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mer191

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Given my situation, how can I not tap into my IRA to pay debt?
I am 35 and am in $23,000 of credit card debt. The monthly payments prohibit my ability to save any money and I'm at my wits' end. I have made some progress this year (paid off 10%), after going nearly 8 months without using a credit card, but ran out of cash and had to dip in again.

I have a decent amount in my IRA (3x my current salary) that is becoming a very attractive option. I will be working less than full-time next year (in nursing school) and am getting married in August. Without some extra money, I won't be able to make minimum payments on these cards.

As I understand it, if I manage to withdraw just enough from my IRA to keep from moving into a higher tax bracket, the main drawbacks are the 10% early withdrawal fee AND the lost potential gains over the next 30+ years (which is not insignificant). I was thinking of then consolidating the remaining credit debt with a loan further, cutting down my repayment time and improving my credit utilization in the process.

What are people's thoughts on this plan? How can I make this work? If I contribute to my IRA when I'm making more money, will this help mitigate the damage of my early withdrawal?

Thanks!

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Don't tap retirement fund!!!

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First thing is, it is taxed as regular income and most people fail to pay it back.  You also lose the compounded interest that you receive when you leave the money in the account. You might want to search for Dave Ramsey's site so you can get ideas on how to pay off your debts.  Keep a notebook recording absolutely EVERYTHING you buy in a month and work on getting your spending under control.  Your credit card debt is way too high!  You need to work on getting those down because you donoit need to enter marriage with a debt load.  That doesn't get marriage off to a good start.

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