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groovypeg
:)
Member since 5/05 2423 total posts
Name:
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need some financial advice UPDATED
from my fellow moms
we are in debt big time. i dont know how we are making ends meet. dh and i have no opportunity to make extra $$$$, so we are trying to cut corners the best we can. we both have retirement accts that could basically pay off all of our credit card debt. the question is: is it worth it to pay the penalty to withdraw from the iras to pay off our debt? paying off our debt would lift a huge burden monthy and definitely make it easier to pay the morgage and other expenses. any advice????
UPDATE
I spoke with a financial advisor who is a friend of my family and we are meeting with him on monday with a mortgae broker too. this way we can get "healthy" and see what we can do to fix this situation. he agreed that taking the $$$ from the ira is a last resort, but he thinks we can go around this in another way. so thank you, thank you, thank you to everyone who gave advice. i am taking in everything you have suggested.
Message edited 9/21/2007 9:40:31 PM.
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Posted 9/21/07 12:18 AM  |
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dm24angel
Happiness
Member since 5/05 34581 total posts
Name:
Donna
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Re: need some financial advice
All the experts tell you not to do it....BUT if it were me in that position at my age, I would pull it and do it.
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| Posted 9/21/07 12:21 AM |
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groovypeg
:)
Member since 5/05 2423 total posts
Name:
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Re: need some financial advice
thanks for the hugs. i am having serious anxiety right now. taking a home equity loan is not feasible so other than that i dont know what else to do
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| Posted 9/21/07 12:35 AM |
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jana
LIF Adult
Member since 3/06 1134 total posts
Name:
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Re: need some financial advice
I'd be cashing in the IRA's.
Why am I worrying about 30-40 yrs from now- when I'm barely treading water today? Will I make it to retirement or will the anxiety over this debt kill me? Thats how I'd be looking at this situation.
Sure, Suze Orman would probably have a hissy fit reading my post..but you have to do whats good for your family now.
Plus I'm a firm believer in the tides turning.. just because you find yourself in a sh!t hole today doesn't mean yrs down the road you'll still be in one. Maybe uplifting this burden will be your turning point.
Good Luck and try to get some sleep and don't let this play out in your head all night (easier said than done).
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| Posted 9/21/07 12:44 AM |
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smdl
I love Gary too..on a plate!
Member since 5/06 32461 total posts
Name:
me
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Re: need some financial advice
Although the expert said NOT to... I would get a "loan" from the retirement plan (not cashing in!!!). If you have a loan, you would repay it to yourself and not be taxed or penalized. Of course, you have to repay it within a certain time period AND if it is at work and you no longer work there you would have to repay it in full once you leave.
Why cashing in and pay the tax and penalty? If you take a loan you may be restricted on the % you have to leave in the account.
While, I don't suggest touching a 401K, IRA type is mostly because you are affecting your future BUT...it's better to take a loan at a lower % rate from your retirement account than the much higher % rate from your CC.
Also.... cut every corner possible. No take out, shop with coupons, register for all the coupons for DC (and exchange them here for some that you want/need, etc..). Buy DC's clothes on the clearance. Think 2, 3 or even 4 times before buying anything... do you really need it?
GL!
Message edited 9/21/2007 2:49:03 AM.
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| Posted 9/21/07 2:48 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: need some financial advice
Message edited 2/24/2022 8:09:57 PM.
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| Posted 9/21/07 6:11 AM |
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CathyB
Member since 5/05 19403 total posts
Name:
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Re: need some financial advice
I wouldn't cash in my IRA, too many penalties. Can you take a loan against it?
Have you considered selling Avon or Mary Kay or something like that? With the holidays coming up it might be some quick cash. My dad's wife sells Mary Kay on the side and brings in over $15k a year on that. It could be a lot more, but she doesn't reallly sell actively anymore, she's just servicing her existing customers.
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| Posted 9/21/07 7:15 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: need some financial advice
Absolutely not. It's a 10% penalty and then ordinary income tax on top of that. You will end up losing 40-50% in tax obligations. If you are looking to pay off credit card debt, try taking the card with the highest interest and pay that as aggressively as possible while making just the minimum payments on the other cards. When that card is paid off, go to the next highest interest card and pay that aggressively.
Also, start keeping a journal, both you and your husband, and write down EVERY PENNY you spend. That will help you find out places where you can continue to cut and save.
Again, the penalty for withdrawing money from your retirement accounts is much higher then any interest on a credit card and not a good financial decision.
FM me if you need any other help.
Agreed - it's wasting money because you'll get SLAMMED with taxes when you take it out, and then SLAMMED again come tax time. You'll lose almost 40% of the investment.
If you can take a loan on your IRA/401k, that's the best way to do it - you will get charged interest, but it goes right back into your account, and usually you can pay it back VERYYYYY slowly .
Otherwise, I'd open a 0% interest card and transfer all your balances. Dh and I did this when we were paying for renovations on our house, and paying off our cars. It took us just about 2 years to pay it off, but we did it without paying any interest.
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| Posted 9/21/07 7:56 AM |
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Tah-wee-ZAH
Kisses
Member since 5/05 15952 total posts
Name:
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Re: need some financial advice
Posted by Bxgell2
Absolutely not. It's a 10% penalty and then ordinary income tax on top of that. You will end up losing 40-50% in tax obligations. If you are looking to pay off credit card debt, try taking the card with the highest interest and pay that as aggressively as possible while making just the minimum payments on the other cards. When that card is paid off, go to the next highest interest card and pay that aggressively.
Also, start keeping a journal, both you and your husband, and write down EVERY PENNY you spend. That will help you find out places where you can continue to cut and save.
Again, the penalty for withdrawing money from your retirement accounts is much higher then any interest on a credit card and not a good financial decision.
FM me if you need any other help.
Agreed - it's wasting money because you'll get SLAMMED with taxes when you take it out, and then SLAMMED again come tax time. You'll lose almost 40% of the investment.
If you can take a loan on your IRA/401k, that's the best way to do it - you will get charged interest, but it goes right back into your account, and usually you can pay it back VERYYYYY slowly .
Otherwise, I'd open a 0% interest card and transfer all your balances. Dh and I did this when we were paying for renovations on our house, and paying off our cars. It took us just about 2 years to pay it off, but we did it without paying any interest.
I agree with both.
I tell my economics students that absolutely under no circumstances shoyuld they ever withdraw their IRA/401K/403B money. NONE!! First, cut all expenses that are not absolutely necessary... an absolute NEED. In all seriousness, I'd go back to waitressing (which I HATED) or pick up any other job before I used my retirement money.
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| Posted 9/21/07 8:15 AM |
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groovypeg
:)
Member since 5/05 2423 total posts
Name:
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Re: need some financial advice
taking a second job is not possible. i work until 5 and am the primary care giver for dd. my dh works late hours too and as much as he would like to take on private clients, becuase of his workload its just not possible. i know liza can attest to that since they work together!
i have already consolidated the debt onto 0% interest cards until 2008. but making minimums is still alot of $$$$$$$. i really am so despondant over this that i havent been able to sleep for days.
etd to say that i cant pay the cards aggressively as we need to be able to pay other expenses like our mortgage and day care.
Message edited 9/21/2007 8:43:09 AM.
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| Posted 9/21/07 8:41 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: need some financial advice
What about taking a loan on your 401ks/IRAs?
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| Posted 9/21/07 8:45 AM |
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LIMOMx2
...
Member since 5/05 24989 total posts
Name:
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Re: need some financial advice
You have FM
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| Posted 9/21/07 8:51 AM |
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Ang-Rich
Beyond Compare
Member since 5/05 17988 total posts
Name:
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Re: need some financial advice
Posted by Bxgell2
What about taking a loan on your 401ks/IRAs?
I agree with everyone said above...I would suggest NOT withdrawing the monies from your retirement accounts. In addition to considering taking a loan against it, have you:
Cancelled Cable
Cancelled Cell Phones
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| Posted 9/21/07 8:51 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: need some financial advice
Posted by groovypeg
taking a second job is not possible. i work until 5 and am the primary care giver for dd. my dh works late hours too and as much as he would like to take on private clients, becuase of his workload its just not possible. i know liza can attest to that since they work together!
i have already consolidated the debt onto 0% interest cards until 2008. but making minimums is still alot of $$$$$$$. i really am so despondant over this that i havent been able to sleep for days.
etd to say that i cant pay the cards aggressively as we need to be able to pay other expenses like our mortgage and day care.
If you want, I can help you set up a budget and a plan. There might be more flexiblity in your finances then you even realize. My first suggestion is to really get a handle on all your expenses and where you spend your money. To do that, you need to keep a journal and write down the money you spend on everything. You might be surprised to see what can be cut out and may give you an extra $10 a week which is $40 more dollars towards you consumer debt.
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| Posted 9/21/07 8:55 AM |
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EmmaNick
*
Member since 12/06 16001 total posts
Name:
*
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Re: need some financial advice
I FM'd you
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| Posted 9/21/07 9:50 AM |
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cloddy
Holiday 2011 photo
Member since 8/05 8088 total posts
Name:
Kristen
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Re: need some financial advice
I was going to suggest a home equity loan or line of credit but I see you said that's not an option. You also indicated that you cannot work any extra either so I"m at a loss. If none of those are options for you it may be time for a credit counseling agency who can help negotiate down the total debt owed and help you pay it off. If any of it is student loans then you can ask for a forbearance for a certain amt of time so that you can stop paying on those for a while and use that money to pay the other debt in the meantime.
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| Posted 9/21/07 9:54 AM |
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dm24angel
Happiness
Member since 5/05 34581 total posts
Name:
Donna
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Re: need some financial advice
Posted by jana
I'd be cashing in the IRA's.
Why am I worrying about 30-40 yrs from now- when I'm barely treading water today? Will I make it to retirement or will the anxiety over this debt kill me? Thats how I'd be looking at this situation.
Sure, Suze Orman would probably have a hissy fit reading my post..but you have to do whats good for your family now.
Plus I'm a firm believer in the tides turning.. just because you find yourself in a sh!t hole today doesn't mean yrs down the road you'll still be in one. Maybe uplifting this burden will be your turning point.
Good Luck and try to get some sleep and don't let this play out in your head all night (easier said than done).
This is what I feel too..
Yes I know I already responponded to the post but I have to agree with this word for word.
I understand people say you have disposable money lile Cable or cell phones but lets be HONEST Here.
I canot live without my cell phone. I have a newborn and I would not want to be out and about without the cell phones security.....
And if cable brings us a tad bit of happiness TODAY...why suffer?
I just think too much emphasis is placed on retirement.
God forbid you dont make it to that age after all the sacrifice?
I think its worth doing now, but putting a plan of action together to rebuild that money down the line.
Its the interst on debt thats killing you and it will be easier ( MUCH) to rebuild the retirement monies then pay off the debt.
Message edited 9/21/2007 10:04:22 AM.
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| Posted 9/21/07 10:00 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: need some financial advice
Message edited 2/24/2022 8:11:35 PM.
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| Posted 9/21/07 10:09 AM |
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Ang-Rich
Beyond Compare
Member since 5/05 17988 total posts
Name:
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Re: need some financial advice
Posted by dm24angel
I understand people say you have disposable money lile Cable or cell phones but lets be HONEST Here.
I canot live without my cell phone. I have a newborn and I would not want to be out and about without the cell phones security.....
And if cable brings us a tad bit of happiness TODAY...why suffer?
I just think too much emphasis is placed on retirement.
God forbid you dont make it to that age after all the sacrifice?
I think its worth doing now, but putting a plan of action together to rebuild that money down the line.
Its the interst on debt thats killing you and it will be easier ( MUCH) to rebuild the retirement monies then pay off the debt.
I respect what you are saying here but in my opinion, if someone is in debt then a cell phone and cable are two easy "luxury" items to get rid of. A pay per call cell phone might be better for emergencies and even reducing cable to basic might help out without all the bells and whistles - just for the time being. I would rather pay off debt than watch tv. Kids have videos (you can even take them out from the library) if that is a concern.
I think that people(some, not all) don't value retirement savings enough (IMO). With inflation, we see basic necessities climb in price (remember what milk and bread used to cost) - so when we retire and there is no more income...how does one live? I see my ILs coming up to this crunch right now. They are forced to work into the retirement years because the lost pensions and didn't have 401k plans. What happens if they get sick? I can tell you - the children have to step up and care for the parents..a financial hardship on more people now. It's easy to push retirement out of mind but when the time comes...it might just be a huge regret.
But we are all only able to make recommendations and suggestions. The original poster has to decide what's best. What works for one does not all ways work for another.
Message edited 9/21/2007 10:28:49 AM.
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| Posted 9/21/07 10:23 AM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: need some financial advice
Can you take out a heloc loan? This is what we did and it lowered our monthly payments and we have no cc debt now AND are able to have money for things we were charging.
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| Posted 9/21/07 11:36 AM |
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Michelle
My Little Yankee Fans
Member since 1/06 4018 total posts
Name:
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Re: need some financial advice
I would not take the money out of the retirement, you will pay too much in tax. The amount you take out will be taxed as well as the 10% penalty.
Can you lower the amount you currently contribute, that will give you some extra money each week?
Also at the end of the year do you get a big refund on your taxes? Maybe you can adjust your witholding so you get more money per week instead of at the end of the year.
Also try consolidating the credit cards.
Good Luck!!!!
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| Posted 9/21/07 1:08 PM |
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ChilisWife
God Bless America
Member since 5/05 3572 total posts
Name:
A.K.
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Re: need some financial advice
Whether or not you decide to take your retirement money, keep in mind that it is still a good idea to put a new plan in place for budgeting, cutting costs and saving money. Because G-d forbid you end up in this situation again, there will be no more retirement money left to draw from.
Good luck!
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| Posted 9/21/07 1:22 PM |
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iwed2005
LIF Adult
Member since 3/06 1389 total posts
Name:
Julie
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Re: need some financial advice
you have FM
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| Posted 9/21/07 1:25 PM |
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lullabella
LIF Adult
Member since 5/05 2246 total posts
Name:
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Re: need some financial advice
 no advice that wasn't already given. I hope things get better soon.
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| Posted 9/21/07 1:37 PM |
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mommy2Alex
3 babies for me :)
Member since 5/05 6683 total posts
Name:
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Re: need some financial advice
Posted by Bxgell2
Absolutely not. It's a 10% penalty and then ordinary income tax on top of that. You will end up losing 40-50% in tax obligations. If you are looking to pay off credit card debt, try taking the card with the highest interest and pay that as aggressively as possible while making just the minimum payments on the other cards. When that card is paid off, go to the next highest interest card and pay that aggressively.
Also, start keeping a journal, both you and your husband, and write down EVERY PENNY you spend. That will help you find out places where you can continue to cut and save.
Again, the penalty for withdrawing money from your retirement accounts is much higher then any interest on a credit card and not a good financial decision.
FM me if you need any other help.
Agreed - it's wasting money because you'll get SLAMMED with taxes when you take it out, and then SLAMMED again come tax time. You'll lose almost 40% of the investment.
If you can take a loan on your IRA/401k, that's the best way to do it - you will get charged interest, but it goes right back into your account, and usually you can pay it back VERYYYYY slowly .
Otherwise, I'd open a 0% interest card and transfer all your balances. Dh and I did this when we were paying for renovations on our house, and paying off our cars. It took us just about 2 years to pay it off, but we did it without paying any interest.
We also used 0% cards to finance our renovations on our house. I agree, I would never take my retirement money. Try to see if you can open a few 0% interest cards and work on the higher interest rates first. We have rolled our 0% cards over several times.
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| Posted 9/21/07 1:45 PM |
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