4 Things Millennials Should Never Sell for Extra Cash
Written by
Andrew Lisa
Edited by
Jenna Klaverweiden
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With summer finally here, millennials across the country are looking for extra cash to take their families on vacation, send their kids to camp, and spend some time — and money — at the shore, the lake, the campsite or whatever their warm-weather retreat of choice may be.
Some of them might launch side hustles or work extra hours, but for many others, the quicker, easier fix is to sell that old tennis racket, coffee table or power drill that’s been collecting dust and might be worth something.
That’s a fine idea.
A purge for profit is a great way to clear out clutter while boosting your bank account — but not everything should be for sale. Here are a few items millennials should not exchange for cash, no matter how tight money may be heading into summer.
Stocks in a Retirement Fund
The most important thing never to sell is any securities in a tax-advantaged fund where you’re growing a nest egg.
“First, don’t touch your retirement savings,” said Rhett Stubbendeck, CPCU, CEO and founder of Leverage Planning. “These funds are your future lifeline. I’ve had clients who withdrew money from their 401(k) or IRA, only to face penalties and taxes. This can really set you back. For example, one client took out $10,000 to pay off credit card debt, losing out on significant future growth.”
That $10,000 for a quick debt payment today could be worth closer to $40,000 in 20 years, presuming 7% returns, even without any further contributions. But retirement insecurity decades from now isn’t the only risk.
On top of a 10% early withdrawal penalty, the IRS withholds 20% to cover the income taxes you’ll owe for funds you tap from your nest egg before you turn 59 1/2. That means the $10,000 Stubbendeck’s client withdrew covered only about $7,000 of their debt payment.
A Life Insurance Policy
Second, never sell your life insurance policy.
“This policy is a safety net for your loved ones,” Stubbendeck said. “I remember advising a young father who considered selling his policy to cover immediate expenses. I explained how crucial it was to keep this protection in place for his family’s future. He realized it wasn’t worth compromising their security for short-term cash.”
According to Experian, you should also keep your policy because you could owe taxes on any profits if you earn more from the sale than you paid in premiums. Benefits like SNAP and Medicaid can also be threatened, debt collectors can come for your earnings if you owe money, and your privacy could suffer if the policy is sold and resold multiple times, as is often the case.
Then, there’s the uncomfortable fact that whoever buys your policy has a financial incentive tied to your early death.
Home Equity
Although home equity isn’t exactly something you sell, you do borrow money to access it in the form of a home equity loan or HELOC.
No matter what you call it, millennials should look elsewhere when they’re hard up for money.
“Avoid using the equity in your home as a quick cash source,” Stubbendeck said. “Home equity is a valuable asset that can benefit you in the long run. I once helped a couple who thought about taking a home equity loan for a vacation. I showed them the risks, like higher interest rates and potential for foreclosure. They decided to save for their trip instead.”
Family Heirlooms
Many millennials have reached the age where they have both aging parents and kids of their own — and if you have special, valuable treasures from the former that might one day become the birthright of the latter, don’t treat them like an old PlayStation or pair of ice skates that you put up on Craigslist for quick cash.
“Millennials should never sell family heirloom items,” said Melanie Musson, a finance expert with Clearsurance. “Not every heirloom needs to stay in your home forever, but if you’re going to sell something, there are some considerations.”
First, would another family member appreciate and treasure that item?
“You could break your cousin’s heart if you sell your grandma’s wedding ring,” Musson said. “If you don’t want something, consider offering it to relatives first. If the item is valuable, you can ask for payment or trade it for something else that serves you better.”
Second, don’t sell heirlooms just because you need extra money.
“If an item is special to you, keep it and figure out a different way to make money,” Musson said. “If you do decide to sell something, make sure it’s because you actually don’t want it and not because you’re desperate for some spending money.”
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