Should I refinance or withdraw from IRA to pay off 25K of credit card debt? I am 64, self employed earning about 30K/yr. My wife is retired. credit card debt snowballed and I now want to pay it off but cannot afford the monthly payments. Have about 300K in IRA.
2Refinancing home is almost certainly the better choice. More important question is how you're going to stop borrowing and pay that down....– keshlamApr 7, 2015 at 12:50
I hope this doesn't come off to crass but I would subtract your current age from your projected age of death. If the interest + principal paid in that time frame to your credit card is less than the total due on the credit card making normal monthly payments, then I wouldn't take out of your IRA to pay off the card.– DotNetRussellApr 7, 2015 at 15:28
btw, in this question money.stackexchange.com/questions/49595/… a guy has pretty much the same problem (25k in credit card debts and some money in deductible saving account)– Max LiJul 6, 2015 at 20:31
You have a standard deduction of $12,600 (Married filing joint, MFJ) plus $8000 in exemptions. A total of $20,600 off the top. In other words, just under $10,000 taxable unless you have other income you haven't disclosed. For MFJ, you are at the 10% bracket up to $18,450 in taxable income.
I would withdraw just enough to 'top off' the 10% bracket each year, whether or not you send it to pay down the card. You don't disclose the rate, but if you are able take a low interest loan to get to a sub 5% interest rate, I'd do that.