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403b retirement vs Student loans
Old 11-11-2009, 08:30 PM   #1
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403b retirement vs Student loans

I have about 30k in student loans and so does my wife totaling 60k in debt. I am a Youth Pastor and she is a nurse. The plan always was for her to work full-time for 5 years after graduating college, but our Daughter came unexpectedly early in our third year of marriage. So instead of her working full-time for 5 years to pay off debt she got pregnant the week of her final exams her senior year of college.

So I am 27 and have about 20k in my 403(b). My wife is 25 and has next to nothing in her 401(k). But even with my minuscule income if we pay off about 15k of student loans she could stay home full-time. We own the house that we live in (didn't use any of my 403b for a down payment and still owe 98k on the mortgage), but I am wondering if retroactively I can use my 403(b) to help pay for my college or my house. We are planning on downsizing back to an apartment because we want to get our debt paid off and possibly move to Mali, West Africa in the next 5 years to work for a hospital there.

So the short and sweet of my question is:
What do my options and advice would you give for me to pay down either my house or my college debt from my retirement. Without losing to big from my 403(b) to taxes or penalties.

I am not set on doing this, but just want to know my options. Thanks for your help.

-Paul
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Old 11-11-2009, 09:37 PM   #2
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Wife goes back to work. You work as well or become a SAHD.
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Old 11-11-2009, 10:11 PM   #3
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You need to maximize your income between the two of you, and I wouldnt use anything in your 403(b) to pay off debt.

Yea, Id say that your wife should go back to work and you stay home with the baby.
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Old 11-11-2009, 10:52 PM   #4
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Though I am all for the SAHD thing, the maternal instinct and desire overrides that plus for me my job isn't about the cash, I want to use my time to make a difference. My wife does work part time (2 shifts a week instead of 3), but we are just looking forward to when she only has to work 2 shifts a month.

So we may have to keep trucking like this for a few more years. But I just wanted to know my options.
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Old 11-12-2009, 06:13 AM   #5
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I think you just insulted all the working moms and dads out there. And you insulted all the caregivers of children at the same time.

Being a Youth Pastor and a caregiver of your daughter and making a difference are not mutually exclusive. You can do all three very easily. Your wife can be a nurse and mother at the same time. Easily.
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Old 11-12-2009, 06:19 AM   #6
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I would not take money out of retirement savings to pay off student loans. How old is your daughter now? Because maternal instinct and all, it becomes a lot easier (and more affordable) to combine work and parenting once your child is 2-3 -- you can always use a home-or church-based daycare center or pre-school, at least part time, to free up more time so that your wife can do some work for money. It also helps that your job most likely has some scheduling flexibility to it -- makes it more feasible to tag-team with childcare responsibilities.

Heck, if your church doesn't already have such a thing you could suggest your wife start one! Care for her own child while getting paid to help care for other kids as well. I would definitely try to get rid of the debt before you move overseas. Overseas life can be great, but there are a lot of unknowns and it is best if you don't have bills hanging over your head when you make that kind of move.
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Old 11-12-2009, 09:03 AM   #7
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Off topic--a little. I am ready to be flamed.
I know a couple who take unpaid leave from their jobs and go down to Central America with their church group. While there they help build churches and do other very good things for a community in one of these poverty stricken areas. They are making a difference, and it is commendable.
But incredibly inefficient. These people live in one of the wealthiest countries on earth. They have skills that enable them to earn $30-$70 an hour here in the US--a fortune in Guatemala. So they take time off from these jobs to go to Guatemala for two weeks to be amateur carpenters and masons. If they instead stayed at home and worked, they could send the earned money to Guatemala and each hour of their pay would put 10 masons and carpenters to work for that hour building the school. The schools would get built faster and probably better, the workers would get badly needed money to feed their families, and we'd even lower the carbon footprint by not flying a bunch of Americans 3000 miles to the jungle. But I guess they want to feel like they are helping and see the results directly. Are they being helpful but inefficient? Or even, in some admittedly strained perspective, selfish? I know what I'd think if I were a mason in Guatemala.

"Making a difference" can mean a lot of different things. A single guy or gal (American or otherwise) with no family or financial (loan) obligations may be in a better position to responsibly give time to the impoverished peoples of the world. Other people, due to their own decisions or due to twists of fate, may be in a situation where they can best make a difference in other ways. There's nothng wrong with "making a difference" right at home--where charity begins.

Okay. None of this responds to your question. This is the downside of free advice in a public forum.
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Old 11-12-2009, 09:22 AM   #8
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Off topic--a little. I am ready to be flamed.
I know a couple who take unpaid leave from their jobs and go down to Central America with their church group. While there they help build churches and do other very good things for a community in one of these poverty stricken areas. They are making a difference, and it is commendable.

But incredibly inefficient. These people live in one of the wealthiest countries on earth. They have skills that enable them to earn $30-$70 an hour here in the US--a fortune in Guatemala. So they take time off from these jobs to go to Guatemala for two weeks to be amateur carpenters and masons. If they instead stayed at home and worked, they could send the earned money to Guatemala and each hour of their pay would put 10 masons and carpenters to work for that hour building the school.
Maybe, but perhaps they are doing it because they want to experience it first hand and carry the memories with them. That's not something that can be duplicated, felt or experienced by mailing in a check.
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Old 11-12-2009, 10:07 AM   #9
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Maybe, but perhaps they are doing it because they want to experience it first hand and carry the memories with them. That's not something that can be duplicated, felt or experienced by mailing in a check.
That's true. And flying down there to move mud and saw wood while breaking bread with the locals is better than staying home and doing nothing. But I think everyone needs to be honest with themselves about the cost of these memories and experiences. We've got "Eco-tourism", is there "poverty experientialism"?
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Old 11-12-2009, 10:23 AM   #10
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My spouse has been one of those "who went to Guatemala to see how the money was spent." What samclem has written is absolutely true. My spouse now realizes that she is better at making money as a civil engineer and giving it away than in trying to do engineering in an undeveloped rural area of Central America.
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Old 11-12-2009, 10:50 AM   #11
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Off topic--a little. Are they being helpful but inefficient? Or even, in some admittedly strained perspective, selfish? I know what I'd think if I were a mason in Guatemala.
I have had the same sort of thoughts and of many places that is true, but there are a few things that need to be considered.
1. When you go there once and live amongst the poor for a few weeks, it changes how you live at home and how you give to people abroad.
2. Most of us can't even imagine how bad a Malian national hospital is, how very few there are, and how poor the national medical training is. There is a reason why relief groups set up and run private hospitals.
3. Almost everyone who spends a few months living in a 3rd world country isn't doing it for selfish reasons. I understand the point you are trying to make, but it is okay to want to grow personally from a trip. Just like it is okay to go on vacation from time to time to relax. I was just in Mali for 16 days and it was such a reminder of all the things we take for-granted here.
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Old 11-13-2009, 12:39 AM   #12
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Not all development work, even strictly volunteer stuff, is focused on the provision of unskilled or minimally-skilled labor. While the impact he and his wife might make if they are providing direct services that could be given by local people may be minimal, if they can provide training in best practices, new techniques, or skills that are otherwise hard to access they could very well make a significant and much-needed contribution. Even in the area of project management, at higher levels many organizations will hire expats who have the appropriate language skills and cultural background, because they are able to operate more effectively in the international donor environment -- you need to have native-level English skills and a lot of cultural sensitivity, along with good analytical and management skills, for most management-level international development jobs. One of the reasons I was hired for my current job (and my last one, for that matter) is because I bring things to the work from my research/academic background and my past experience that would be very hard to find in a local candidate.lhamo
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