Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Author: fehorse4 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 294  
Subject: Cash out 403b to pay debt Date: 1/29/2009 9:46 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have a question about using my 403b to pay off debt.
I have, unfortunately, about $70k of credit card debt left, which I have been steadily paying down. I currently pay about $800 a month in finance charges on the debt and pay about $2800 each month .
I am 59 and 3 months of age. My wife is 62. I earn 170k a year and have (after the crash) about 270k in a company 403b and my own IRA from a rollover from a previous job. My wife brings home $2600 a month after taxes.
My question is this; does it make sense to withdraw funds from my retirement account to pay off the debt, then increase my monthly contribution by the same amount ($2800) to save the finance charges? I calculate I could then pay back the amount in about two years. This would free up the $2800/month and with retirement payments from my wife's job and SS, more than compensate for the drop in her income and allow her to retire in 2 years.
I think there is a way to withdraw funds from the 403B before age 59 1/2 or I could wait a few months.
I can pay back into my 403B by maximizing my contribution or by paying it in post tax dollars into my IRA at TD Ameritrade and taking a tax deduction.
Will the taxes on the withdrawal cancel out any savings I get from the cancelled debt?
It seems to me that my funds are not earning a heck of alot right now sitting in my 403B.
Print the post Back To Top
Author: progmtl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 218 of 294
Subject: Re: Cash out 403b to pay debt Date: 1/30/2009 4:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I would not touch the 403b at all; it seems to me that after a market crash would be about the worst time to pull money out of the stock market. Also, you will get killed with penalties. You have the current income to pay off the debt, so I would attack it mercilessly and cut out some luxuries to get rid of it quickly.

All that said, you should really re-post this question on the "Credit Cards And Consumer Debt" board, which gets a lot of traffic and where some very savvy people will help you break down your question.

Here is a link to that board:
http://boards.fool.com/Messages.asp?mid=27396675&bid=100...

People will ask you to post more detail, such as a breakdown of the interest rates on each card and the amount owed.

Good luck,
-progmtl.

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Advertisement