Credit Card debt Roth IRA

[Guest PS486]

I have high credit card debt. I am thinking of closing my roth IRA to pay off ONE card (8,000). Is this a good idea.

I can pay extra on my cards, but would like to pay one of now. Help please.

[John G]

Have you considered rolling all the debt into a home equity loan or jumping to another card with a front end "grace period" from interest rates. Another option might be to get a second job for 6 months or get your spouse back in the workforce. Ask for a raise? Change jobs for higher pay? Some of these suggestions might work for you.

Credit card debt is a real stone around a families neck, no doubt about it. But you will face income taxes and penalties to access your Roth. I would look elsewhere first to reduce the interest rate you pay, then accelerate the debt retirement.

Look for a credit card counseling service in your community... but be careful not to fall for a false pitch. They can help in many ways including getting your debt restructured and perhaps lowering your interest rate.

I would also like to suggest that you cut up every credit card you own but one. The last one gets tossed into your safe deposit box for 6-12 months, not to be used. In 95% of the credit card debt cases I have seen, spending too much is the primary problem. Often folks can't even discribe what exactly they bought to create the debt, which always sounds to me like they didn't need it. The other 5% seem to be the hard luck problem of medical bills, natural disaster, or some other financial blight to which they did not contribute.

Good luck.