Hi Terry:Love you–btw-
I am in a dilemma- frugal but not with my daughter now 19–private school etc -and the debt has accumulated-21,548$ I can borrow from my valic fund and pay the account back at 5% -2% back to me– my concerns– if I lose my job–and default on loan then it becomes ordinary income and I would also lose a FERS disability annuity that I have that pays 20k a year– I can only make 80% of what a current worker is making or I lose the annuity for 1 year– at age 60 ,there is no cap on outside income– I just turned 58 Monday. I have been at same place for 10 years and one never knows-but in 7 to 8 years I would like to golf more and work less— I like your advice– or I could work with dave ramsey disciple and she charges 150$ to set up a budget to pay off credit cards and not take loan out–sorry to make your head spinnnn—Jerry
Terry Says: Well, because you “love me” — and because what you really need is FREE help and a dose of “backbone” — I’m going to stop this “spinning head” of yours right now! First, your daughter can take on her OWN debt — OR go part time to school. I’ve been consistent with this position. It’s great for parents to help with their children’s education — but not at the expense of their own retirement. Those kids won’t be around to help pay your bills after they graduate. So be open and be firm with your daughter. Tell her that you are “out of money” — but that she can live at home and go to community college, if she contributes to the food budget.
Second, you don’t have to pay $150 to set up a budget. Call 800-388-2227 — which is the toll-free number for the National Foundation on Credit Counseling. That will automatically connect you to the nearest local office, and you can go in, or talk to them on the phone, for either no fee or something very low like $15-$25. They are trained to help people in your situation, and you can trust them.
Then write back to me and let me know what they suggest. BUT do NOT under any circumstances — except life-or-death — borrow from your retirement plan. You obviously understand the huge consequences of doing that. Your budget plan will figure out a way for you to pay back that $21,000 — either by spending less on some things, or think about how you might earn a little more money every month (even on disability) — perhaps babysitting for a neighbor, or taking their dog for a walk every day. That latter might do you both some good! Please write back and let me know the plan.