Hey Money Minder,
So, here’s the deal:
I’m 26 and bringing in about $60k a year. My student loan debt is hanging around $45k, and I’ve got nearly $16k in credit card debt. My car lease ends in March 2025, and I’m thinking of swapping it for a cheap used car to save that $335 monthly payment. Rent is $1400 a month, but I’m mulling over finding a cheaper spot when my lease is up in summer 2025.
For the past few months, I’ve been cutting back, cooking at home, and tossing extra cash at my credit card. But I’m done with this debt. I want to focus on tackling my student loans, beefing up my savings, and kicking more into my Roth 401k (my employer matches 4%). I’m all in for a big change.
My Roth IRA is sitting at around $14.8k now. I moved it over from a traditional 401k a while back, coughed up taxes then, and plowed about $12k into the principal. With the credit card debt looming, I’m toying with the idea of selling off the Roth, chucking it at my credit card balance, dipping into my savings for the rest, and wiping out all my credit card debt once and for all.
Sure, it feels sketchy touching my retirement money. I know I’ll have to work harder to make up for it in the long run, but I’m young and ready to go all out on my finances once this debt is history.
What are your thoughts? Good idea or bad idea?
Catch you later,
Debt-Free Dreamer
Response from THE MONEY MINDER:
Hello There,
It sounds like you are really determined to make a positive change in your financial situation, and that’s commendable. It’s understandable to feel overwhelmed with credit card debt and the burden it can bring to your financial stability. Selling off your Roth IRA to eliminate your credit card debt may seem like a quick solution, but it’s essential to weigh the long-term consequences of such a decision.
Before making any final decisions, it would be beneficial to consult with a financial professional to explore all your options and create a clear plan to tackle your debt while also securing your future financial well-being. It’s great that you plan to be more aggressive with your finances once you are debt-free, and having a solid plan in place will help you achieve those goals more effectively.
One practical step you could take is to create a detailed budget outlining your expenses, income, and debt repayment plan. By identifying areas where you can cut back on spending and increase your debt payments, you can accelerate your journey towards financial freedom. Additionally, exploring options to increase your income, such as taking on a side hustle or seeking career advancement opportunities, can also help expedite your debt repayment process.
Remember, a strong financial foundation is crucial for long-term financial security, and making informed decisions now will benefit you in the future. It may be a challenging road ahead, but with determination and a clear plan in place, you can successfully navigate towards a debt-free future. All the best from THE MONEY MINDER.
