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Pay Off CC2 with Some IRA Money

August 23rd, 2017 at 09:23 am

Hope you all had a nice summer!

I've been contemplating cashing in some of my IRA to pay off CC2. I can afford the penalty. But I can't continue this treadmill anymore. I have to pay off something. There will still be a large balance in my IRA account.

Once that is done, I need to get down to business to pay off CC1. My goal is to have it paid off by end of Summer of 2018.

All that will be left is my student loan and mortgage.

7 Responses to “Pay Off CC2 with Some IRA Money”

  1. creditcardfree Says:

    I so understand how annoying debt can be. However, raiding your IRA money to pay it off, despite being able to afford the penalty is not financially wise. Your last post indicated you went on a trip to London. Can't someone who can afford that wonderful trip pay off $8K in credit card debt? At the very least stop your IRA contribution and send that money to the credit card, along with every other cent you can. Start retirement savings again when you have it paid off. This would at least save you the penalty!

  2. CB in the City Says:

    I agree with CCF; I wouldn't raid your IRA. Focusing on that one card is a tangible goal; throw every bit of cash you have at it, cut back in creative ways. It will go faster than you think if you really focus on it.

  3. My English Castle Says:

    CCF and CB are right. Stop the new contributions and think of ways to throw every cent at it. That penalty money is cash down the drain.

  4. snafu Says:

    Adding my voice to CCF, CB and MEC hoping you'll reconsider. The whole point of IRA is the wonderful magic of compounding contributions over the long term. The sums earned now will be needed to support your 35 + years of retirement. It's not a pile of money waiting for you to use in an uncomfortable situation. I don't know how clear your crystal ball is, you don't know your future need age 55-65. The reason the government assesses a penalty and charges tax on withdraws is to emphasis it as a poor choice.

    Where is all the money going? How can we help you reach your goal? What costs can be reduced short term to pay down debt? What do you have that is no longer used or needed that could be sold? What non essentials can be examined? I'm confident you can solve this problem without jeopardizing long term future.

  5. rob62521 Says:

    I hope you are paying attention to what these kind folks are telling you...don't take money out of your IRA. Compound interest is your friend and although you'd like to pay off your credit card, you need to find ways to cut other areas to get the money.

  6. Trying to get ahead Says:

    Thank you all!!!! You all speak the truth. However, yes the London trip was affordable and a once in a lifetime trip and I don't regret it for a moment. I am pulling all the resources together I can and formulating a pay-off plan. The IRA is on the table but not at the top. I was hoping for a windfall from the powerball last night (jk). I have the IRA decision on a sleep cycle which is why I posted my thoughts. You are right there are other ways and I am working through all the scenarios I can think of. Again, thanks for talking off the ledge Smile

  7. creditcardfree Says:

    Yea, we pulled you from the ledge! I'm not harping on your for taking a fabulous trip, just so you know. Smile
    So you are looking at a payoff time table of 12 months, right? Your side bar is probably not up to date, but based on the balance from January, you are looking at paying at least $705 a month to pay it off on that time table. It's probably more per month because of interest, guessing $725. What payment are you making now? Deduct that from the $725. That is the amount you have left to find in your budget to make this a reality a year from now.

    What expenses do you have that you would be willing to give up for a year? Hair coloring, nails, new clothes, magazine subscriptions, specialty foods, eating out...are any of these a possibility?

    How much is your IRA contribution? If you cut that out will it meet the amount you need. Beware that this could change taxes though. Which brings up that if you get a large refund, you could adjust withholding to get a smaller refund and put that change in withholding to the debt.

    Cheering you on!!

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