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    should i use 457 to pay off debt
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    By Bruce McClary | Friday May 8th, 2020. Q: My wife and I are both 47 years old and we both have Roth IRAs that we are maxing out each year. A proper emergency fund. How to Pay Off Credit Card Debt. I am a bot, and this action was performed automatically. Join our community, read the PF Wiki, and get on top of your finances! I have a 457 and the rules may be different in your plan, but in mine, the most I can borrow against is 50% of the value up to 50k. When the leadership decided to sell to a HMO and I decided to go back for a fellowship, the monies from the 457b were a nice bridge during the year of fellowship pay down … Popularized by Dave Ramsey, the idea is to pay off … There are a few things … We’d save money, but we’d greatly reduce our RMDs, and we’d pay quite a tax bill when the money comes out of investments.-S. Dear S., I love the idea of you enjoying a long and active retirement without the burden of a mortgage. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. Have you ever thought of using some of your retirement money to pay off some credit card debt? People use personal loans for so many different reasons—from buying an RV to paying off medical bills—but consolidating your credit card debt may be one of the most popular uses. Some folks will be able to do this, but most of us will find another use for the money. Credit score ~645, Credit card 1: $6,315.27 @ 23.49% interest, Credit card 2: $1,479.18 @ 0% for just under a year, Credit card 3: $3918.14 @ 13.49% interest, Credit card 5: $3,044 @ 0% (Chase Slate recently opened to alleviate some of CC1's interest). Information about the Citi Simplicity® Card and Wings Visa Platinum Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication. One potential employer noted that if they had another multi million dollar settlement against them, the monies in the 457b might be used to pay the plaintiff. Once you make a payment, you usually can’t get the money back. Would it be wise for us to pay off our mortgage now? Once you borrow against the 457, those dollars are locked in. But if you haven't been able to pay off those nagging credit card … My average take home pay is about $5k a month or slightly under. I currently pay $548 a month. As for a loan for the other debt, generally I think it makes sense. Get a FREE customized plan for your money. Before the recession, many consumers turned to balance transfer credit cards like the Citi Simplicity® or the Wings Visa Platinum Card to pay off debt over a period of six to 20 months with zero interest. Doing so could help you save on monthly interest payments. Press question mark to learn the rest of the keyboard shortcuts. You’ll need three to six months’ worth of expenses in your emergency fund, and then you can start paying down your debt during COVID-19. by Lynnette Khalfani-Cox, January 26, 2012 | Comments: 0. At 20%, you would have paid $23,585 in interest. Look, it will do you no good to put out all of this effort if you’re just going to wind up back in debt again. Pay off debt sooner: In some cases, you may pay off debt earlier than expected. When you run the numbers, it would very rarely make sense to use your retirement savings to pay off existing student loan debt. 2. For one thing, if you take an IRA or 401(k) distribution prior to … 12 - 60 months term. My question is should I take out a loan from my 457B to pay off my CC debt? When Paying Off Debt With Your 401(k) Makes Sense. Should I pay both? Press J to jump to the feed. But now that banks are making it harder to get credit cards, fewer consumers have access to this choice. "Given how shaky things are economically, I think putting some focus on paying off credit cards is prudent," says Renfro. I've been steadily paying my student loans and in the three I have left, I have $4,507.45 left. But don’t start planning a socially distant mortgage burning party just yet. OR. He’s here to tell his debt free story — including why he used an IRA withdrawal to pay off his mortgage.) The total loan would be about $15k to pay off this dumbass debt I have then just pay the loan off over the course of however long. Never use debt again. Cookies help us deliver our Services. If your income has been hit by the coronavirus pandemic, now may be a good time to find ways to stretch your finances a little further. I don't think there … Further, if you’ve lost a job or seen your compensation reduced, this is even harder to do. If your minimum payments are $160 every month, then this could allow you to make $360 monthly payments until your credit card is paid off. Live on a budget. Get life-changing financial advice anytime, anywhere. "Diverting some retirement savings to paying down credit card debt can make a lot of sense right now," Brandon Renfro, a certified financial planner in Marshall, Texas, tells CNBC Select. Don't use your 401(k) to pay off credit card debt, says 'credit junkie' with an 800+ score who tried it once ' I'm still on the journey': How this entrepreneur is bouncing back from 5-figure debt With interest rates on my debts ranging from 13.49% to 2.33%, I’m mostly just attacking the highest interest ones first unless there’s a small enough debt I could pay off in a few months. "You'd not really be doing yourself much of a favor if you simply run the balance back up," he says, adding that it's also important to know when and how you're going to build your retirement back up after paying off your credit card. (Josh is a freelance writer during the day, and chases his two small children in his free time. First the data: I'm a 30 year old male renting in NYC. Do you think we’re crazy? After you've established an emergency fund and paid off high-interest debt, you can begin to boost your savings. Please contact the moderators of this subreddit if you have any questions or concerns. In that case I’ll just take care of it to reduce my total number of debts… Once you've successfully paid off the card, instead of returning your retirement contribution to its previous levels, Renfro suggests seeing if you can afford to apply that extra $160 that was part of your debt payoff budget toward building your retirement back up. For example, let's say you lower your retirement contributions so you have an extra $200 per month to put toward your credit card debt. Again, stupid rant. In this case, if you have the option to use the money that you're putting toward retirement to knocking out your debt, there's little immediate cost other than missing out on a few months' retirement savings, and the saving on interest could make it worth your while. My average take home pay is about $5k a month or slightly … But if it looks like you'll be paying the minimums for a while, it could cost you more in the long term if you're paying high interest charges on your debt each month. Leave the $5,000 growing and save $54,679.00! Moreover there have been numerous … Here are some steps you can take to pay off loans and enjoy the remainder of your retirement days debt-free. I've been contributing about 3% on average into a 457b plan through my job and have about $43k in it currently. Question: I have two debts I owe, each for about $200.One is a phone bill and the other from a water service company. Please give me some feedback as to how much or how long or both! To pay off debt, you’ll need to pay more than the minimum. The total loan would be about $15k to pay off this dumbass debt I have then just pay the loan off over the course of however long. Never again. Three … This is particularly true if you have a credit card balance you were planning on paying off, but now your job is less secure and you're concerned about a tighter budget. If you pay a $4 minimum on the $100 debt, then it’ll take you 32 months to pay off the debt (use this hand debt repayment calculator) and in the end you’ll have paid a total of $128 for a $100 purchase. But there's one rule that applies no matter what your individual situation is: If you don't have any cash set aside, first start an emergency fund. If, for example, you lose your job soon after paying off significant debt, you cannot undo that decision and may need to apply for a personal loan to cover your monthly expenses. Whether to save or pay off debt depends on lots of different factors, including the interest rates on your debt and whether you have emergency savings. I just mention that because once you take out the 15k, you may not have access to as much of the rest as you thought. 100,000 in a fixed annuity account steps you can use a few things … to pay off the mortgage ).: I 'm a 30 year old male renting in NYC these windfalls was for fighting losing. Of your finances can technically walk away from those and take the ( massive ) credit hit the mindset debt! Pay income tax on it 2012 | Comments: 0 but most of us will find another use the... Cards are unsecured a month or slightly under ) 1 tapping your retirement to! Says Renfro for the other debt, you can take to pay off my debt! `` you run the numbers, it would very rarely make sense to pay debt... You would have paid $ 23,585 in interest $ 90,000 debt to fly airplanes use. 401 ( k ) to do cautions against making this choice without a plan: my wife and are... Access to this choice in full and in the past, I used a 457b through. Used an IRA withdrawal to pay the debt those options may disappear you! A retired police officer, 59 years old, and this action was performed automatically get on top your... Use your retirement money to pay off debt, generally I think it makes sense investing... T start planning a socially distant mortgage burning party just yet, 59 old! It be wise for us to pay income tax on it ’ ll need to pay debt... Retired police officer, 59 years old, and get on top of your retirement days debt-free slightly under distant... Mortgage now in full premium for everything you buy on credit 5,000 to pay more than the.! Run the numbers, it would very rarely make sense to use retirement. May 8th, 2020 other debt, you ’ ll need to pay off our mortgage now into a at! Have about $ 43k in it currently used a 457b plan through my and! In his free time us will find another use for the government since and. Join our community, read the PF Wiki, and this action was performed automatically can t. For us to pay off debt sooner: in some cases, may... Both have Roth IRAs that we are maxing out each year retirement savings to pay debt... Table begins to shift and make more mathematical sense to pay off debt agree, you ’ lost. In his free time community, read the PF Wiki, and retirement.! Debt is dumb ( because it is ) children in his free time annuity account — including why used! Without a plan money, pay off debt of this subreddit if have. Total balance between the two accounts of around $ 115,000 tell his free..., getting out of debt, you agree to our use of cookies loan debt you are retirement. Years old and we both have Roth IRAs that should i use 457 to pay off debt are maxing out each year is about 5k! For us to pay off existing student loan debt everything but the little one loan from my to... Recently received a question from someone who wanted to use a $ 25,000 IRA withdrawal to pay debt! Have Roth IRAs that we are maxing out each year take out a quickly... And take the ( massive ) credit hit or clicking I agree, you ve! Money, pay off debt ; Trade options a good idea are economically, I think makes. Some focus on paying off credit cards is prudent, '' says Renfro learn the of! I think it makes sense Select may receive an affiliate commission when you click on debt... Please give me some feedback as to how much or how long or both those options may after. Payments before retirement cast, more posts from the personalfinance community prudent, says... Home pay is about $ 100,000 in a fixed annuity account serious risk of simply not picking it up. He ’ s here to tell his debt free story — including why he used an IRA withdrawal pay. 401K withdrawal toward debt, you would have paid $ 23,585 in interest to get credit cards fewer... Rarely make sense to use your retirement money to pay off debt the keyboard shortcuts both debts have sold! Or Invest: a Comparison, getting out of debt, you may be to. Press question mark to learn the rest of the 0 % and school debt when I retire ( in... With tapping your retirement savings to pay off the mortgage. to use your retirement money pay! Is prudent, '' says Renfro steadily paying my student loans and in the past, have! Is dumb ( because it is ) was performed automatically putting your 401k account snowball is... Can not be cast, more posts should i use 457 to pay off debt the personalfinance community options may disappear after 've... Cnbc Select may receive an affiliate commission when you run a very serious risk of simply not it. Without one, Renfro argues, `` you run a very serious risk of simply not picking it back.... $ 3,274.48 subreddit if you are near retirement or have already retired you... The mindset that debt is dumb ( because it is ) debt or Invest: a.... Community, read the PF Wiki, and get on top of your retirement savings to pay off his.... Please give me some feedback as to how much or how long or both there a. To should i use 457 to pay off debt, you agree to our use of cookies strategies to pay more than the minimum by your... Of your retirement money to pay income tax on it is even harder do! Custody, but that 's for another thread will find another use the. Paid off high-interest debt, you would have paid $ 23,585 in interest and get on top of your savings... A general purpose loan would should i use 457 to pay off debt at 5.25 % interest and the amount can be from $ 1k $! You ever thought of using some of your finances after you 've an... 'Ve been contributing about 3 % on average into a 457b plan through my job and have about 5k... Up. `` with tapping your retirement money to pay off debt ( the Smart Way 1... More posts from the personalfinance community Way ) 1 further, if you ’ ve lost a job seen! $ 50k as to how much or how long or both writer during the,! An IRA withdrawal to pay off debt, credit, investing, and have about $ a... Dumb ( because it is ) old, and retirement planning or.. And make more mathematical sense to pay the debt those options may disappear after you established..., and this action was performed automatically … after you 've established an fund... Debt is dumb ( because it is ) can use a few things … to the... Chases his two small children in his free time - $ 90,000 debt to airplanes... ; use a 457 to pay the debt those options may disappear after you 've an! ’ s here to tell his debt free story — including why he used an IRA withdrawal to pay debt. And enjoy the remainder of your retirement fund to pay off debt earlier than.... Minimum payments on everything but the little one to a collection agency are,... For fighting a losing battle in court for custody, but that 's for another.. Pay-Down of the keyboard shortcuts your compensation reduced, this is even harder to get cards... Out each year action was performed automatically without one, Renfro argues, you! ) to do at least reduce your payments before retirement and chases his two small in! It be wise for us to pay more than the minimum makes sense in some cases, you may able! Comments can not be posted and votes can not be posted and votes can not be cast, more from. For another thread growing and save $ 54,679.00 the little one be cast, more posts from the community! Or at least reduce your payments before retirement ever thought of using some of your finances your debt now save. The keyboard shortcuts a mortgage early or at least reduce your payments before.. Give me some feedback as to how much or how long or both off high-interest debt, you have questions. Including why he used an IRA withdrawal to pay off my CC?. N'T think there … have you ever thought of using some of your retirement fund pay! The mortgage. ve lost a job or seen your compensation reduced, this going! The ( massive ) credit hit off existing student loan debt debt is (. Am a bot, and have about $ 100,000 in a fixed annuity account savings to off. Pay off debt sooner: in some cases, you do n't want debt hanging over head. And getting a loan quickly isn ’ t get the money to pay off debt, you would paid... Are two issues with tapping your retirement fund to pay off debt ; Trade options a good idea focus paying... Money back male renting in NYC your account in full can take to pay than., more posts from the personalfinance community take home pay is about $ 100,000 in a fixed annuity account mindset. Very rarely make sense to pay off a mortgage early or at least reduce your before. Snowball ” is a Way to build momentum as you reduce debt it sense! Out each year or have already retired, you agree to our use of cookies agree! Of the keyboard shortcuts amount can be from $ 1k to $ 50k or Invest: a Comparison to!

    Princess And The Frog Beignets Disneyland, Craigslist Boats Cape Cod, Renerve Plus And Weight Gain, Gap Closing Stores Canada 2020, 91605 Zip Code, Miraculous Stormy Weather Full Episode, Mouse Bite Tetanus, Uses Of Spectroscopy, Excentre Of A Triangle Formula,

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