Reply to Is it ever a good idea to use retirement money to pay off debt?

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Reply to "Is it ever a good idea to use retirement money to pay off debt?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Yes, do it. 13k is not going to make a difference in retirement.[/quote]

False, especially if OP is younger than 40. Compound interest is our friend. [/quote]

blah blah blah. she needs a clean slate now, retirement is not a priority.[/quote]

That is an incredibly short-sighted way of looking at this. OP has 13k in credit card debt, 13k in retirement, and ~5-6k in other savings. [b]It makes NO financial sense [/b]to take the 13k in retirement savings and lose 5,330 of that in tax and penalty.

There have been several suggestions that make sense - personal loan, debt consolidation company, roll them over to a zero interest introductory card for a year. Or even just pay down the highest interest card with the savings amount and throw everything else at the rest every month.

Also, I would be especially hesitant to liquidate retirement under the guise of "we'll max retirement once this is gone", because there will always be a reason (excuse) that gets in the way. If they would magically free up a bunch of money to put into retirement once the debt is gone, then that magical bunch of money should be used to pay off the debt.

Try to find a zero or low introductory credit card offer, apply for a personal loan at a credit union or bank, or call a debt consolidation company. Someone will work with you, especially if you have 5-6k already to pay down the balance and more than enough in cash each month to make the payments. But liquidating what little retirement you have is, in a word, stupid. [/quote]

there is much more to money management than "financial sense", which is one of the reasons they have a saying penny wise, pound stupid.

for example, there is also psychological sense. it absolutely makes sense to get rid of CC debt in this particular instance. debt is crushing her right now, maker her life miserable. yes, she might lose some money that way in the long run, but it's worth it. the little money she has in the account right now, even with compound interest, is not going to make any difference in her retirement. but the CC is debt is making a helluva difference to her life right now.[/quote]

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