What would you do?

[anonymous1]

What would you do if you had $30,000 in debt (not including mortgage) and you had the money in mutual funds to pay it off? Breakdown is $10,769 auto loan, $12,284 travel trailer, the rest credit cards and computer. We have tried to sell our travel trailer but there isn't anybody who wants to pull it with the way gas prices are. We didn't have a car loan but last March, thanks to an idiot 19 year old who wasn't paying attention, our car was totaled. I am just struggling with what to do. As I have figured it, we aren't making much more interest on our investments than we are paying out on our debt. Why is this such a hard thing? My gut tells me to first (most important) cut up the credit cards, pay it all off, try to sell the travel trailer in the Spring, and knock down that mortgage. Deep down that is my GOAL!

Stephanie

[Juto]

Don't touch the mutual fund money. Pay debt off any other way, but don't steal from your future. That is my opinion.

[pammy]

Might not be a popular opinion, but here goes:

Is it in a retirement account? If yes, then don't touch it!! They will hit your hard with fees and penalties, like 40%.

If no, just regular mutual funds, then how about this: Work on paying off your debt for, say, a year. See if you can truly not use your cc's or get further into debt. You need the behavior changes of not using debt, cause, as you know, it's not helping you any. But, if in, say, a year, you are able to pay off some of your debt, you haven't gone into more debt, and you promise not to go back into debt once you pay everything off, go ahead and cash out your mutual funds and be done with it. But ONLY, and I mean only, if you don't go right back into debt, or it as the previous poster said, you just robbed from your future and didn't learn anything.

Just my two cents.

[Nishu]

If there are no penalties involved in cashing out your MF, I'd cut it down to your three months of expense emergency fund and pay the rest down as you go.

[sdrjeolsen]

Might not be a popular opinion, but here goes:

Is it in a retirement account? If yes, then don't touch it!! They will hit your hard with fees and penalties, like 40%.

If no, just regular mutual funds, then how about this: Work on paying off your debt for, say, a year. See if you can truly not use your cc's or get further into debt. You need the behavior changes of not using debt, cause, as you know, it's not helping you any. But, if in, say, a year, you are able to pay off some of your debt, you haven't gone into more debt, and you promise not to go back into debt once you pay everything off, go ahead and cash out your mutual funds and be done with it. But ONLY, and I mean only, if you don't go right back into debt, or it as the previous poster said, you just robbed from your future and didn't learn anything.

Just my two cents.

Only thing I would add is that once you withdraw the money and pay off debt, use the monthly amount you were using for debt and put it back into a mutual fund and build it back up to where it was.

[dianne9106]

We are in a similar situation except we are just plain stupid! We talked about paying everything down for one year, but we are still paying an interest rate, not high, but one none the less. If we did that, we would just find some way to go deeper into debt. So, we cut up the cards, put ourselves on a budget and in JAN we will use some money to pay off two of debts completely. That way we can free up more money to put into our retirement fund (TSP) and build up our emergency fund. Our situation is unique, a different long story. Some of the other recommendations are good concerning your actual retirement verus fees, etc... But, can you pay these things off and stay out of debt??? We can't. We were completely out of debt up until lately. Loooooong Story
So pay somethings off to take the pressure off and put that extra money towards your other debt. If all else fails look up a professional financial planner, one that won't try to sell you anything, and take the day and get things sorted out.
Best Wishes!!
Dianne

[anonymous1]

Wow, I wondered if I would get replies to my post. Hubby and I talked about it and I thought about it all day yesterday. We have an IRA and his 401K is now into the 6 digits so basically this money is and isn't for retirement. I have been checking into withdrawing our dividends from our life insurance to at least pay off our car first. Some would disagree, I know. I have cut up all my credit cards except the Visa and it is locked up where I can't get to it. The way I see it, our life insurance dividends are not making as much money as our mutual funds. I have already started to get those credit cards paid down. I love being able to pay online cause I can make more than one payment when I want. I often do that. Do ya ever wonder where that cc debt came from. I can't remember. We paid for all our vacations out of pocket so it wasn't that. I guess little things here and there add up fast!

I quit my job in 2003 to be a stay at home mother but at that time things were a little cheaper. Have ya seen the price of milk lately? I won't begin to comment on gas! I am going to be more active in trying to save on my electric bill and etc. My kids probably think I am the "light" police cause I am constantly telling them to turn their lights off (they leave a trail of them everywhere they go). I am still trying to work on groceries. I buy healthy and organic so that is a hard one to cut. I will not to eat out and cook at home!

So thanks for the help guys. This is such a great website!

Stephanie

[frugal-fannie]

Do you have enough to get by without life insurance. If so cash out the policy.Once I had enough money in my retirement account to pay off the mortgage, I canceled mine. I tell my kids just save 10k to bury or cremate and you don't need it. Some places offer it free
for employees, do you have a plan. Do both of you make enough to pay the payments if something happens to the other one. If you have younger children to care for and could not make it on your own then you need insurance. My friend has over a million dollars on herself and her husband. She asks me why I don't have more and I tell her I don't want to look more attractive dead than alive. Really I don't want my husband spending it on some other woman after I worked so hard. bad humor