At this point, my debt-to-income ratio is the highest it’s ever been, and I’m struggling to keep up with my bills. Even though I’m earning more than ever, I’m also the most financially strained I’ve ever been. I have about $15,000 in debt, including credit card debt and a car payment. My question is: would it be worth withdrawing some money from my Roth IRA, which I rolled over from a previous employer, to help reduce my debt? I’m dealing with high-interest cards and loans and can’t keep up. I realize I’ve made mistakes, but I would greatly appreciate any financial advice.
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Honestly, we’d need a lot more information to give you a solid recommendation. Details like your monthly income, expenses, the amount owed on each type of debt, and whether your accounts are in good standing, collections, or charged off would help. Generally speaking, $15,000 isn’t an insurmountable amount of debt, but it’s hard to say for sure without more specifics. If you’re not comfortable sharing that information, I’d suggest contacting each of your credit card companies to inquire about a financial hardship program. These programs usually involve closing your account in exchange for a fixed payment over a certain number of months, often with little or no interest. This approach might help you make better decisions without the pressure of overwhelming monthly bills.
Not an expert in finances, but someone who has undoubtedly been in your shoes. You ought to take money out of your Roth IRA if you are able to. You will gain from debt repayment in the long run. Furthermore, you can always increase your retirement contributions when circumstances improve again. Retirement cannot be planned for until you have a strategy to get there.
fifteen thousand? Is that all?
Post your financial information, dude. Every single one of them. No one—I repeat, NO ONE—can assist you until you have a thorough financial overview.
Not a financial wiz, but someone who has definitely been where you are. If you can withdraw from your Roth IRA, you should do so. Paying down your debt now will benefit you later. Plus, when things swing up again, you can always contribute more to your retirement. You can’t plan for retirement until you have a plan to make it there.
Have you contacted your credit card issuers to request a reduction in interest rates? They’ll probably cut it to between two and four percent each month, but you’ll have to cancel the account.
Only contributions are eligible for penalty-free withdrawal. Take no rollover money out. You can pay off $15k quite rapidly. Wishing you luck.
Using a debt management company is a bad idea—they take your money, you end up deeper in debt, and it takes forever to get out. Don’t do it. Also, don’t withdraw money from your Roth IRA or long-term savings; that’s like stealing from your future to solve today’s problems. Plus, the penalties and taxes for early withdrawals are huge. I hate to admit it, but the Dave Ramsey program really works. I’ve followed his plan many times it’s not fun, it’s tough, and it can be really challenging, but within a year, you’ll see the light at the end of the tunnel, and it’s not an oncoming train. You could be debt-free.