Posted on: 06th Aug, 2009 08:27 pm
I currently have 3 credit cards at $15,000 each. We are paying at least $1000 a month for all 3 cards to basically make the minimum payment for each card. I have approximately $185,000 in the IRA. I am 52 and plan on retiring in 10 years or less. My income is good but we struggle making all the bills, like the house payment, utilities and food with the 3 large credit cards bills. I have no car payment but we do need a new car , however, I cannot afford one at this time. Every month is a struggle to make ends meet. My credit rating is suffering as well, due to late payments. And the credit have been raising our interest rates making our minimum payment go up. I know what put us here and we have made changes to stop that. We have been very frugal over the last 2 years, but it is still not enough. Fortunately we have been healthy, so we have not had any large medical bills. My thoughts are, take out enough to pay for at least 2 cards, then focus on paying off the other card. By paying off the cards quickly, I can then take a portion of the amount I was paying toward the cards and put it in my company 401k. I will get a match of funds from company, reduced income tax and will build up my retirement account, while being able to not stress out on making all my bill payments.
Hi bluesmantee,
Wihdrawing money from IRA is not a very good option, but considering your current situation, it could be worth doing it. You have been making only the minimum payment, that too late. This is only going to increase the total amount of interest payable for the debt. The idea of paying off at least 2 of the credit card debts using the money from IRA is good. It will make your finances more manageable. You can then concentrate on paying off the other credit card debts and make house, utility payments etc. It will help you improve your credit score over time. However, an early withdrawal from your IRA before the age of 59½ will result in a federal penalty of 10%, state penalty and appllicable income taxes on traditional IRAs.
Wihdrawing money from IRA is not a very good option, but considering your current situation, it could be worth doing it. You have been making only the minimum payment, that too late. This is only going to increase the total amount of interest payable for the debt. The idea of paying off at least 2 of the credit card debts using the money from IRA is good. It will make your finances more manageable. You can then concentrate on paying off the other credit card debts and make house, utility payments etc. It will help you improve your credit score over time. However, an early withdrawal from your IRA before the age of 59½ will result in a federal penalty of 10%, state penalty and appllicable income taxes on traditional IRAs.
It is never a good idea to draw from your retirement to pay bills...especially now. That market is ready to rebound. If anything, you should add money to it.
Hi bluesmantee,
your statement is little bit confusing. one side you are sying that you are earning good. otherside you are not paying your bill full & in time.
your thoughts for withdrawing from IRA may be a good option. but you need to evaluate various possible scenario & then go ahead with the best possible. right now several info is not shared by you.
your statement is little bit confusing. one side you are sying that you are earning good. otherside you are not paying your bill full & in time.
your thoughts for withdrawing from IRA may be a good option. but you need to evaluate various possible scenario & then go ahead with the best possible. right now several info is not shared by you.
That would be a bad idea.
If you encash your IRA, you will need to pay taxes and also penalty
If you encash your IRA, you will need to pay taxes and also penalty
i think property rates are at low right now. Therefore, bluesmantee is thinking about this option.
let him evaluate this option. it may be useful as he is purchasing a property at a very low price. panelty may be get cmpensated by tax benefits.
let him evaluate this option. it may be useful as he is purchasing a property at a very low price. panelty may be get cmpensated by tax benefits.
eric, you may be right. but for all practical purposes, withdrawal of money from IRA is never recommended
apple
I do not think you understood my post. I was saying that it was not a good idea.
I do not think you understood my post. I was saying that it was not a good idea.