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Hello All!

I need some advice. I am a born again student who works part time. I have 10K in debt from foolish spending. I am thinking of making a withdrawal from my IRA to pay off this debt (I am < 59 1/2 YO and IRA balance 10k+). I understand there are fees etc but It would really remove the burden of debt that I carry. Also next fall I may not be able to work as much as I do now (I may have to do a full time school commitment) and paying things off would be a help. I thought I'd wait and do this next year after 4/15 because of taxes. Ideally I do not want to touch this $$ but It seems like the best thing for me to do. Thanks Goldie.
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I need some advice. I am a born again student who works part time. I have
10K in debt from foolish spending. I am thinking of making a withdrawal
from my IRA to pay off this debt (I am < 59 1/2 YO and IRA balance
10k+). I understand there are fees etc but It would really remove the


Can you get any student loans and use that money to help pay off foolish debt?
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Greetings, Goldie2000, and welcome. You wrote:

<<I need some advice. I am a born again student who works part time. I have 10K in debt from foolish spending. I am thinking of making a withdrawal from my IRA to pay off this debt (I am < 59 1/2 YO and IRA balance 10k+). I understand there are fees etc but It would really remove the burden of debt that I carry. Also next fall I may not be able to work as much as I do now (I may have to do a full time school commitment) and paying things off would be a help. I thought I'd wait and do this next year after 4/15 because of taxes. Ideally I do not want to touch this $$ but It seems like the best thing for me to do.>>

I'm always reluctant to tell anyone it's a smart thing to take money from an IRA prior to age 59 1/2. That's because of the steep price you pay to do so. If you're in the 15% tax bracket and you take $1K, then you must pay $150 in ordinary income tax plus another $100 (or 10%) as a penalty for the early withdrawal. That means you net just $750, or three-fourths of what you wanted. That seems a pretty steep price to pay. Only you can say whether that price is worth it based on your debt and your need to eliminate that debt. Just keep in mind that it will cost you today, and it will cost you tomorrow when that money and its compounded earnings is no longer available at retirement. If those factors are out-weighed by your need to pay down the debt, then do so. OTOH, if you can manage that debt without cashing in the IRA, then IMHO you should do that instead.

Regards…..Pixy
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Good luck with returning to school --- Pixy pointed out that you'd pay a premium to get IRA $$ out --- maybe I'd be less concerned about the taxes as you may be in a higher bracket later -- after the school? You mention "foolish debt" which could be userious, non-deductible credit card rates. It might be safe to assume IRA growth of 10% over time --- tax deferred. But who can forecast in the short run? And debt interest is for sure! One tie breaker may be flexibility: If you had an unexpected bill in the last semester would it be easier to tap your own IRA funds then --- or would the cards or other sources of funds be available with certainty then?? Maybe -- even though you speak of full time school -- if you could find some way to generate a bit of income -- which would be nearly tax free, you might avoid five or ten thousand in debt over the next year or so..... wishing the best!

Hope this helps a little........ Jack
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Thanks Pixy and rjm for the food for thought. I am exploring my options now while I still have 8 months to make a decision. Hmmm....What to do....What to do. Goldie
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And thanks to you as well Jack. More food for thought! Goldie
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