gribe
Confused about dryer sheets
I'm 35 years old. I want to pay off my credit card which has a balance of about $3,900. Interest rate is a ridiculous 22.9%. I would like to withdraw from my 457 to pay off this debt. Is that a good idea?
Should I use my 457 to pay off CC
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MasterBlaster
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Well at least you won't have to pay a penalty to take your money out of the 457 plan.
But you'll pay (state and federal) income taxes on what you withdraw
Also, You will forego any growth that the 457 plan might have.
The question I would ask is....
Why would you get in a situation where you have credit card debt ? And 22% interest credit card debt at that !
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Mulligan
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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If you have good credit, take advantage of a 0% CC offer and transfer it. Although I only do it occasionally and with a specific game plan, I have had friends float credit card debt for years and pay little to no interest on CC via the transfer game. Paying 22% percent would be unacceptable to me.
SumDay
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Or read Dave Ramsey's Total Money Makeover, and start snowballing that $3,900 until it is a big fat ZERO.
I've done what you want to do, and it's the easy way out. That 457 plan should not be a crutch. You don't want to learn to rely on it, or when you get to be my age you won't have much in your retirement fund.
I don't know your situation, but $3,900 is not a huge amount of money. Start throwing an extra $500 a month at it and this time next year it will be gone. Or call and ask the credit card company to freeze it and give you a better rate with a promise from you that you'll pay them XX a month.
YMMV.
I've done what you want to do, and it's the easy way out. That 457 plan should not be a crutch. You don't want to learn to rely on it, or when you get to be my age you won't have much in your retirement fund.
I don't know your situation, but $3,900 is not a huge amount of money. Start throwing an extra $500 a month at it and this time next year it will be gone. Or call and ask the credit card company to freeze it and give you a better rate with a promise from you that you'll pay them XX a month.
YMMV.
ziggy29
Moderator Emeritus
How long would it take you to pay it off if you don't do that? If it's only a few months I'd just suck it up, tighten the budget for a while and throw as much excess cash flow as I could at it.
If it's longer than that, I'd like to consider a balance transfer to a lower rate while you pay it down (if you have adequate credit to get a single-digit interest rate). Raiding a retirement account is one of the last resorts, and should absolutely *never* be done unless you are 100% confident you won't run up the balance again.
If it's longer than that, I'd like to consider a balance transfer to a lower rate while you pay it down (if you have adequate credit to get a single-digit interest rate). Raiding a retirement account is one of the last resorts, and should absolutely *never* be done unless you are 100% confident you won't run up the balance again.
