Jumped in the Debt pool... now a new approach.

[old medic]

Been looking around to replace our 05 truck with 284K miles. Being very specific, They are far and few between. Im talking maybe a dozen or so available at a time, COUNTRY WIDE. We could have ordered brand new and waited 6+ months and paid twice as much. So when a one owner local got traded in that had most of what we were looking for.... DW said JUMP. I wish it could just be a BTD moment, but can't. So we now looking at a car payment, 1st in nearly 10 years.
Our other option is to take a loan from the DW's 401K. The interest is slightly higher, but the interest goes back to her account.
Currently maxing out tax deferred everywhere for ACA reasons, but plan to roll over to her insurance starting next year.
Once we get off the ACA we could also start pulling money out of my 401K.
Any other suggestions or input?

 

[Tetto]

Is your current truck in otherwise good condition? It may be better to rebuild the engine/transmission. I have a hard time with these ridiculous car/truck prices nowadays.

 

[old medic]

Is your current truck in otherwise good condition? It may be better to rebuild the engine/transmission. I have a hard time with these ridiculous car/truck prices nowadays.

Yes it is, but the main issue is a rear main seal leak. We just finished a 2750 trip pulling 7500 lbs of camper and managed 11.5 MPG, and about 7 quarts of oil. Seriously considered doing the motor change, may even just do the rear main seal at some point. Thing is I can get it fixed and get about what we paid for it 10 years ago. New truck is diesel with better tow rating and MPG.

 

[Kings over Queens]

I'm not a fan of 401k loans. Perhaps a HELOC, or just bite the bullet on the car payment and increase monthly payments to pay off sooner?

 

[TheWizard]

Sometimes your options are limited and you do what you gotta do.
Car loans aren't a terrible thing; I had a number of them back in the bad old days when I was maxing out my tax-deferred retirement contributions and didn't have lots of $$ left over.

Nowadays, in my 12th year of retirement, I've got plenty of excess income stashed away in my taxable account.
So when the time comes to replace my 2016 F-150 (93,000 miles) in a few years, I'll just factory-order what I want and pay cash for it when it arrives...

 

[Tetto]

Yes it is, but the main issue is a rear main seal leak. We just finished a 2750 trip pulling 7500 lbs of camper and managed 11.5 MPG, and about 7 quarts of oil. Seriously considered doing the motor change, may even just do the rear main seal at some point. Thing is I can get it fixed and get about what we paid for it 10 years ago. New truck is diesel with better tow rating and MPG.

You may be able to find a lower mileage replacement engine. I like to drive the wheels off stuff if I can! But if you want something new(er) you may be able to find a low percent deal from a manufacturer.

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[Gumby]

A HELOC probably has a lower interest rate than a car loan.

 

[MarieIG]

Just note with the 401k loan that typically it becomes due in full upon separation from service (otherwise there are tax implications). Please investigate this and be aware of all ramifications before you make your decision.

 

[Gumby]

Just note with the 401k loan that typically it becomes due in full upon separation from service (otherwise there are tax implications). Please investigate this and be aware of all ramifications before you make your decision.

A most excellent point.

 

[street]

The auto business is ugly, and I was up against the same battle you are in, one year ago. The one difference from you to me is I didn't need a large truck for pulling heavy loads.
I found in searching and dead-end roads was to buy new for price, miles, years and also for less maintenance issues.

So, I ordered new small truck, took 9 months to receive it but was still the best way for me to go.

 

[Spock]

I'd seriously consider fixing the old one. "They don't make them like the used to", especially trucks. What still looks on the outside like a "truck" is built with aluminum and plastic instead of steel and the computer controlled transmission won't let wheels spin when trying to get un-stuck.
I bought a new 4x4 last year... they don't even call it a transfer case anymore more... the "Power Distribution Unit" is made out of plastic and has a life expectancy of about 3 years.

 

[pb4uski]

... Any other suggestions or input?

We recently bought a house and needed bridge financing from when we bought the house until we sold our Florida condo. I arranged a Pledged Asset Line of Credit on my Schwab brokerage account and it worked perfectly. Interest rate is SOFR + 3.5%, or 8.5% but no fees.

 

[Texas Proud]

I do not think all debt is bad... if your are trying to manage to an ACA credit it might be worth a lot more than the amount you pay in interest...

I would just take the loan from the bank and pay it off ASAP...

 

[old medic]

I guess I need to clarify... We bought the truck, 7.25% interest.
Several mentions of HELOC, and hate that we have no mortgage but can't borrow against it until we finish the remodel. Since we have been paying as we go, and 0% interest purchases, its taking forever. Glad to say the paintings done and flooring to be installed next week.
Seriously considered fixing the old, rebuild or junkyard engine. and may still do something along that line.
Grandson will start driving in a few years.

 

[old medic]

Just note with the 401k loan that typically it becomes due in full upon separation from service (otherwise there are tax implications). Please investigate this and be aware of all ramifications before you make your decision.

Actually I took one out a couple years before I retired and called it my Anti Retirement plan since I could have at that point. When I walked into our finance office and told them that I wanted to change from 50/50 split (loan/401K) to paying everything on the loan, The girls in the office got upset... they realized I was leaving.
The DW has a few more years before 100% pension, so it can be her AR plan.