Using Roth to Payoff Credit Card

Was thinking of using Roth to payoff credit card debt.

About 5 years ago I was 55K in credit card debt and started a plan to pay it off, I have stuck with my plan and the current debt is 9K.

Through my plan I had bounced around with zero percent deals but realized it reduced my zest, I mean I stuck with my plan but seemed not as urgent.

Currently it is at 5.99 % until August 2025. I knock off about 500 a month of the balance now.

I was born in the early sixties so I’m not going to lose “decades of compounding” if I do take from my Roth I was thinking of “paying myself back” by reinvesting weekly back into the Roth, probably 120.00 or so a week.

I think the feeling of not having that debt will be nice, my only debt would be a small mortgage on my condo (84K).

My credit score is 814.

Would you do it ? or just keep hammering it down at 500 a month ?

I’m on the fence.

Congratulations on reducing your credit card debt from 55K to 9K.
'“I was born in the early sixties” - you are over the age of 60. What is the status of your current retirement savings compared to your projected retirement expenses? This is an important consideration for others to comment on your situation.
Your credit score is 814 with 9K in credit care debt? With 30% of a credit score based on the ratio of debt to credit limit I do not understand how your score is feasible even if you have a massive credit card limit?

Thank you for the congrats.

I have low 6 figures in my retirement accounts (210K), I plan on semi retiring soon and will work a part time job if I collect SS, I think under FRA you can make 23K a year without penalty ? and wouldn’t have to touch retirement accounts. With SS and a part time job I can easily meet my expenses.
My credit score comes up on my CC account , it says I use 12% of my available credit.
I have about 80- 90K ? in available CC (which I would never use, I’ve learned a steep lesson) I also have a heloc on my condo with a zero balance.
I have never in my life been late with a payment for anything so that plays in I’m sure.

I use a reward card (2% cash back) for my day to day purchases which I pay in full every month so I’m not sure how much that plays into credit usage score wise.

Congratulations on paying off so much CC debt.
Sounds like what you’ve been doing has been working.
$9k paying down at $500/month is about 1.5 years, which will go by fast.

Please keep your Roth. If you ever have to cash it out, let it be for a true emergency.

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Thank you for the congrats.

I also get a holiday bonus from work usually about 750.-1000 so that will go right to it.

I know it’s probably not the greatest idea to take from Roth but something about making it disappear seems appealing.

Do it if it will let you sleep @ nite and not stress.
But You have to cut the card ( keep the account ) and realize it wasnt worth being a nice person to friends. or Vet. bills.
( 2 things that get put on cards … plus clothes and nice dinners )
You cannot do it again.

Maybe whittle it down the balance over the course of a Year or Two.
so Your Compounding % can pay for some of the balance.
If you pay it off in a large sum, You might get “tempted to spend” again.
( happens to everyone )

As @NancyM suggested I would keep your Roth. Use the opensocialsecurity or the maximizemysocialsecurity calculators to help guide your social security timing decision.
Also consider at some point hiring a hourly fee only financial advisor. The financial decisions during the decumulation years are considerably more complex than the decisions during the accumulation years.

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I would also keep the Roth. Think of what would future self would say to you present self if you spent part of it. Remember, you need to plan to 95 years old in most cases, if you’re 60 then it is decades more of tax-free compounding for that final incremental sliver of money.

I suggest you consider the finish line to be totally debt free, if you raid your Roth to make the CC debt go away you may be less motivated to keep up the debt-free pace you’ve been at.

I wouldn’t consider retiring with any debt, including a home mortgage.

Great rate of 5.99%. Why not continue paying that off as you have been doing until 8/25 when rates go up? Then, if rates go up to the 15% to 20% range, pay it off from your Roth.

I vote for leaving retirement savings alone. Your future self will thank you.

It’s fine to pay 6% or so interest as long as you have stocks in your portfolio. The market has been up this year over 20%. So giving up 20% to pay off 6% is not logical. Even 4% on cash reserves is is an insignificant difference.

Of course we can’t predict future returns and we can’t guess at whether carrying debt is bugging you and you’d fell better paying it off.

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First - I agree with the others - keep your Roth - you never know when you may need those funds in retirement, especially for unexpected medical bills -
Secondly - another option is to delay your semi-retirement, maybe by six months, and pay additional from your income to get rid of that 9K debt faster. ( If you find that you are able to pay it off sooner than you estimate, of course, semi- retire and celebrate! : ) )

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Thank you all for the input.

It looks like keeping the money in the Roth is the best thing to do, I will in fact keep it in there.

I am making good progress paying it down and it’s at a reasonable rate until August.

There was just something compelling about making it disappear and start the new year without the CC debt.

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