ST Alpha - "color of money chat q: should they take money out of their retirement account to pay down high-interest credit card debt?" (Reading a Post)

SlickerTalk
Search Archives
The Leaderboard
The FAQ

Down to Post

Backboards:

Posts: 167

color of money chat q: should they take money out of their retirement account to pay down high-interest credit card debt?

Posted by poxie (aka chris) Oct 27 '11, 10:12

HIGH INTEREST CC DEBT VS. RETIREMENT SAVINGS

Hi, I'm new to this chat, so I apologize if this is an area you've covered extensively in the past. I am extremely frustrated trying to pay off CC debt and get some savings built up, and I'm contemplating withdrawing from my Traditional IRA (401K from a previous employer) to pay off some of the higher interest CC debt (maybe around $2,000). I have already tried to get the interest rates lowered, to no avail. What are your thoughts on this? I've listed some of my details below: Age: 27 Total Retirement Savings: $7,700 vested, an additional $3-4K not fully vested Total CC Debt: $6,000 Student Loan: $10,000 No car or house loan Credit Score: 672

Responses:

Depending on your tax bracket you're looking at paying in the neighborhood of 40% in taxes and penalties on the amount in order to pay off the debt. - pmb Oct 27, 10:26
If it's a one time withdrawal and you behave responsibly with the CC from then on, I would. - TWuG Oct 27, 10:17 3
- and pay the tax penalty on withdrawal? -- nm - loosilu Oct 27, 10:20 2
  - On $2k I doubt it's high enough to offset the gains you'd make in paying down the CC debt. -- nm - TWuG Oct 27, 10:46 1
    - I think it almost certainly is, actually. -- nm - loosilu Oct 27, 10:48
no. -- nm - loosilu Oct 27, 10:16
Ask Paul Newman to help you -- nm - Capstern Oct 27, 10:15
get a bank loan with a low interest rate to pay of the CC debt. Then cut up your cards -- nm - Evil Beaker Oct 27, 10:14
If you really want to pay off $2k of CC debt, that's just a year of belt-tightening for most people. - TFox Oct 27, 10:14 1
- seriously -- nm - poxie Oct 27, 10:14
no -- nm - psilotum Oct 27, 10:13 1
- this -- nm - 4,198,574,430 Oct 27, 10:15

Post a message top

color of money chat q: should they take money out of their retirement account to pay down high-interest credit card debt?

Replies are disabled on threads older than 7 days.