I posted about my IRA a couple months ago, I do not have it invested and I am pretty confused about it. Anyway, I have 5000$ in an IRA. I also have about 11000$ in debt. of that debt 7200$ of it is in the form of student loans. I recently read you can withdrawal IRA for either a first home purchase or student loans/college tuition without penalty (i didn't know that!!). So essentially I could pay off almost all of my student debt with my IRA. currently 2 of three loan are defered. They are set to end in April for one and June in another. When they end they will add 150$ of bills to my already strapped budget. So what would dave ramsey or any savvy person do in this situation?? Advice?
That's tricky. When I googled it, he says no, I believe because even though there is no penalty it will count as income possibly putting you in a higher tax bracket, and you will pay tax on any money earned as interest. It might depend on your exact financial situation but I think he'd say no.
BC Mum of three ('05, '07, '11 and #4 coming May '14!)
No no and no! Never cash in retirement (you'll also have to pay taxes which will be more expensive than the debt interest rate, likely) for debt. Cut down expenses or get an extra job.
Jaya- unschooling mama to Ariah Ray1/02 Rukundo Pacifique11/08
missing Trace Oak 10/25/06
Carson, living life with my 3 boys: DH, DS Dec '09 and newbie DS Sept'12
always two in my
I absolutely would not - retirement savings are so important. Also, most student loans have incredibly low interest rates, so it's not the worst kind of debt to carry. I would say pay off your revolving debt with higher interests rates first, and avoid cutting into your retirement savings if at all possible.
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