People Are DRAINING Their Savings EVERYWHERE — Here’s Why

[00:00:00]I am absolutely buzzing because I just deposited my 401k.

[00:00:05]>> [crying] >> Yeah, yeah, yeah. I deposited my 401k cuz I took it all out so that I could pay off my credit cards because your girl was drowning.

[00:00:14]I was drowning in credit card debt because I had lost my job when I was traveling Europe. So, I had to put everything on my credit cards and I just like couldn't do it anymore. Literally crying to my friend. I was like, "What do I do? Like do I like file bankruptcy?

[00:00:28]Like do I take out like a personal loan?

[00:00:30]I just like don't want to pay anybody back. Like I just That was like the whole goal is to just like be done with this. Like I just don't know what to do." She's like, "Wait, you still have a 401k from Warner when we worked there."

[00:00:39]Cuz we worked at Warner together. And I was like, "Yeah, why?" And she's like, "Pull it out." She's like, "Take that out and pay it." She's like, "You know that you're going to get a job soon again and like you're just just aggressively put into your 401k then."

[00:00:51]And I was like, "You're brilliant." Cuz I'm like, "When I pay my credit cards off, I can just put it back into a 401k." Cuz I was paying like $1,300 a month in credit card debt.

[00:01:00]>> Jeez.

[00:01:01]>> That's a minimum, mind you. So, I literally was not even making a goddamn dent with the 1,300. I was like, "I can't do this anymore. Like literally can't do it. It's not worth it." Pulled out my 401k and I just deposited the check and I am I like literally feel like I can breathe. I just feel so happy because now I feel like I can like live my life and really not make money just to pay off debt that isn't even getting paid off because of the interest rate.

[00:01:29]>> Yeah.

[00:01:29]>> This what I've done that feels good to me was to take out my 401k. It's an option. I feel like rich people do this all the time. So, like why are we not talking about it more? And I hate that people don't talk about debt enough. Um because everyone has it nowadays.

[00:01:45]Everyone.

[00:01:46]>> Yeah.

[00:01:46]>> I just feel so excited.

[00:01:50]Shout out to my friend who like told me about this because I didn't even think about it.

[00:01:53]>> Yeah, and shout out to the creator of this video. Listen, I'm not a financial advisor or expert in any kind of way, but what I can tell you is a lot of people across the United States are emptying out their 401k's. And listen, while I typically don't recommend you emptying out your 401k for any reason, I think the best reason she did this in this situation was to clear out debt, right? And in any time the the if any reason you would do it is to pay off debt, especially high interest debt in most situations. Not necessarily a mortgage or, you know, liabilities that can be looked at as assets, but when you talk about interest on a credit card, you're basically paying more in interest than you possibly could earn in terms of money within your 401k. So, in this situation, I would actually give it a pass. Like I said, it depends on the situation. I've seen people empty out their 401k's just to go on vacations, on concerts, and buy clothes, and all this randomness, but ultimately it's just a waste of money. So, it's crazy. This is just a trend that I see all over the internet right now. People are clearing out their retirement. And before I get into this clip right here, so many people, I'm going to say this right now, are not going to be able to retire within the next couple decades. It's crazy. It's kind of scary when you think about it, but ultimately, hey, you make the own decisions, the best decisions that works for you within your life.

[00:03:10]>> Babe, why did you cash out your 401k?

[00:03:12]>> So, in 2019, I cashed out over $100,000 out of my 401k to invest in real estate.

[00:03:20]And that's because 401k's are the single greatest scam that anybody can invest in. Now, for 99% of people, if you have no discipline financially and you don't want to invest your own money, for sure, get your employer match.

[00:03:33]>> Yeah.

[00:03:33]>> That's fine. But what 401k's were designed for is the US government literally said, "Most people don't have enough discipline to actively invest money on their own, so we're going to create a program that forces people to get into equities, aka the stock market." And so, the 401k is designed for you to not pay tax right now, and then draw on it later at 65, where you're supposed to be paying less tax.

[00:03:56]But, the issue is I'm going to be really, really rich at 65 years old, and I'm going to be in a higher tax bracket.

[00:04:02]So, you are literally having no benefit to having a 401k because you have zero control with that capital that's inside the vehicle of the 401k. So, look, I'm not your financial advisor. I'm not giving financial advice. If you want to ride that 401k, do it. I'm just saying that if you want to understand how to actively invest your money in real estate, in businesses, and stuff like that, >> Basically, buy his course. That's basically what he was about to say, right? Like, I'm sure he's selling some type of product, some type of course, or whatever the case is. And, you know, I get it, you know? Like, he 401k is not the greatest investment vehicle ever, right? It's not 100%. There are, you know, situations where, you know, 401k works for people and where it doesn't work. However, this notion that is completely useless and people don't retire off of 401k and it sucks because you got to pay taxes later versus paying it now, is basically factually untrue.

[00:04:57]Because, if you think about it, 100%, there are benefits to a 401k, and there are benefits to just a regular taxable brokerage account, if you want to do it.

[00:05:05]But, the best, of course, we know is the Roth IRA, but ultimately, you still got to pay tax. You can't avoid the taxes, no matter how you want to, you know, flip it. And, he's investing in real estate, great, 100%, amazing. But, ultimately, it just depends on what you prefer. So, it's crazy. This is why financial education is needed within like school. Like, they don't teach these different things in this high school or college or whatever. You have to learn it. You have to learn it on your own through life. I guess there's college courses on it, but it sucks.

[00:05:34]This video right here is absolutely bizarre, though, guys. Check this out.

[00:05:38]>> So, I am um in one of my old jobs, I have a 401k, and they're about to um they're about to messing with y'all retirement.

[00:05:49]So, talk to your accountant or whatever the case to figure out how to get your money pulled out, right? Of these 401Ks and all that kind of stuff.

[00:05:57]So, I contact the folks. Let me go ahead and pull this out.

[00:06:02]Do you know just on the withdrawal I lost $5,000?

[00:06:08]>> Yeah.

[00:06:09]>> I lost $5,000.

[00:06:16]So, they sent me this notice. Been sending me this notice.

[00:06:20]Big bold print. This is my amount. Cool.

[00:06:23]Cool. Cool. So, time for me to go ahead and withdraw. Oh, no. No. No. Look at the small print.

[00:06:29]Because you didn't vet it.

[00:06:31]That's not your true amount.

[00:06:33]We're going to knock off several thousand.

[00:06:35]>> Yeah.

[00:06:37]>> Off the top.

[00:06:42]And then on the transfer they take a percent.

[00:06:47]And then the California takes a percent.

[00:06:51]And then to top it all off these jokers sent me a tax notice.

[00:06:58]So, then I'm going to have to pay taxes on America's really not a fair place.

[00:07:13]It's really really hard to to do things right here.

[00:07:19]That's my money.

[00:07:22]>> Yeah.

[00:07:25]>> You gave me a whole booklet.

[00:07:29]And and explained to me if I sign up for this I get X amount of of this and then you send me the notice I get this and then you're like, "No. Got you."

[00:07:41]You conned me out of my money.

[00:07:45]And then you use all these big words and these big jargon and all of these things to make it sound like it's just normal.

[00:07:53]It's not normal for you to take money from me that I worked for when it's just sitting in a an account.

[00:08:02]Like stop trying to make it seem like you're doing me a favor by stealing my money.

[00:08:10]And the reason why I have to move this is cuz you guys are going to steal my money again.

[00:08:16]They're making it really cuz it's really really complicated.

[00:08:19]>> Yeah, and while I feel her pain, I'll be quite honest with you. I do I sympathize with her or empathize, I guess is the word, whatever the case is, right? I do, 100% because I feel her pain in today's economy. We know a lot of people are dealing with a lot of the aspects of what we see in today's situation. I understand 100%. But this is exactly why I say financial education is very important in today's situations. Too many times, too many times I see this where people don't understand how the system actually works and they think that just oh, I'm going to invest in my 401k and I'll be able to take that money out anytime without getting any kind of penalties and not paying taxes on this. Don't forget this is pre-tax money that you're putting in. You don't have to pay taxes on it until you begin to withdraw. And once you do begin to withdraw, it's taxed as a ordinary income at that point. And that's at 59 and a half. So, you know, those are years and years that that money is in that account. It is growing, right? So, yes, you will have more money at the end versus you do at the beginning, but ultimately, you still have to pay taxes on any of the money that you take. And you take a penalty if you decide to withdraw early. That's just how the system fundamentally works. This is why I say financial education is important in today's situation, guys.