Due to my husbands unemployment and reemployment at a lower salary and my very small salary due to Parkinson’s disease, we have built up a very large credit card balance. About $40,000. We are barely making ends meet. We have about $200,000. + in an IRA and my husband is 60. We were/are hoping our house would be a good investment for retirement(plan to downsize) but it’s value dropped and is slow in returning..At one point it was worth about $600,000 but now is around $480,000 and we owe about $350,000. on it.
We would like to use our IRA to pay off our credit card debt. This would allow us to make ends meet and perhaps even save a little. Is this good idea ? My husband is 60, so there would be no penalty. Please advise.
My first reaction is that it’s not a good idea, at all. Based on your income situation there is little expectation you’d be able to replace the IRA money in time for you to have it when you need it most in the fast approach years. You said it yourself, even if you took money out and paid off the credit cards you’d only be able to “save a little.” To me that does not say “We can easily afford to replace the money and save even more.”
In my opinion the beast way to first approach this situation is to click here to find a local bankruptcy attorney to talk to. Bankruptcy can address the debt and protect you from losing one cent from your needed and necessary retirement funds.
Please don’t make an emotional decision that will greatly harm you in the upcoming years. Please talk to a local bankruptcy attorney.
Once you discharge the debt you can then focus on moving forward and living within your reduced income. That’s going to be the key to moving forward and avoiding future financial troubles.
Let’s start with the basics.
I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.
After that, come back here and comment about what seems to make the most sense and let’s discuss that.
Does that sound like a reasonable approach?