Borrow from family or sell equities for cash

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Topic Author
catchup
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Borrow from family or sell equities for cash

Post by catchup »

Good afternoon. I need help with a first world problem.
I will share details. I hope it’s not impolite to do so on this forum.

We recently purchased a home and put down 125 k for closing costs. Moving will cost 20k. I owe 10k for first quarter taxes and haven’t received a 14 k refund for 2019.
We have 80 k in repairs anticipated but we may need to budget a substantial unanticipated additional amount to put in air conditioning while walls are torn down for electrical work.

I am a month out from getting a regular paycheck at a new job. 320k gross annual income.

We have about 130k in cash left over, but continue to have living expenses such as my 750 dollar 40k mile car service today.

We will be selling our old home once we move out. It’s worth 300k and we owe 25k on the mortgage, in a good market area, but timing will not be optimal for this market. Better in Spring then in August.

I have roughly 300k in a taxable account in equities.

My question for the forum is as follows: Should I sell equities to provide a cushion in our account and to pay for moving and repairs until we sell our old house, understanding I will pay capital gains, or should I borrow from relatives. Father in law offered 10k loan. Brother and father each have 50 k line of credit. Which is the most expensive and which is the lesser of 2 evils.

Home equity loans are not being offered at Wells Fargo, where we have our mortgage, or at USAA right now. Dollar, where we have our new home, won’t offer home equity loan for out of state home.

Are there other options for personal loans that are reasonable.

I feel we have been responsible with saving and didn’t buy a million dollar home that’s way over our head, but I do need a bridge until we can out of our house and sell it.

I also need to contribute 26k to a solo 401k by the end of the year. But I’m waiting for a cash cushion After sale of home first.

Thanks in advance.
Lalamimi
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Re: Borrow from family or sell equities for cash

Post by Lalamimi »

First, why does it cost $20K to move? We moved 200 miles for about $3K, hired a company with a 27' truck, gave away some furniture and used a Uhaul trailer for some items. Are you having to store In between getting house ready? Can you do some of it yourself? Did you buy a fixer upper to have $80K in repairs before you move in or is it wanted remodeling. We bought before we sold a few years ago. Borrowed from DH's IRA then returned it within the 60 days with no penalty as we were closing on sale of a small house very close for comfort, and did not sell our larger home for 10 months. Maybe look at a loan from your 401K, worry about contributing later. Is the $130K including your $80K for remodeling? That is a large cushion if it does. I would just cut expenses best you can and see how far you can stretch the dollars you have. Get your current home ready asap and have it listed as COMING SOON. That seems to help with offers. Thank the relatives and ask if they can hold that thought until you decide if you really need their help. I would not sell any equities.
inverter
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Re: Borrow from family or sell equities for cash

Post by inverter »

I’ve borrowed money from my dad before in a similar scenario at his HELOC rate.
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KlingKlang
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Re: Borrow from family or sell equities for cash

Post by KlingKlang »

It sounds like your $130k cash on hand will just about cover your expenses until your paychecks start coming in. You can use your credit cards to bridge some expenses like the car service.

People have different philosophies on family loans, personally I would avoid them if possible.

If you need some extra funds I see no problem with selling some (not all) of your equities if you promise to repurchase them after your old house sells.
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Lapalimi,

Thank you for your response. We have a family of five and a whole lot of stuff. We could cut costs some, need professional movers to do the bulk of it at our ages and with our outside demands.

The house is an older, substantial home with some old knob and tube. We need to redo some electric work, tear down walls and repaint. Again, we aren’t in a position time wise to DIY. Our house won’t sell with all of our stuff in it, but will sell quickly when we are out.

We can stretch the dollars and cut some costs, but if we are installing air conditioning, I’m afraid we won’t have the funds and/or won’t be able to keep the kind of cushion in our checking that we need and like.

I appreciate the views expressed re: borrowing from family, selling equities, and borrowing from family.

I’m leaning toward selling shares, preferentially the ones that have lost or gained the least. I’ll try to maintain asset allocation in the process and invest/ save once I’m working and have sold the house.

I’d rather not have to pay the capital gains taxes now, but on the other hand I saved and invested for a long time to. Hold up this sizable emergency fund, and a big move for the benefit of my family is probably a justifiable use.

Prefer to be self-reliant.

Thanks.
delamer
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Re: Borrow from family or sell equities for cash

Post by delamer »

If you prefer to be self reliant, then you have your answer.
02nz
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Re: Borrow from family or sell equities for cash

Post by 02nz »

LTCG is 15%. And you can pick out those lots that have the lowest gains, or maybe even harvest some losses. I would never take a loan from a family member to delay paying capital gains tax (which is what you'd be doing), esp. when that person has to draw it against their HELOC.
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whodidntante
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Re: Borrow from family or sell equities for cash

Post by whodidntante »

Perfect application of a margin loan. Transfer assets to IB so you don't pay absurd rates.
michaeljc70
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Re: Borrow from family or sell equities for cash

Post by michaeljc70 »

whodidntante wrote: Mon Jun 15, 2020 6:02 pm Perfect application of a margin loan. Transfer assets to IB so you don't pay absurd rates.
+1. Exactly my thought. And at the right place cheaper than your relatives LOC. 1.57% at IB last I checked for lower amounts. Perfect for short term borrowing.
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White Coat Investor
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Re: Borrow from family or sell equities for cash

Post by White Coat Investor »

catchup wrote: Mon Jun 15, 2020 3:35 pm Good afternoon. I need help with a first world problem.
I will share details. I hope it’s not impolite to do so on this forum.

We recently purchased a home and put down 125 k for closing costs. Moving will cost 20k. I owe 10k for first quarter taxes and haven’t received a 14 k refund for 2019.
We have 80 k in repairs anticipated but we may need to budget a substantial unanticipated additional amount to put in air conditioning while walls are torn down for electrical work.

I am a month out from getting a regular paycheck at a new job. 320k gross annual income.

We have about 130k in cash left over, but continue to have living expenses such as my 750 dollar 40k mile car service today.

We will be selling our old home once we move out. It’s worth 300k and we owe 25k on the mortgage, in a good market area, but timing will not be optimal for this market. Better in Spring then in August.

I have roughly 300k in a taxable account in equities.

My question for the forum is as follows: Should I sell equities to provide a cushion in our account and to pay for moving and repairs until we sell our old house, understanding I will pay capital gains, or should I borrow from relatives. Father in law offered 10k loan. Brother and father each have 50 k line of credit. Which is the most expensive and which is the lesser of 2 evils.

Home equity loans are not being offered at Wells Fargo, where we have our mortgage, or at USAA right now. Dollar, where we have our new home, won’t offer home equity loan for out of state home.

Are there other options for personal loans that are reasonable.

I feel we have been responsible with saving and didn’t buy a million dollar home that’s way over our head, but I do need a bridge until we can out of our house and sell it.

I also need to contribute 26k to a solo 401k by the end of the year. But I’m waiting for a cash cushion After sale of home first.

Thanks in advance.
I'm lost. You have $130K in cash and need $80K+ ? Why not wait to sell stocks or borrow until you've burned through that $130K? Cross that bridge when (if?) you get there. I bet you don't given your income.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Thanks for additional input. Reading responses helped me realize where I stand with respect to borrowing from family. Appreciate them, but using other people’s credit to avoid paying some taxes I now realize doesn’t sit right.

What is a margin loan? What is IB?
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Sandtrap
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Re: Borrow from family or sell equities for cash

Post by Sandtrap »

delamer wrote: Mon Jun 15, 2020 5:39 pm If you prefer to be self reliant, then you have your answer.
+1
There are varying degrees of being "self reliant".
1. Completely self reliant, as though there were no other resources than oneself.
2. Self reliant, but in times of "need", using other people's resources with reasons.
3. Generally self reliant. But, perhaps with occasional subsidies or small consistent subsidies from others.
4. Not self reliant. Not financially independent.

OP: IMHO, I would make it work somehow without borrowing from family. There's always a way.

j :D
Last edited by Sandtrap on Mon Jun 15, 2020 8:09 pm, edited 1 time in total.
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michaeljc70
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Re: Borrow from family or sell equities for cash

Post by michaeljc70 »

catchup wrote: Mon Jun 15, 2020 6:21 pm Thanks for additional input. Reading responses helped me realize where I stand with respect to borrowing from family. Appreciate them, but using other people’s credit to avoid paying some taxes I now realize doesn’t sit right.

What is a margin loan? What is IB?
IB is Interactive Brokers. They are a brokerage with cheap margin loans. To get the best rate you need an account that has a $10/mo minimum commission (they have accounts with no minimum with higher rates). But $120/yr is chump change compared to what you would save. If you don't have any commissions they charge you the $10/mo. There is no need to transfer your whole account. There will be no tax implications if you do an in kind (stock/ETF/mutual fund) transfer. Current rates are https://www.interactivebrokers.com/en/i ... WjEALw_wcB. If you are not familiar with margin, you can generally borrow half of what you have in marginable securities. I wouldn't cut it close though in case the market tanks. For example, say you need 50k. If you move $100k in stocks to IB you can borrow $50k. But like I said, better to be conservative (though a drop doesn't instantly trigger a margin call...there are thresholds).
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

White Coat Investor,

Yes, was trying to cross the bridge when we get there, but things like home equity loans and borrowing from family take some advance planning

It all adds up. I owe 10 k in First quarter taxes, ? Plus more second quarter, 80k on repair contract as it stands, 20k moving expenses, monthly credit card bills for next couple months. We are used to 20-50k in checking to avoid worrying. With the above, we could still probably manage without borrowing, but with possibility of scraping the bottom of our checking account. Health insurance, atls, car repairs, are all sitting on my credit card balance...

Plus the last 20-30k k is in my wife’s account that I don’t have easy access to yet ( its like pulling teeth).

We dont have the quote for AC installment but if that costs another 20 or 30 k or more, then I definitely need to have some contingency plans.

But yes, I am trying to stretch it out until I get some money coming in and I’m past the major expenditures.

I was also expecting my tax refund of14k but covid got in the way. We file by paper because we had identity theft electronically, even using its provided secret codes. IRS is way behind.
Last edited by catchup on Mon Jun 15, 2020 7:00 pm, edited 1 time in total.
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Thanks, Michaeljc.

Sounds very reasonable.

I do think that transferring money out of Vanguard without a close connection with a bank or broker whom I know may be out of my zone of comfort and definitely outside my wife’s.

Otherwise, this is exactly what I would need. Just want to use my home equity or assets as collateral for some short term needs for a couple months.
hudson
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Re: Borrow from family or sell equities for cash

Post by hudson »

catchup,
Wow, you have a lot of balloons in the air.
I would not rely on family for anything. I would work it out without borrowing from them even if I had to put a project or two on hold. Why? Because, you have enough resources to survive without help.
Bogle_Bro
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Re: Borrow from family or sell equities for cash

Post by Bogle_Bro »

How about a zero APR credit card? BoA approved me for 20k , 0apr for 18 months ("bankamericard")
Lalamimi
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Re: Borrow from family or sell equities for cash

Post by Lalamimi »

love your comment "at our ages"! We were 64 and 66 when we moved two houses in to one. We emptied one, moved in a week before Christmas, had a family party of 25 the week after Christmas, had the entire house interior painted 2 days later (with one household of stuff in it), moved all the stuff of the larger home in May, 200 miles away, used our car trailer with new "sides", a uhaul and movers. Fun stuff! Did you know if you have your refrigerator in a uhaul, you can bounce it out on an air mattress! We are in our 5th and hopefully last house. Good luck!!
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TxAg
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Re: Borrow from family or sell equities for cash

Post by TxAg »

Well, you came to your senses.

My pride wouldn't let me borrow from family unless my kids were at risk of starving.
Triple digit golfer
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Re: Borrow from family or sell equities for cash

Post by Triple digit golfer »

You make $320k a year and have $300k available. Why would you borrow money from anybody?
michaeljc70
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Re: Borrow from family or sell equities for cash

Post by michaeljc70 »

catchup wrote: Mon Jun 15, 2020 6:57 pm Thanks, Michaeljc.

Sounds very reasonable.

I do think that transferring money out of Vanguard without a close connection with a bank or broker whom I know may be out of my zone of comfort and definitely outside my wife’s.

Otherwise, this is exactly what I would need. Just want to use my home equity or assets as collateral for some short term needs for a couple months.
Fair enough. Do you have a close connection to Vanguard though? I transferred all my assets from Vanguard due to issues. You need to do what you feel comfortable with. I wouldn't feel comfortable making $300k+ per year and borrowing from family but all relationships are different. All brokerages are insured and serve the same purpose with varying degrees of fees, customer service, nice websites, etc.
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Hudson,
Yeah, balloons in the air sums it up. That’s probably why I’ve been preoccupied with running different scenarios despite having plenty of options and resources.

Michaeljc,

I’d work with a vanguard broker, but it looks like their base fees for that kind of thing are 6 percent plus interest fees.

Golfer,
I wasn’t really looking at the 300,000 as liquid. Trying to build assets, be tax wise, compound, avoid churning. We saved so much cash for this transition that I felt we shouldn’t have to sell assets (sell the farm). But accessing those funds isn’t that big a deal, I now realize.

0 percent credit card is a great idea if we can access large sums.

Thanks for all of the input.

We should be fine without borrowing.
Breezy
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Re: Borrow from family or sell equities for cash

Post by Breezy »

When we replaced our AC last year, the company offered 0% financing for a year. We didn’t expect this when we had them in for a quote. It turned out to be a Wells Fargo offer. We took it & paid it off within that time. I bet it’s a common offer.
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Re: Borrow from family or sell equities for cash

Post by bloom2708 »

delamer wrote: Mon Jun 15, 2020 5:39 pm If you prefer to be self reliant, then you have your answer.
+1

Sell some stocks in taxable. Cherry pick lots with smaller gains and pair with losses to have a "close to net $0 gain" as possible.

Replace when the house sells.
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bironology
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Re: Borrow from family or sell equities for cash

Post by bironology »

As others noted, it’s a personal philosophy question, but consider that your $300k of equities afford you great flexibility in your life. Now seems to be a good time to capitalize on that flexibility.
Jack FFR1846
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Re: Borrow from family or sell equities for cash

Post by Jack FFR1846 »

This isn't as hard as you're making it out to be.

1) find a rental in the new location.
2) Move to the rental.
3) Sell the old house
4) Get the new house fixed up once cash starts coming from the new job/house sells.
5) In a year (which it sure sounds like the work you plan will take that long), move to the new house

All of this can be done without much of a loan.
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Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Thanks for the additional input.

Good idea about looking into 0% financing on AC as well as 0% credit cards.

Would be nice to have low interest line of credit; I'm looking into that as well.

Agree there is no need to borrow.

I agree that we've given ourselves flexibility and if needed, I can take advantage of the flexibility wisely, and will sell lots judiciously if necessary.

Part of concern about selling equities had to do with the downturn. Not as much of a concern since the bounce back. I didn't like the idea of, not only paying capital gains, but also selling at a loss, after saving a quarter million dollars in liquid assets to avoid that necessity.

Overall, I do think we are in a good position. The work in the house is expected to take 6-8 weeks, so we are going to plan for a house to house move, one move only. With three kids and busy schedules, we want as smooth a transition as possible and are not planning on renting. The wife and kids don't need the additional stress of another transition.

Renting was a possibility if we truly were not in a position to finance a house purchase and move, but is no longer a consideration for our particular situation. I do appreciate the thoughtful suggestion.
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Hi. Sorry to beat a dead horse, but I wanted to get input on another alternative solution for accessing cash temporarily.
For review, I had saved a huge amount of cash for a home downpayment and moving expenses while awaiting start of new job. However, between taxes, moving expenses, home repairs, ongoing recurring expenses, I will be close to exhausting my liquid cash resources before getting a couple regular paychecks under my belt and paying off the major expenses.

Options considered included borrowing from family or using their established lines of credit, selling equities from a taxable account. Other options suggested included trying to reduce or delay moving expenses, using 0% credit cards, margin loans (which I understand to be starting my own line of credit with existing assets as collateral), or trying to ride it out.

I have discovered a new option and wanted feedback. I expect to have somewhere between 0-10k left in checking when all is said in done by mid July or August, as paychecks start coming in. I essentially need some overdraft protection or a backstop to avoid hitting bottom in our checking account. I am strongly considering utilizing my Roth IRA which has about 75k. I will withdraw this money for about 6 weeks. My understanding is that I can do so without penalty as long as I redeposit it within 60 days. If I need more time, I can access my wife's Roth IRA with 100k, or roll over my 401k from Fidelity (350k) and deposit it into Vanguard within 60 days.

We will be moving by mid-August, at which time I will put the house on the market (275,000) of equity and will be established in my new position, with no more major house repairs, down payments or major moving expenses thereafter.

The downside is that I will have some money out of the market for a short time which could be a plus or a minus depending on the market. I will also have to be all over the deadlines. On the plus side, I will avoid depending on family. My father in law is already (generously) offering assistance and telling us how to do things, and I'd like to avoid family interference or liabilities. Although I don't like to touch retirement, these are my hard earned assets and I am utilizing them for practical purposes. I will avoid capital gains taxes and if I plan to take money out of the market, it would be better to do so without incurring taxes.

Do I understand the tax laws correctly? Will I avoid a penalty if these funds are redeposited in 60 days.

Make sense?

Thanks in advance for any input.
Breezy
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Re: Borrow from family or sell equities for cash

Post by Breezy »

As I look over your initial post and note your situation and income, I'm actually thinking the simplest thing for you to do would be to tap into your brother or dad's credit line. (How frustrating you haven't received your tax refund and yet need to make a tax payment, btw!)

I also think withdrawing money from your Roth is ok, but with moving & associated expenses, I suspect you are less likely to "pay the Roth back" than to pay back your dad or brother.

If your family has been affected by covid, you could also take money from a traditional IRA without penalty, although you would have to pay taxes on the money eventually (within three years, I think) or re-deposit the money within three years. Lack of childcare is a reason. Has that affected you?

Quick info (copied): As a result of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020, meant to provide economic relief amid the COVID-19 pandemic, certain temporary changes have been put into place for the tax year regarding retirement plan withdrawals and tax liability.

Any changes apply to what the law considers to be an eligible participant, namely, a person who has been diagnosed with COVID-19, has a spouse or dependent diagnosed with COVID-19, or has experienced a layoff, furlough, reduction in hours, or inability to work due to COVID-19 or lack of childcare because of COVID-19.

Eligible participants can take an early withdrawal of up to $100,000 from 401(k)s, 403(b)s, 457s, and traditional IRAs without paying a 10% penalty. An individual has up to three years to pay the taxes on the early withdrawal or to redeposit the money back into their retirement account (versus the standard repayment requirement of 60 days).


Honestly, though, I would just borrow the money and set up immediate, automatic monthly payments to your brother or dad, with the intention of paying it back much quicker.
Topic Author
catchup
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Re: Borrow from family or sell equities for cash

Post by catchup »

Thanks for the reply.
Good thought about the covid exception. I don't think it applies to us. I could make an argument that I contributed to child care, but it is not the main reason I have taken time off, and may wife is not currently working outside the home.

I'll keep an open mind about drawing on family's credit line, but would rather not subject family to any risk of non-repayment.
02nz
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Re: Borrow from family or sell equities for cash

Post by 02nz »

The 60-day IRA loan should work, although the consequences are rather severe if you miss it, so set multiple reminders on multiple devices! I would personally prefer this method to having a family member take out a loan for my expenses. Assuming you currently have some money allocated to bonds, you can avoid being "out of the market" by shifting bonds toward stocks (preferably in tax-advantaged) such that you overall asset allocation remains the same.
delamer
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Re: Borrow from family or sell equities for cash

Post by delamer »

02nz wrote: Thu Jun 25, 2020 12:09 pm The 60-day IRA loan should work, although the consequences are rather severe if you miss it, so set multiple reminders on multiple devices! I would personally prefer this method to having a family member take out a loan for my expenses. Assuming you currently have some money allocated to bonds, you can avoid being "out of the market" by shifting bonds toward stocks (preferably in tax-advantaged) such that you overall asset allocation remains the same.
Agreed, especially since it sounds like your FIL already is inserting himself in this process more than you’d like.

There are lots of variation by cultural background and just within particular families regarding sharing information and/or involvement in each others’ finances. But if you and your spouse stick with a policy of limiting the amount of sharing/involvement with your extended families, you’ll be happier.

When I was single, I appreciated having my parents as sounding boards for financial decisions. Once I got married though, that sharing stopped.
Living Free
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Re: Borrow from family or sell equities for cash

Post by Living Free »

catchup wrote: Mon Jun 15, 2020 6:53 pm White Coat Investor,

Yes, was trying to cross the bridge when we get there, but things like home equity loans and borrowing from family take some advance planning

It all adds up. I owe 10 k in First quarter taxes, ? Plus more second quarter, 80k on repair contract as it stands, 20k moving expenses, monthly credit card bills for next couple months. We are used to 20-50k in checking to avoid worrying. With the above, we could still probably manage without borrowing, but with possibility of scraping the bottom of our checking account. Health insurance, atls, car repairs, are all sitting on my credit card balance...

Plus the last 20-30k k is in my wife’s account that I don’t have easy access to yet ( its like pulling teeth).

We dont have the quote for AC installment but if that costs another 20 or 30 k or more, then I definitely need to have some contingency plans.

But yes, I am trying to stretch it out until I get some money coming in and I’m past the major expenditures.

I was also expecting my tax refund of14k but covid got in the way. We file by paper because we had identity theft electronically, even using its provided secret codes. IRS is way behind.
So does your wife like watching the family struggle financially (admittedly, your struggle is more of an optimization than a true struggle) while she sits on a pile of cash? What gives??
lstone19
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Re: Borrow from family or sell equities for cash

Post by lstone19 »

catchup wrote: Mon Jun 15, 2020 3:35 pm Moving will cost 20k. I owe 10k for first quarter taxes and haven’t received a 14 k refund for 2019.
Too late to do anything about it this year but assuming you knew you would owe estimated taxes, why didn't you apply the 2019 refund to 2020 estimated taxes? That would have all counted towards the 1st quarter with any excess rolling over to the 2nd quarter (and so on). As I said, too late but something for others to think about if in the same situation.
TimeTheMarket
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Re: Borrow from family or sell equities for cash

Post by TimeTheMarket »

At your age, income, and assets the very idea of borrowing from family like a 20 year old behind on rent seems outrageous.

401k loan, personal loan, credit card cash advance, or sell stocks.
Username is not serious :)
Olemiss540
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Re: Borrow from family or sell equities for cash

Post by Olemiss540 »

You have 300k in a taxable account. Why do you need anything from anybody?? Who cares about taxes on gains, just liquidate as you need it and try not to liquidate more than necessary. Quit letting perfect be the enemy of good considering the stress and change you are under.

Dint let the tax tail wag the happiness dog here....
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
Freetime76
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Re: Borrow from family or sell equities for cash

Post by Freetime76 »

Olemiss540 wrote: Thu Jun 25, 2020 7:05 pm You have 300k in a taxable account. Why do you need anything from anybody?? Who cares about taxes on gains, just liquidate as you need it and try not to liquidate more than necessary. Quit letting perfect be the enemy of good considering the stress and change you are under.

Dint let the tax tail wag the happiness dog here....
(A) Wife here.
Exactly, to the above post. I hear a few folks chiming in as to why the wife is being such a stick in the mud...wanting to hang onto her small Roth. :D Good for her!!! :sharebeer

No way is my husband getting his fingers on my retirement just to “maximize” some desirable gain or return, nor to minimize some undesirable such as taxes or interest. No way would he even ask - he gets extra money...he “buys himself some retirement 8-) ). No, I would not be trying to play this complicated shell game.

Correct, I do not fully under all the ins and outs that y’all sophisticates are debating. We keep our finances simple so that I don’t need 6 spreadsheets plus a flow chart with possible outcomes to get what is going on.

I DO understand the following:
1. Slow and steady wins the race. Roth wins over time. (And nobody ever “accidentally “ fails to put the money back....never :oops: ) It’s taken years to get that money in. It IS a sacred cow in our household - we’re about 40ish - and it is not to be touched or played with.
2. A woman is likely to outlive her husband, and is smart to take a hand in her own future security...
3. My sensing a risk and/or what is an overly complex-likely to blow-up-99.99%of the time not worth the trouble and hassle is waaaaayyy better than my husband’s.

Your plan from the beginning is too complicated for me. Get a (bank) loan, or don’t. Use your taxable money, or don’t. If you don’t have enough between the two...gasp...wait. No central air? Get a few window units. Yes, it’s more convenient to do all the updates now, but so? Think outside of the box. This is Bogleheads Land - where I thought people lived within/below their means to be able to have security and become wealthy. You’re plan smacks of spend-spend and not being able to say no to yourself, or trying to be too smart. What are you going to do when the construction drags on? Or has unknown issues pop up? Or regular cost overruns? As wife, I’d wonder, are you/we getting a loan to put the Roth money back then? (I.e. Her Roth might just be the one thing your wife actually said No on...amongst other concerns. Have you asked?).

Apologies for the simplistic post. More complicated has never served me well. One thing at a time, plan plan plan, analyze and mitigate risks - this last for you and your wife especially.
Topic Author
catchup
Posts: 251
Joined: Sun Apr 20, 2008 12:15 pm

Re: Borrow from family or sell equities for cash

Post by catchup »

Thanks for all of the replies.
My wife and I have been working together to get the house in order and stay financially prepared, and avoid living beyond our means.

We've linked all of our checking accounts so we now have access to our funds, it was just a matter of going through the logistics, and I was a little more anxious to do so right away than she was. Not a big deal.

The construction has dragged on. I am now getting regular biweekly paychecks, the IRS sent my $14,000 refund, and we have a little extra time before having to pay movers and final payments for needed repairs.

So, no need to borrow from retirement...yet...I just needed to understand my options for short term cash needs. I am glad that we are able to keep it simple as well and avoid borrowing.
finite_difference
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Re: Borrow from family or sell equities for cash

Post by finite_difference »

I wouldn’t have a problem asking my parents for a temporary loan if I was sure that I could pay it back and they could easily afford it. Not sure I would feel comfortable asking any other family though.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
MBB_Boy
Posts: 195
Joined: Sat May 12, 2018 4:09 pm

Re: Borrow from family or sell equities for cash

Post by MBB_Boy »

I like the 60 day IRA option. I've done it twice before, and it was very simple. Just have to make sure you don't miss the deadline, and realize you can only do it once every 365 days, no matter how many IRAs you have
milktoast
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Joined: Wed Jul 10, 2019 8:17 pm

Re: Borrow from family or sell equities for cash

Post by milktoast »

It only takes a week to get cash from taxable brokerage to checking at brick and mortar.

I went through a similar squeeze lately.

Don’t pay early and run cash accounts down. Wouldn’t be surprised if you don’t need to sell in taxable at all.
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willthrill81
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Re: Borrow from family or sell equities for cash

Post by willthrill81 »

finite_difference wrote: Sat Aug 01, 2020 2:31 pm I wouldn’t have a problem asking my parents for a temporary loan if I was sure that I could pay it back and they could easily afford it. Not sure I would feel comfortable asking any other family though.
Same.

We did borrow a relatively small amount from my MiL when we bought our first home, but we repaid it in about a year with interest. But generally speaking, I don't think that it's a good idea to borrow from or loan to family members.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
RudyS
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Re: Borrow from family or sell equities for cash

Post by RudyS »

Maybe I missed something, but if I had to sell "equities" for a short term need, I'd look to sell bonds rather than stocks so as not to have to pay capital gains tax, or worry about time out of market. Although tax loss harvesting is also attractive.
inbox788
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Re: Borrow from family or sell equities for cash

Post by inbox788 »

catchup wrote: Mon Jun 15, 2020 3:35 pmI have roughly 300k in a taxable account in equities.
In all the posts so far, I didn't come across the cost basis (but maybe I missed it). I would take into account the cost basis and tax liability.

What are the holdings? Are there bonds, as someone mentioned? Are there different lots with different tax liabilities? Depending on when you purchased them, the gains may not be all that much.

The other consideration is the time out of the market, but that seems like a somewhat short period, and with the current run up, the timing might not be bad to take some off the table. Or call it a rebalance that's overdue.

Which brokerage? Margin loan is an option. Does anyone compete with Interactive Brokers?

https://www.interactivebrokers.com/en/index.php?f=44427

Good discussion about margin levels to avoid margin calls discussed here...

Using IB margin to pay off mortgage
viewtopic.php?t=321270
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