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Should We Use Some Retirement Funds to Pay Down our Debt? – Kari

“Dear Steve,

Recently have realized that our debt management plan is not helping us as we hoped. Are looking into other options to help process our debt more efficiently.

We have been discussing our retirement funds that we left intact in Wisconsin when we moved. My husband is considering pulling the funds and reinvesting them in more sound strategies. Using part of the funds to pay down our debt considerably. We are wondering due to the flux of the economy if this is wise as well as if this is a good option to assist with our debt. Thank you!

Kari”

Dear Kari,

I am not a fan of taking retirement funds out to deal with debt. It’s easy to take those funds out but very hard to replace them to get yourself back in the current investments you are in now.

It seems we have two issues here. The first is the funds may not be performing as you hoped. That’s a simple matter of reallocating them for a better return.

The second issue is the draining of the account to, I assume, either pay off the debt or pursue some debt settlement approach.

Because of the limited information I really think the best approach is for you to schedule a consultation with my debt coach friend Damon Day. Let’s get him to take an in-depth look at this situation and save you from making the wrong decision which can cost you a massive amount of money.

Please post your responses and follow-up messages to me on this in the comments section below.

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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.

2 Comments

  • Thank you Steve. I don’t think I was specific enough in my question. Our retirement funds are not currently invested except within the State of Wisconsin retirement system. My husband feels, by watching other state retirement systems crash that it may be a wise time to pull them out and actually invest them whether that be in precious metals, stocks, etc. Then using a bit of it to help pay off some of the debt. Thank you for your referral to Damon.

  • Thank you Steve. I don’t think I was specific enough in my question. Our retirement funds are not currently invested except within the State of Wisconsin retirement system. My husband feels, by watching other state retirement systems crash that it may be a wise time to pull them out and actually invest them whether that be in precious metals, stocks, etc. Then using a bit of it to help pay off some of the debt. Thank you for your referral to Damon.

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