The Only Way You Should Pay for a Cruise (12 20 23)

December 20, 2023

You may be shocked to learn how many people borrow against their 401(k) account. Find out the number later in this email.

💵 Today’s Top Stories
Cruise

Some cruise companies haven’t recovered well from the business losses suffered from COVID-19. Use this payment method when you book a cruise so you’re not at risk of losing your money. Read more.

Work from home

What happens to your Social Security benefit if you keep working after you get it? And is it worth considering financially? Read more.

Car

Selling your car for the most money often means foregoing the faster, easier options. Here’s what you should consider when selling a vehicle – and what Clark recommends. Read more.

Gift Cards

Did you know you can buy gift cards at a discount online? And you can sell unwanted gift cards as well? Here’s a great primer as we head into peak gift card season. Read more.

💵 Avoid Viewing Your 401(k) As a Piggy Bank

The holidays represent peak spending for many people between travel, presents, food, charity donations, late-year healthcare and more.

A surprising number of Americans will tap into their 401(k) to fund their spending. According to Fidelity, about 1 in 6 plans currently have outstanding loans against them (17.6%).

And that’s only active loans. It doesn’t include individuals who have already paid themselves back.

“I don’t want you using your retirement accounts as a piggy bank when you need cash,” Clark says on the Dec. 20 podcast.

Pulling money out of your 401(k), even temporarily, is an opportunity cost. Your investment gains over decades are so meaningful that getting in the habit of pulling money out significantly reduces the amount of money you’ll have in retirement.

If the bank is foreclosing on your house or you’re getting your vehicle repossessed, by all means, borrow from your 401(k), Clark says.

“There are going to be circumstances where your financial house is burning down. And you need the money to put the fire out,” Clark says. “Other times it’s lifestyle. If I could draw any line here it would be that.

“The purpose of putting money in the 401(k) is to create financial security later in life. And you don’t want to erode that security with a current borrow from your 401(k).”

📊 Stat of the Day

💸 41.4%: Share of earnings that someone on a median U.S. income ($78,642) would need to spend on monthly housing costs if they bought a median-priced home ($408,806). It’s the highest percentage since Redfin started tracking the stat in 2012 (the ratio was 21.1% then).

💰️ Deal Alert: Today’s Top Deals
Hawaii
Fossil
🎙️ Podcast

Have you heard of “dupes”? They are items of clothing, cosmetics, etc., that are similar to designer brands but much cheaper. Are they worth a try? Also, Toyota just paid fines for cheating borrowers. Clark shares several ways to protect yourself and your wallet before you buy a car, including one very important rule.

☎️ Need Money Help?

The Team Clark Consumer Action Center is a free helpline that can help you navigate your money questions. Call 636-492-5275. Visit clark.com/cac for more information.

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