Best way to reduce my CC Debt - use our IRA?

[DJP0910]

Thanks for everyone's advice...I have laid out a payment plan month by month and see the debt drastically reduced by end of 2012. Thanks for all the sound advice!

[riverwed070707]

My first option would be to find extra work, stop contributions to college funds and retirement funds, cut living expenses to the bone and sell things. Once that was exausted I would only use contributions from a Roth. I would not use 401k or traditional IRA funds.

You really need to do this while experiencing some massive spending cuts in lifestyle. You will not become immune to over-spending until you detox from it. I am a firm believer that good personal finance is a behavoir issue and not a numbers issue.

Ditto this. I would (and have!) pick up a second job before I would sacrifice my retirement to pay off debt.

[YLTL_Dan]

Thanks for everyone's advice...I have laid out a payment plan month by month and see the debt drastically reduced by end of 2012. Thanks for all the sound advice!

Good luck! Just think, in two years you'll be able to tell everyone else how you paid off your $23k in debt, and you'll still have all of that money in your IRA! This path will be much better than taking a 'short-cut' by taking money out of your IRA, and it should change your money habits for the long term.

[gablab]

I would stop contributing to kids college fund.
Kids can take loan and go to school, but you wont have many choices if you wont have enough in retirement.
You should also think about looking for higher paying job and/or side job to increase income.

IMO priorities should be in following order:
1. pay of debts
2. save enough for retirement
2. save for kids college

I would focus on paying CC debts.

I agree with Hector. Paying your debts is definitely the priority. What you think you're saving on your retirement, you lose it double on the CCs. btw, check out McGill University in Canada. It's rated among the best universities in the world and it's way less expensive than in the Sates.

Cheers and good luck

[ahcjar103]

do NOT take anything out of retirement accounts.

if you really want to tackle your credit card debt and not jeopardize everything else in the process, you need to start thinking about ways to increase your revenues in addition to ways you can cut expenses.

[PetMom]

Never ever touch a retirement account - the penalities are almost punitive plus all the progress you have made to have that much in a retirement account.

Save to get an emergency fund going and not ever use a credit card again.

Then start paying them down.

House repairs?

Tough one. We just slowly, after getting an emergency fund established, chipped away at repairs and try to do it ourselves. This is tough, and you have to just get rid of having any granite counter tops or fancy steel appliances. We don't have a workable dishwasher, but have the $400.00 for one in ef.

The emergency fund is key.

[flipyourdebt]

You should consolidate all those credit cards into one, low interest loan. That would be the first step.

[DJP0910]

Been meaning to post back here to follow-up to my first post.

I am happy to say that we have paid off all our CCs. I want to say thank you to all those who replied to my initial post. You made me realize that I had to really buckle down on paying these debts and not just throw money at it now and then. We sacrificed vacations and delayed home repairs to get it done - but now the future seems MUCH brighter.

We still have plenty to do but just knowing that I don't have that weighted down feeling of CC debt is SUCH a relief.

Thanks again to all you for making me realize what needed to be done.

[neatdesign]

Been meaning to post back here to follow-up to my first post.

I am happy to say that we have paid off all our CCs. I want to say thank you to all those who replied to my initial post. You made me realize that I had to really buckle down on paying these debts and not just throw money at it now and then. We sacrificed vacations and delayed home repairs to get it done - but now the future seems MUCH brighter.

We still have plenty to do but just knowing that I don't have that weighted down feeling of CC debt is SUCH a relief.

Thanks again to all you for making me realize what needed to be done.

Congratulations!!! That's wonderful news -- good for you!

Now you just need to figure out what you're going to do with the $1250/month you HAD been putting towards debt repayment. Use it wisely!

[creditcardfree]

Congratulations! Glad to hear you didn't take money from your retirement to pay down your debt. Way to go.

[Baby_nurse]

Great job! Wow, I know you must feel a tremendous sense of accomplishment.

[Hoover]

I just took out a $37,000 loan from my 401K to pay off our credit card balances.

It was kind of a breath-taker to see my 401K drop from $117,000 down to $80,000. But I'll be saving over $200 per month and paying everything off in 5 years. Plus I'll be paying myself back.

[snafu]

DJP0010: Good on you for buckling down and getting those CC paid off without jeopardizing your retirement. I'm sure it was difficult but the future will likely be brighter without that debt albatross weighing you down.

Hoover, it's pretty serious to borrow against retirement with potential for serious tax penalties all the while jeopardizing your ability to support yourself as a senior since compounding is a major factor in any individual's plan. I wonder what was bought to create $ 37K of consumer debt and how much interest has already been paid. The research says that unless you stop using CCs consumers return to debt. It suggests it's necessary to struggle through the pay-off process and give every dollar a job sticking to *needs*, avoiding *wants* and watching for leakage. You know, the few bucks for a latte, fast food drive through, some unplanned, sale priced, purchase or a treat to give you a lift on a bad day etc.

Hoover, Wishing you success in beating down the odds and paying off the loan . Is it your plan to pay $700. per month or $ 325, bi weekly no matter what life's challenges throws at you?

[Manthony]

Use the extra money to start your own business. There is plenty you can do online without needing big loans. The goal is to not need a 401k or an IRA at all. These are made for the poor and middle class. Mainly the middle class, as the poor usually don't have enough to put away into a retirement account. The rich don't use them or need them. They use other means of generating and growing income. I'd take time to learn what this group does.

[Baby_nurse]

Use the extra money to start your own business. There is plenty you can do online without needing big loans. The goal is to not need a 401k or an IRA at all. These are made for the poor and middle class. Mainly the middle class, as the poor usually don't have enough to put away into a retirement account. The rich don't use them or need them. They use other means of generating and growing income. I'd take time to learn what this group does.

More than half of new businesses fail within the first 5 years. Those that survive take a long time to actually show a profit. The smart business owner puts money aside in various accounts,including a SEP-IRA's.