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Paying Off Credit Card Debt

By Terry Savage on June 15, 2022 | Credit/Debt

Terry:
My wife and I have about 50K in credit card debt. I am using a service that will negotiate a lower interest rate as long as I agree to a payment plan but what I would really like to do is pay down as much of the debt as possible. My wife can receive $2,123/month from Social Security in about 3 months when she will be 66 and 4 months. She insists on waiting until she reaches age 70 and would rather withdraw money from her IRA to pay down the credit card debt. I understand why she wants to wait until age 70 but in the meantime, we are accumulating more debt. I also think that taking money out of an IRA is going to come back and haunt us in the future. What do you suggest?

Terry Says

First, stop accumulating more debt.
Second, I agree with your wife — for one reason only. Yiu are likely to die first, and she gets an additional 8% in her base check for every year she delays. And she will get that, plus a COLA on that higher base check, for the rest of her life. Why rob her future?

Beware of those firms that tell you to stop paying and to set the money aside so that they can negotiate a lower rate. That can really ruin your credit.

BUT if you can earn enough now — extra money– to DOUBLE THE CURRENT MINIMUM PAYMENT ON EACH CARD — and keep paying that same amount every month (not the new minimum but the current amount) then you will have the card paid off in less than 3 years.

So instead of her taking SS early — how about you BOTH get side jobs now and make enough money to do that!! It’s a much better plan!!

money

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