Zero 2 Rich

Investing to One Million Dollars or Bust!


Keep in mind that a 401k is a retirement plan! It is intended for your retirement. So the IRS has designed the 401k withdrawal rules to make it hard for you to use the money for other purposes.

Normal withdrawals may begin after age 59 1/2. Normal income tax applies to these withdrawals.

It is possible to make a 401k hardship withdrawal. A hardship withdrawal is not a 401k loan. You cannot repay the money. The withdrawal will be subject to taxes, and possible penalties.

There are two types of 401k hardship withdrawals. The first is a financial hardship withdrawal. This type of hardship withdrawal is subject to income taxes and also 10% 401k early withdrawal penalties if you are under 59 1/2.
Some reasons you might be able to take a financial hardship withdrawal:
*To purchase a primary residence.
*To avoid foreclosure on or eviction from your primary home.
*To pay for college tuition that is dues within 12 months for you or a dependent.
*To pay medical expenses for you or a dependent that will not be reimbursed.
*To pay for funeral expenses.
*For repair of primary residence.

The second is a penalty-free withdrawal. This is also subject to income taxes, but there is no penalty.
Some reasons you might be able to withdraw money from your 401k penalty-free:
*If you become completely disabled.
*Debts from medical expenses are in excess of 7.5 percent of your adjusted gross income.
*You ordered by a court to surrender money to a former spouse, child, or dependent.
*You leave your job by being laid off, fired, quitting, or retiring early, and you are 55 or older, or it is within the year that you turn 55.
*You leave your job and set up a schedule of payments for roughly equal payments to last through your life expectancy. These payments must continue for at least 5 years or until you reach age 59 1/2 (whichever is longer).

Your employer is not required to offer either type of hardship withdrawl. So you will need to talk to your employer to find out if one of these is available to you.

(Click image to see this book at
IRAs, 401(k)s & Other Retirement Plans: Taking Your Money Out by Twila Slesnick PhD

I was listening to a book on tape, and heard mention of hard money lenders. I had never heard of them before. They are a last resort source of money for investing in real estate.
Hard money funding is typically used to fund short term real estate investments. Hard money lenders will loan money to the investor at high interest rates then what you will find at a bank. Also they will loan you less money compared to what the property is valued (loan to value rates). The hard money lender will then assume a lien on the property. They will usually be in the 1st lien tier position, so in case of default, they are the first to be paid.
Often hard money loans are used to purchase real estate for the purpose of flipping. So even though the loan is at higher interest rate, it is only for short term. The borrower is likely to have to pay points as well.

A while back I was listening to a book on tape. They described this guy who travelled around the country on business. What he would do on his on during each trip was rent a car, drive out and look at properties. He would look at the city, or towns, and try to figure out which direction the city seemed to be growing in. And then he would buy some small lot in that area. Apparently he was pretty good because his real estate investments had risen in value, and he was very wealthy.
Every time I head out to Las Vegas, to visit my father in Pahrump, I see how much the area is growing, and I keep thinking about buying a small piece of Las Vegas investment property. I know property values have been rising fast out there. But I don’t know anything about real estate investing. I mean I could buy some little plot of land in Las Vegas, or in Pahrump as an investment, but chances are I would not make any money, or lose money as I don’t knwo what I am doing. I suppose I could get my father to help me some find some plot of land. He has bought and sold houses in the past, so would probably have a good idea about buying a piece of land.
Maybe I will just stick with the stock market. Land doesn’t grow, where a company can.

Since before the beginning of the world wide web, I have been making money online. I first started making money on bulletin board systems (BBS). I sold a BBS door game as shareware. Later, when the world wide web brought the interne to the masses, I was right there. I had new shareware program to sell. When Amazon introduced it’s affiliate program, I was there. Then Amazon came out with Amazon Web Services (AWS), and was building stores. When Google introduced Adsense, I signed up. I have sold used books on I have sold stuff on eBay. I have made money from all of these. I keep learning, and making more money. I have been making huge strides in learning over the last couple months. I invested in some ebooks, and website tools, and have been increasing my online earnings to personal highs. It’s possible that my online earnings may surpass my 8-5 corporate programming job by the end of the year. And what I am doing is something that anyone can do.
My current energies are focused on build several blog sites. I have about 8 websites total. They all make money. But my blog sites, this one in particular, are growing at an incredible pace. I have spent much time and money studying webpage layout, where to place ads on the page for the best click through rates, learning about keywords, etc. I have always been very good in search engine optimization, but some of the ebooks I have been reading have brought my skills and knowledge to a whole new level. And it is paying. I have spent around $400 over the last couple months on ebooks, and tools. My earnings this month will be close to $800. I am expecting my earnings next month to exceed $1000, or more. And they are still growing.
As I said, anyone can do this. The internet is full of opportunity! Try things, some things will work, other things wont. Try lots of things! For the things that work, do more of them. They things that don’t work, try doing them differently. Keep playing and having fun! I don’t play video games. I enjoy trying to make money! The scores are much more satisfying when there is a dollar sign in front of them. I try to avoind time wasting activities. I try to do at least something everyday to forward my money making potential. If I make just a little progress every day, it will make a big difference down the road. Just like investing in the stock market. But instead of money, I am investing my time. I am generating a nice income stream. And it is compounding! And I am enjoying it!
The internet is a playground for your home based business! Find those online opportunities. Have fun, make money!

Many people wonder how to rollover a 401k into an IRA. First, consider your options. Do you really need to roll it over into an IRA?
Option 1:If your 401k balance is over $5000, your previous employer is required by law to let you keep your money in their 401k plan.
Option 2: Take the money now, and pay the taxes an penalties. This is a dumb move!
Option 3: Roll it over into your new employr’s 401k plan or into an IRA. You want to make sure you NEVER touch the money!
If rolling over your 401k into a new 401k You need to do a trustee-to-trustee transfer. You would need to contact the company that runs you new 401k plan to initiate the transfer.
If you want to roll the money into an IRA, you can either roll it into an existing IRA, or set up a new IRA. Rolling into into a separate IRA has advantages that you can later roll it into a new employers 401k plan (if the company allows this). If you roll your 401k into an existing IRA or make contributions to the separate rollover IRA, you may no longer mover the funds into a new employer’s plan.

You can also optionally have your previous employer write you a check for the 401k balance. But they will have to withhold 20% for income taxes. You will get the 20% back at tax time via a tax refund. But meanwhile you must deposit 100% of the balance from your previous employers 401k plan into the new account within 60 days. If you deposit any less the 100%, it will be seen as a withdrawl, and you will have to pay taxes, and penalties. But since the IRS is holding 20%, you only have 80% of the balance. You would have to come up with the remain 20% to deposit into the new account. Ouch!

Before making any decisions about the rollover of a 401k into an IRA or another 401k, you should talk to your financial planner or accountant.

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