WW DR Do? use IRA to pay off student loans, yes or no? - Mothering Forums

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Old 03-29-2014, 10:14 AM - Thread Starter
 
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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?


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Old 03-31-2014, 07:11 PM
 
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I don't know what Dave would do, but I do know Suze Ormond would say no way.

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Old 03-31-2014, 09:55 PM
 
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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.


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Old 04-01-2014, 06:42 AM
 
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And it also depends on your age too.  25 vs 40 would make a big difference.

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Old 04-01-2014, 05:12 PM
 
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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.  


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Old 04-02-2014, 06:29 AM - Thread Starter
 
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I am not working right now so I dont think it will put me in a higher tax bracket. Getting an extra job is out because any side jobs will make me no money due to child care I already have on side job but with looking for an actual job and taking classes and having no free babysitter it is difficult to take on more. My ex doesn't have a normal schedule so he can't take the kids for me so I can work. If I plan to use the ira it would be in June so I still have time to research etc.

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Old 04-03-2014, 12:17 PM
 
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I'm curious about this because you have mentioned it before. You say it is in an Ira,but not 'invested'. What does that mean? Is the money actually in a brokerage/institutions hands? Because if its not, it's not truly in an Ira. If it isn't invested, it's not doing anything.

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Old 04-04-2014, 12:52 PM - Thread Starter
 
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It is with a firm but not invested. My ex set it up and we separated 2 months later. He put the money in a roth ira. I know nothing of investing and not sure what to do with it. It is just sitting there.

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Old 04-04-2014, 08:35 PM
 
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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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