[DeTomaso] Heads up my friends, GTS may be for sale soon

[Christopher Kimball]

Dear Paul,

 

This is terrible news indeed.  Before doing anything rash, please consider these few thoughts:

 

The market is recovering and is up almost 40% from it's recent low point.  If you have anything in you or you wife's IRAs that has recovered to within 10 to 20% of its original value, or if you happen to have some of your allocation in a bond or bond fund that didn't get whacked (yes, there were a few that posted positive gains in 2008) or better yet, have some retirement funds in a money market fund or cash, consider using those funds for living expenses instead of selling your car.

 

Before you start saying what terrible financial advice that is, first, ask yourself what kind of hit you'll take trying to sell a Pantera in this environment.  If the price of the car is off by 35% or more, you're better off using retirement funds that have slightly increased or stayed flat over the last few years.  Yes, you'll pay taxes on the distributions, and yes, you'll pay a 10% early withdrawal penalty, but depending on your tax bracket, that's probably going to total somewhere around a 35% loss.  If your car is down by 35% or more, keep it and use the retirement funds!

 

The car is a lot more fun, and you can always work a little while longer to make up for the early distributions.

 

Also, many 401(k) plans have a loan feature allowing you to access the lesser of $50,000 or 50% of your vested account value.  Other than a small set-up charge and yearly maintenance fee, there is no cost to you, and the repayment can be stretched out to five years, and it's payroll deduction so it's easy.  The interest charged goes back into your own account, so, in essence, you become your own banker.  if your accounts are large enough, between the two of you there could be $100,000 available.  You do have to pay it back, however.  If you don't, the remaining unpaid balance becomes a deemed distribution, subject to the taxes and penalties mentioned above.

 

By the way, if you sell anything in your retirement funds that has only recovered to within 10 to 20% of its original value (as I talked about earlier), with taxes and penalties you'll still probably lose more than if you sell your car at a 35% loss, but the car is still more fun.

 

Best of luck.

 

Sincerely,

 

Chris
 
> From: rimov at charter.net
> To: deTomaso at realbig.com
> Date: Mon, 3 Aug 2009 16:19:10 -0700
> Subject: [DeTomaso] Heads up my friends, GTS may be for sale soon
> 
> Afternoon all my friends:
> 
> Another summer in Medford is dragging along and again we just can not seem to get going on our house project. Home prices are severely depressed in our area making it impossible to sell our house or rental and our investments like many others are virtually non existent. We purchased a really nice piece of property several years ago with the intent of building a modest home on it and we are feeling it we can not start the building process pretty soon we may never be able to with all the new building restrictions and fees being proposed by the city. My son is pretty unhappy living where we are, very small home and rooms with no back yard to speak of and my wife is discourages by our lack of progress. It may very well come down to having to put my car up for sale or abandon the project. I really love my car, especially as great as every thing is with it now, but I am at a very difficult crossroad that I feel like I need to do what is best for my family. So if you see my car for sale soon don't be to surprised or shocked. 
> 
> Thanks
> 
> Paul 
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