Ask Terry Questions Take from IRA for partial payment of home equity loan

Take from IRA for partial payment of home equity loan

By Terry Savage on August 13, 2015 | Credit/Debt

I owe 30,000 for a home equity loan. I am thinking of taking 10,000 from my IRA (since I’m 60 there will be no penalty but I will have to pay taxes. Then I would have a loan of 20000 that I could pay ASAP I have approximately 2,500 in credit card debt. I am on a fixed income of approximately 2,000 a month which takes care of monthly expenses including insurance and savings and living expenses. Should I take 10,000 out of my IRA? Thanks for your expert advice! I appreciatecha!

Terry Says:  Well, I can certainly understand the desire to be out of debt at this stage of your life.  But have you considered the alternative of trying to earn enough money to pay down the debt, instead of raiding your IRA?  Perhaps  you are not in a positin to earn extra money.  In that case, this might be a good alternative.  You seem to have other savings to pay down the balance of the loan, if I understand your question correctly.  But don’t leave yourself cash poor.

In the end, it all comes down to math.  If you are paying a high rate on your home equity loan, you are probably better off paying it down.  I’m assuming you don’t want to take a lot of risk with your IRA, so probably aren’t earning as much on your IRA as you are paying in interest.  Without more details about your other assets, I can’t really make this decision for you.   But there is no price too great to pay for peace of mind!



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