Cashing in a Simple IRA
I want to cash in a small $12000 Simple IRA to pay off Debt. I will be working at least 15 more years and credit card debt is $7500. I have other IRA’s and this one is just sitting at a previous employer, doing nothing. I have anxiety over this debt. If you have debt, you really have no savings, so I hear.
Terry Says
Wait, calm down. That would be a BIG mistake. Especially if you’re under age 59-1/2, which means you’d pay a 10% penalty AND income taxes on the withdrawal. Here’s my advice:
1. It shouldn’t be just “sitting there doing nothing.” Call Fidelity or Vanguard (1800-FIDELITY or 1-800 VANGUARD) and have them roll the money over to a rollover IRA. YOU DON”T TOUCH IT! They’ll handle it for you. Then invest it in their “balanced” fund — and stop thinking about it until retirement.
Second promise me to use my simple formula to pay down credit card debt in less than three years.
Take the current minimum monthly payment and double it. Write that number down.
Keep paying that same amount every month — (NOT double the new minimum).
Don’t charge another penny.
Your card will be paid off in less than 3 years.
That should end your anxiety and help with your eventual retirement. And don’t tell me you “can’t afford” to make those double payments. Go get a weekend job to earn the extra money. It will be worth it, I promise! Please write back in 6 months and let me know how you’re doing.
