So it’s time for the annual Required Minimum Withdrawal (RMD) from the big IRA, which resides with Fidelity. Actually, I had to accelerate the drawdown by a few weeks, because I’m running out of money…waiting for the scheduled drawdown date in mid-September risked bouncing utility and car loan payments.
The car loan is the problem. Last fall when I bought the car, I put $4,000 down on it, which I could afford. What I couldn’t afford is the $400-a-month payments over the next five years.
Net 2018 annual income, based on the RMD and Social Security, will be $35,657. Net 2018 expenses, if they remain the same as they have been over the past 12 months, will be $36,899: a fine shortfall.
Payments are $194 twice a month: almost $400 a month, except…they’re set up to go out biweekly, meaning there are two extra payments a year, for a total of almost $5,044 a year.
I could probably cut the amount I spend by a couple hundred bucks a month: lay off Gerardo; buy cheaper dog food (or adopt out one of the dogs); eat more beans, rice, and pasta; grow some vegetables; stay out of Costco and cancel the Costco membership; cancel the Amazon Prime membership. That still wouldn’t make up the shortfall.
And…y’know…for reasons unknown, no substantial extraordinary costs have happened this year.
So even if I could cut $400 a month from the budget, it still wouldn’t cover surprise medical bills, dental bills, house repairs, car repairs, clothing, vet bills, and God only knows what else.
Somehow, then, I’ve got to get rid of that shortfall…and that somehow would be by getting rid of the auto loan.
One is not limited to the legally mandated RMD…one could (after all) draw down more than that.
Wonder-Accountant, however, pointed out that The Copyeditor’s Desk, an S-corporation, owes me money from a series of loans to it. If I drew a fair amount of it, I’d have to draw down that much left from investments. And the boss man at Stellar Financial pointed out that I could take the remaining cash out of an old Roth IRA. It would mean that much less would be earning tax-free…but the two strategies taken together would raise enough to get rid of the burdensome loan without incurring much tax liability.
Several expensive upkeep items are simmering on the burner…
• The house needs to be painted: got an estimate of $3,000, which is probably about right.
• A tooth hurts mysteriously. Whenever we figure out what’s causing the pain, that’s likely to rack up a stiff bill: $1,000+++
• The pool still needs to be replastered and the pump replaced: $4,000 to $6,000
Holy mackerel. Maybe I should draw down an extra three grand for the painter now, while shares are still worth something; then pay off the car, thereby leaving enough to pay for one other major expense this year.
If you have to sell stocks to unload a damn debt, this is the time to do it. The stock market isn’t going to stay up forever. Even under the best of circumstances, what goes up must come down. And we are decidedly not in the best of circumstances. Sooner or later, having elected a mentally unbalanced bully to the highest office in the land is going to come back to bite us all…