Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Anybody Cash out early, pay penalties and start their own business?
Old 01-15-2006, 11:32 AM   #1
Confused about dryer sheets
 
Join Date: Jan 2006
Posts: 3
Anybody Cash out early, pay penalties and start their own business?

This is "Young Dreamers" forum I'm growing tired of the rat race!
__________________

__________________
vicmost is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-15-2006, 11:39 AM   #2
Recycles dryer sheets
 
Join Date: Apr 2005
Posts: 306
Re: Anybody Cash out early, pay penalties and start their own business?

guess not
__________________

__________________
-----------------------------------------------------
Whatever you do will be insignificant, but it is very important that you do it.
mickj is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-15-2006, 12:07 PM   #3
Full time employment: Posting here.
 
Join Date: Apr 2005
Posts: 577
Re: Anybody Cash out early, pay penalties and start their own business?

Did you, like me , have a beer before posting?

All those things don't follow. I started my own business, self-employed, and never had an experience I could name as a penalty or a cash out. If your experience is real different , just call it something else, and do what you want to do. This life is not a dress rehearsal. And besides, you can always say this own business thing is not what I want after you try it. My guess is you have a pension chain, no? If it's a government, you can probably opt back in. (I can.)
__________________
kat is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 08:18 AM   #4
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: Anybody Cash out early, pay penalties and start their own business?

I think he is talking about cashing in his 401k and paying the tax and early withdrawal penalties.

Don't do it.

If you want to start a business, find, figure out a way to do so without losing your 401k.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 08:51 AM   #5
Thinks s/he gets paid by the post
Jay_Gatsby's Avatar
 
Join Date: Oct 2004
Posts: 1,719
Re: Anybody Cash out early, pay penalties and start their own business?

Quote:
Originally Posted by Martha
I think he is talking about cashing in his 401k and paying the tax and early withdrawal penalties.

Don't do it.*

If you want to start a business, find, figure out a way to do so without losing your 401k.*
Exactly. Perhaps you should follow the common advice "if you can't pay cash, you can't afford it". In repeating this often-said adage, I mean to emphasize that you should work at your "day job" until you have: (a) enough cash to cover one year of your normal living expenses, (b) enough cash to get your company to cash positive territory, and (c) health insurance from some other source.

Don't be in such a hurry to ditch your day job (the "rat race" as you refer to it) until you have a solid plan of action and the means to carry it out.
__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
Jay_Gatsby is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 08:57 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Re: Anybody Cash out early, pay penalties and start their own business?

Probably the #1 reason small businesses fail is lack of reserves to operate until cash flow positive...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 01:42 PM   #7
Full time employment: Posting here.
Arif's Avatar
 
Join Date: Jun 2005
Posts: 761
Re: Anybody Cash out early, pay penalties and start their own business?

Quote:
Exactly. Perhaps you should follow the common advice "if you can't pay cash, you can't afford it". In repeating this often-said adage, I mean to emphasize that you should work at your "day job" until you have: (a) enough cash to cover one year of your normal living expenses, (b) enough cash to get your company to cash positive territory, and (c) health insurance from some other source.
We started our business on the side until it got big enough for us to live off the income. At that point we left the service and went into real estate full time. prior to leaving our jobs we saved and invested one years worth of living expenses, paid off the car and moved to Panama. I plan to fly back about 4 times a year to take care of business and the rest of the time online looking for properties to invest in. Not a bad life and sometimes I wonder if I am the only person community from one country to another to work?
__________________
You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
Arif is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 01:48 PM   #8
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Re: Anybody Cash out early, pay penalties and start their own business?

Quote:
I think he is talking about cashing in his 401k and paying the tax and early withdrawal penalties.

Don't do it.

If you want to start a business, find, figure out a way to do so without losing your 401k.
I borrowed from the 401k and bought a couple properties at auction in the early 90's. Have to keep the day job to make the loan payments - to yourself.

Worked out great as the properties have returned many times more than the 401k has/would-have. Paid the loans off before I FIRE'd. All is well.

Paying the penalty and taxes - cashing out - never crossed my mind.
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 02:12 PM   #9
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: Anybody Cash out early, pay penalties and start their own business?

Quote:
Originally Posted by Martha
I think he is talking about cashing in his 401k and paying the tax and early withdrawal penalties.

Don't do it.*

If you want to start a business, find, figure out a way to do so without losing your 401k.*
Ditto. I was about to write the exact same thing.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 02:15 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Re: Anybody Cash out early, pay penalties and start their own business?

Quote:
Originally Posted by Arif
We started our business on the side until it got big enough for us to live off the income. At that point we left the service and went into real estate full time. prior to leaving our jobs we saved and invested one years worth of living expenses, paid off the car and moved to Panama. I plan to fly back about 4 times a year to take care of business and the rest of the time online looking for properties to invest in. Not a bad life and sometimes I wonder if I am the only person community from one country to another to work?
That you could give up this much to local competitors and still do well kind of amazes me. People in real estate may not be geniuses, but they aren't stupid. I would expect the local operators to get anything good that showed up. And also for your expenses to be quite high- it isn't easy to manage something from that extreme distance.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Re: Anybody Cash out early, pay penalties and start their own business?
Old 01-16-2006, 03:02 PM   #11
Full time employment: Posting here.
Arif's Avatar
 
Join Date: Jun 2005
Posts: 761
Re: Anybody Cash out early, pay penalties and start their own business?

Quote:
That you could give up this much to local competitors and still do well kind of amazes me. People in real estate may not be geniuses, but they aren't stupid. I would expect the local operators to get anything good that showed up. And also for your expenses to be quite high- it isn't easy to manage something from that extreme distance.
You would think but that hasn't been the case. When I was local I found properties the same way I do now..on the internet. Everything is online, comparables, MLS listings, you name it. I use the same realtors, contractors, and overall system as I did when I was there. We buy 2-3 homes on each trip so the costs are spread out. It works for us.
__________________

__________________
You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
Arif is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
IRA early W/D- Private-letter ruling mickeyd FIRE and Money 3 08-24-2004 12:44 PM

 

 
All times are GMT -6. The time now is 01:03 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.