Posted on: 26th Mar, 2010 01:39 pm
I am considering options for paying down cc debt. I have about $20K across two cards. I have a couple of IRAs worth about $10K and a 401K of $151K. I have a mortgage with some additional room left on a home equity line. Ordinarily the HE line would be a good way to move the debt into a lower rate, but I'm reluctant to add more debt anywhere, and also want to improve my credit rating. So I'm thinking the IRAs would be a good source. I'm 55. Thoughts or comments?
Hi Phillips!
Welcome to forums!
As far as I know, you will be able to get qualified distribution from your IRA account, after you reach the age of 59 and 1/2 years of age. If you withdraw any money before that from the Roth IRA or 401k, you would be liable for paying taxes.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As far as I know, you will be able to get qualified distribution from your IRA account, after you reach the age of 59 and 1/2 years of age. If you withdraw any money before that from the Roth IRA or 401k, you would be liable for paying taxes.
Feel free to ask if you've further queries.
Sussane
Personally, if I had room on HELOC to pay off cards, I would do that right now becasue the Prime Rate is 3.35%. Then I would pay as much extra monthly o the HELOC to get that debt down as much as possible as fast as possible before prime rate goes up. You are not increasing dept, you are transferring it from cards to HELOC.
Then I would have a game plan to perhaps borrow from my 401k to pay off/down the HELOC when the prime rate reaches a certain rate--maybe 8%. In other words, I would borrow from the 401k later, not now. Why borrow from it now when prime rate is so low.
No one knows how long prime rate will stay at or below 8%. Could be months or years. If it is years, that would be great. It is a little bit key that you pay as much extra every month on the HELOC as possible. When prime rate does go up your balance will be lower and the rising rate will not affect your required payment as much.
Then I would have a game plan to perhaps borrow from my 401k to pay off/down the HELOC when the prime rate reaches a certain rate--maybe 8%. In other words, I would borrow from the 401k later, not now. Why borrow from it now when prime rate is so low.
No one knows how long prime rate will stay at or below 8%. Could be months or years. If it is years, that would be great. It is a little bit key that you pay as much extra every month on the HELOC as possible. When prime rate does go up your balance will be lower and the rising rate will not affect your required payment as much.
