I Am a Professional Pilot in Debt. – Mike

“Dear Steve,

Professional pilot. About $140k annual income. 10k in high interest CC debt. 10 K in lower interest home equity. I really want to eliminate both debts. 1 Car loan of lesser concern, but want to attack after cc debts are eliminated. 43 yrs old married two teen kids. Started late on retirement – about 60k saved.

I recently received a “decedent IRA” of about 58k after my father passed away last year. If used there is no penalty, but it will be taxed as income appropriate to my bracket on withdrawals. I believe the tax will be much less than the interest paid over the years it would take me to pay off the credit cards. I have been reluctant to use any these funds. Should I simply view this a boost to my retirement, and not touch it, or use it as “found money” to pay off the cc debt I so desperately want to eliminate. I have confidence that I can avoid accumulating more debt in the future.


Dear Mike,

As a fellow pilot let me speak directly to you. The strategy of cashing out will crash and burn your retirement plans.

You know that feeling when you desperately want to launch into marginal weather because you are anxious to get “there?” That’s what is going on here. You are anxious to eliminate a current concern with money that feels like a bonus. You are going to be VFR in IMC my friend and live to regret it.

The primary driver here is something called hyperbolic discounting. In that phenomena we discount the impact of decisions we perceive to be farther into the future and place more weight and importance on things right in front of us.

As a professional pilot it is quite possible that your income may go down, your retirement plan moving forward may be gutted or provide less benefit, or you could be laid off with a merger or change.

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That gift from your father is a valuable and wonderful investment in your older years. As long as it sits in a protected retirement account it can not be touched by your creditors. My personal vote is to treat it as the investment in your retirement future and not touch it.

If you have high interest rate credit card debt and you want to pay it off at a lower rate, consider a fixed rate, unsecured debt consolidation loan from LendingClub.com instead.

Please update me on your progress by

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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