Unemployed and in Debt...Use IRA to survive and pay down debt?

[uncertaintimes]

Hi,
I am unemployed, living off of severance pay for about another month. After that, it is tap into the IRA retirement funds to survive. We have a lot of credit card debt and also a big equity line of credit on our home that we have fully used and paying down although it is all going towards interest at this point and not the principle.

I would appreciate someone's sound advice on the best way to proceed while my search for employment continues... I will need to use IRA funds to survive, I am also thinking to use IRA funds in paying off the credit card debt and then possibly refinancing but would rather not refinance as I have a 15 year 4.5% interest rate that I am now in year 5.

Should I pay down the credit line so I can borrow back from that to then pay down my credit card debt? What are my best options?

Any sound advice is welcomed and appreciated.
Jack

[Fizgig]

I would consider every possible option before paying off credit cards with an IRA. If worst comes to worst and you end up filing bankruptcy, if you keep your retirement accounts they will be protected. If you use the money but still can't find your way out, then you'll be truly starting at zero.

Best of luck to you.

[PetMom]

The equity line of credit or loan is of high importance also.

I agree with protecting the retirement. Are you going to take it all out, is it a lot (which would be hard to recover and catch up), is this your only option now (what about collecting unemployment?).

You are not the first person to contemplate going into retirement funds.

I certainly would not use that money to completely pay off a credit card debt. The equity debt is more important and the ability to keep paying on that.

And although drastic, maybe consider bankruptcy if you had to - like above poster commented, retirement acct. is protected and (unless laws have changed) it is protected from any collection agencies.

[creditcardfree]

How much debt are we talking about? Interest rate? Current monthly payment?

Personally, I would do everything in my power to avoid tapping into any retirement funds. Part time job, babysit, mow lawns, shovel driveways, what skills do you have that you could offer for quick cash. Have you sold things you no longer use? Have you cut all unnecessary expenses, such as cable and eating out?

I also would not refinance. You have a great mortgage rate and you are close, in relative terms to paying it off. I might be difficult to get a new mortgage with out a job, too.

[uncertaintimes]

I would consider every possible option before paying off credit cards with an IRA. If worst comes to worst and you end up filing bankruptcy, if you keep your retirement accounts they will be protected. If you use the money but still can't find your way out, then you'll be truly starting at zero.

Best of luck to you.

Thanks a lot! I agree with you on keeping the retirement funds intact. Unfortunately, I also have to live off of it and that is the #1 priority.

[uncertaintimes]

The equity line of credit or loan is of high importance also.

I agree with protecting the retirement. Are you going to take it all out, is it a lot (which would be hard to recover and catch up), is this your only option now (what about collecting unemployment?).

You are not the first person to contemplate going into retirement funds.

I certainly would not use that money to completely pay off a credit card debt. The equity debt is more important and the ability to keep paying on that.

And although drastic, maybe consider bankruptcy if you had to - like above poster commented, retirement acct. is protected and (unless laws have changed) it is protected from any collection agencies.

Thanks I agree the equity debt is more important... I guess I will live off the IRA for hopefullly a short time while status quo on paying bills...

[uncertaintimes]

How much debt are we talking about? Interest rate? Current monthly payment?

Personally, I would do everything in my power to avoid tapping into any retirement funds. Part time job, babysit, mow lawns, shovel driveways, what skills do you have that you could offer for quick cash. Have you sold things you no longer use? Have you cut all unnecessary expenses, such as cable and eating out?

I also would not refinance. You have a great mortgage rate and you are close, in relative terms to paying it off. I might be difficult to get a new mortgage with out a job, too.

We are 20k cc debt and 80k on the home equity LC... I am hoping to land soon with a job. I am a seasoned veteran in the IT business, pretty highly skilled and previously well paid so although I wouldn't call it stooping to a low of lesser jobs, I am confident I can make a pretty serious coin in the next 0 - 12 months... Just trying to hang on in the meantime... Thanks for your words of wisdom though, greatly appreciated and seriously noted.