a loan. Forget about the IRA and borrow the money from credit union.

If you have enough money in the credit union you may be able to get a signature loan which would be collateralized by your balance in the credit union and that would reduce the amount of interest they charge you. Talk to the credit union people. They can be creative. Very Happy
Post Sat Feb 19, 2011 2:51 pm
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buziness11
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u can credit money from your borrow union and it would the great way of borrowing money.
Post Sat Feb 26, 2011 5:13 am
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kate032
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I would not touch that IRA, as others have stated.

Although a second car would be convenient, can you really afford it? You could save even more money for retirement by not having another car and car insurance. In this economy, I'd save every penny that doesn't absolutely have to be spent.
Post Sun Mar 20, 2011 2:28 am
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trinden
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You should wait and see what comes out of the settlement,maybe you might have enough without having to borrow anything
Post Tue Apr 12, 2011 1:18 pm
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InterVivos Florist &
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I think there is no need for you to buy a car or you must not be too impulsive about it just think wisely and consider your need first.But if you want to buy then I guess you better choose the option of credit union because you should have some money for emergency.
Post Sat Nov 12, 2011 7:56 am
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Using IRA funds/Retirement funds to buy a car is absolutely crazy. You's pay a huge tax penalty, lost all the future earning power of the money you withdrawl, and cars depreciate in value.

See Proof. You can make free money online.
Post Fri Nov 25, 2011 3:50 am
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cbhattarai
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quote:
Originally posted by coaster
Borrow it from the credit union, but don't put your house up for collateral; the IRA could serve as collateral if needed.
I truly agree with with..
Post Wed Feb 22, 2012 11:57 am
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