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Should I Use Half My IRA Debt to Pay Off My Debt? – B

“Dear Steve,

I have about $9400 in credit card debt which has an interest rate of 25.66% ! I have about $4700 in an IRA account. I made about $ 70K last year but I am single with no dependents so I don’t have many exemptions and have alot of taxes taken out of my check. I have two jobs (got the second one just to pay off debt) and I would be able to pay all of it off in 5 months if I use my IRA money plus reduce the amount of interest I am paying ($200/month). If I don’t it will take me twice as long and cost me twice as much in interest.

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Is it worth withdrawing from my IRA to pay off half of my debt?

Thanks,
B.”

Dear B,

My opinion is that it is absolutely NOT worth doing that. Leave the money where it is, You’ve got a lot more to build up for retirement anyway.

Instead, look at an unsecured fixed rate debt consolidation loan from LendingClub.com at a lower interest rate. If you have a credit score above 660 you may be eligible for a loan from this peer-to-peer lending network. If you decide to go that route, let me know. I’d be happy to be one of the investors that helps to fund your loan.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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