The Dumbest Mistake You Can Make with Your 401k
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Some good news and some bad news on 401ks. Good news, Americans are putting more money than ever into their 401ks. Good job, guys. Bad news?
pulling way too much money out. Yeah, 4.8 % of workers in 2024 took a hardship distribution for financial emergencies. That’s up from the pre-pandemic average of 2%. This is according to Vanguard, nearly one third of people who leave jobs annually. is, guys, don’t do this, okay?
Don’t. It’s dumb. Okay? You’re leaving a job. You’re leaving a job. You don’t liquidate your 401k. You gotta pay a penalty and then you’re gonna have to pay taxes. It’s simple. It’s simple. Go to our website, Watchdogonwallstreet.com. Sign up for personal CFO program. We’ll give you the paperwork. You can roll it into an IRA. Really simple. again,
Why would you take a solo stove? Would you take a solo stove, put it in your backyard? You want to have your friends over for a fire and you’re to burn money? That’s essentially what you’re doing. Rules have made it much easier for people to dip into their 401 case. A lot of things. got people, again, and they’re going on, the funny thing is, is these idiots go on social media?
and tell people that that’s a great idea going to talk. It was the best thing I ever did. I pulled money out of my 401K. And I don’t think these people have actually used calculators. Listen, I get it. You know, I’ve been I again, I tell people all the time, you got to have a rainy day fund. You do not want to. You do not.
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Want to go into debt and pay high interest on credit cards by any stretch of imagination. I understand things happen. Again, you need to use your 401k, take advantage of one of the hardship withdrawals. Fine, pay it back. Pay it back as soon as possible. Don’t, people, again, I try to explain this to people and I get interviewed on this a lot in our philosophy.
I’m not a, know, people out there that are, you know, crazy savers out there and, you know, you got to stop living your life. Yeah, I said, I just had this conversation with my son. You know, said, yeah, I’m happy. He’d been putting money away from all of his jobs through high school and college that he had been very smart. I said, okay, you know, now you’re, you know, your rent’s expensive. You’ve got this bill. You got that bill.
Yeah, you’re going to put money away. You’re going to continue to put money away into these retirement accounts. And that’s a smart thing to do. However, However, now guess what? You’re going to also need money for, hey, you want to own a home someday. You’re to have to put some money aside for a down payment on a home. A myriad of other things. One of the best ways to think about building wealth and saving and also enjoying your life. This is something that I try to get across to people.
Yeah, I’m gonna take it. We’ll take the money factor out right now. We’ll think of it a different way. We’ll think it about if you’ve been out of shape. You’ve been out of shape and you say to yourself, you know what, I am gonna start going to the gym, I’m gonna start exercising, but I have no idea what the hell to do. So you hire a personal trainer. You hire a personal trainer, you go to the gym, you haven’t worked out in ages, you’re out of shape.
and the personal trainer absolutely destroys you.
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destroys you. Does it, you know, basically, you know, puts you through a workout, you know, you’re there for a week, you can barely move, you’re a mess, you can’t. And again, those types of you’re going to be more apt to quit rather than than going back to the gym. You know, my mother-in-law says it all the time, Greeks, they say, see, guys, you got easy, easy. OK, you got to take it easy. OK.
Listen, the same thing holds true. Yes, you got to save. I get it. You’re 22 years old and I get it. Your bills are high. You might have student loans, whatever it may be. That doesn’t excuse it. You better be putting some money away. You need to pay yourself every month. And I try to play this people’s like, okay, you’ve got a bill. You bills you got to pay all the time. This is a bill that you pay to yourself. You, you, you’re every month. You got your bills, you know, you your cell phone bill, got car bill, whatever it may be your rent.
utilities, Netflix, you also have to have a bill where you’re paying yourself every month. But again, you need to make it a dollar amount that you can deal with, that you can handle. Okay, no, I don’t want you, you know, eating government cheese, okay, and dumpster diving.
just so you can make the, you’re paying yourself every single month. You picked a number that was unrealistic. And the problem is if you do that, what happens is people are gonna end up stop. They’re not gonna stop saving rather than making it an enjoyable experience. Now obviously, as you advance, as you get ahead, as you wish you’re going to do, you’re gonna do, you’re gonna get raises, you’re gonna get promotions, you add to it to an even greater degree. Watchdog on wallstreet.com.
