I need advice on paying off debt. I thought that I might use some of my retirement that has built up to pay off some of the high interest bills I have. I am 30 and my husband is 26. I know it's not the best idea to do that, but I'm not sure why. Since we're still young, maybe we can still build it all back up?
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It's hard to give feedback without knowing how much you owe. In my opinion, it would be better to sit down and write down each account, how much you owe, the interest rate, and your minimum payment each month. Try to pay off the account with the highest interest rate first. Contact each company and see if they will lower your interest rate. Cut up your cards, for now, and focus on what you owe.
Remember, you'll have to pay taxes on any that you take out of your retirement. I had to do that with mine, and now I have none because I stay home (my husband has switched too much to start up an employer based. We are still under 30, and in debt! Our finances are too tight due to medical bills, or we would do Credit counseling (everything is managed into a monthly payment, they get your interest rates cut by at least half) If it is creditcards and private loans, try that first.
You guys need to watch the Suze Orman show and look for her published books to help you become savy on what and what not to do. If you want to go to her website it is http://www.Suzeorman.com. You need to learn to make and stick to a budget except for emergency items and not immediate gratification items. It can be very hard, but it can be done.
I work for an investment advisor and one thing you should know if you take a distribution from your retirement without a special exception you have to pay a 10% penalty on top of whatever you have to pay in taxes. This should be a last resort only.
Go to nomoremortgage.com. It is a coaching site. Call them on the phone. It has been highly recommended by many financial people. I called this morning and my coach, Doug is helping me with my debts. Do it now. I am 40 years old and wish we had done it sooner.
Suzie Orman says when you buy something and get change in one dollar bills... Put the ones into a bank envelope until it is about full... (FYI.. I heard they hold $35 in ones... ) Spend the change, but always save your ones...
Go to daveramsey.com and listen to his call in show which is streamed for free on the net. He gives advice on how to get out of debt. He is on the radio here every day for 2 hours. Different in every city. It's called the Dave Ramsey show, you may be able to find it in your city. He never advises taking money out of a retirement account. You can also call in to his show and ask any question you might have. He has books out called "the total money makeover" and has a program called Financial Peace University where he shows people how to get out of debt. It's a matter of choices and he can help you if you give him the chance.
You've really got to try to pay down the debt without using your retirement savings. Along with the penalties, the biggest problem is that unless you get your spending under control you're going to end up using the retirement fund to pay down debt and then just run the debt back up again. Then you'll have more debt and NO retirement savings. The only way to be finanically successful is for you to figure out how to stop spending more than you make (which is probably why you have debt in the first place) and then figure out how to get the debt down as fast as you can with your current income. It may be hard to do and you'll have to do without some things for a while, but that's the price you pay for getting into debt in the first place. Using your retirement savings isn't a good way out - it'll be too hard to play catch up later and if you're already the type to be in debt at such a young age odds are you won't be able to find the money to get your retirement savings back up. If you start now thinking that things like credit and retirement funds can be used to help you out with your day-to-day finances and debt repayment, you're setting yourself up for financial disaster and stress thoughout your life.
Maybe this is a one time thing (like education loans) and you figure once you get rid of this debt you'll be good at staying out of it. If this is case, then MAYBE you can use your retirement funds, but only if you can convince yourself and your husband that you truly understand what caused your debt and you really know how to make sure it never happens again. You should also make sure that if you take out your retirement funds you don't do it until you have laid out a detailed plan of how you are going to pay it back. If you can't figure that out, then you're taking too big a risk.
It took my husband and I four years to get rid of our debt, but now that we've done it we're really good at saving and we're looking forward to a lifetime of financial security and opportunities.
Check with a tax man, the taxes you will have to pay will be VERY HIGH and probably not worth it. You may need to take a loan to pay your taxes next year!
I would suggest a website I just recently discovered
www.stretcher.com
It is written by a gentleman who's a retired Financial Planner and he really knows his stuff!!! You can email him with questions like this. And not only will he email you back, but he has all sorts of resources he can recommend for just about anything financially related that you can think of to ask him!
hey the best way to do it is pay off the highest interest first then when that is paid off take the paid off payment and the next highest payment and pay twice the payment continue to do this till all your bills are paid. the most important thing is to cut up all the plastic and live within your budget . good luck
I have another site to recommend before you touch your retirement savings. I speak from personal experience to say that Mary Hunt's rapid debt reduction plan is doable and it works. Check her out!
content.living.aol.com/
www.cheapskatemonthly.com/
Thanks you all for the great advice. I will check out the websites and resources you recommended. Thanks so much!
Hi! You need to go to this website: www.daveramsey.com This guy is just great; he's a syndicated radio host, located here in Tennessee (Nashville). I listen to him so much, I can tell you that he would say to NEVER take money out of your retirement fund. He would tell you that you need to eat beans and rice until you get your bills paid off. But first, to make a budget. I can't emphasize enough that you should look at his website. You can email him, also. And he has several books out. We've paid off our house and all our bills with his methods. He wants you to be DEBT FREE, and if you follow his advice you will be. It won't be easy, but nothing worthwhile ever is...and you will not only be so proud of yourself, you'll have so much more money to spend because you won't be paying interest on loans. YOU CAN DO IT! Good Luck! Shu-shu
Check out daveramsey.com/
Great practical help on getting (and staying) out of debt.
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