Hi all, apologies in advance for the long-winded post, I'd like to try to include as much information as I can. I currently have roughly $38,000 in high interest debt that I am trying to pay off. The balances are as follows:
60 Month Debt Consolidation Loan: $16,888 @ 12.20%
Chase Credit Card (Wife's): $8,058 @ 22.24%
American Express Card: $5,134 @ 16.24%
Citi Card: $7,800 @ 15.74% (Currently 0% APR until August)
I currently have $22,500 in a rollover IRA and $4,800 in my 401k. I currently contribute 5% of my paycheck and my employer matches the first 4%. The minimum payments on these cards total roughly $900. I am considering cashing out my rollover (and withholding taxes) to pay off the cards and once my wife's car is paid off ($350/monthly until August) putting that money towards the debt consolidation loan. The monthly payment on that loan is $400 and if I can pay off an additional $350 a month I can pay off the loan in 2021, two years early.
Once I pay off the credit cards plan on increasing my 401k contribution to 14%, in order to make up for the funds I withdraw from the rollover. I realize that this may leave me a little bit lighter in the short to intermediate term than if I was to leave the IRA alone, but another consideration of mine is the tax implications. My wife is a self-employed hairstylist and I would like to try and reduce our taxable income. If we have $900 in debt payments per month that is $900 that must be deposited into our account to cover it. If those debts can be eliminated and I can reduce my taxable income by increasing my 401k contribution while at the same holding some of my wife's cash earnings back, it seems like it could work on multiple levels.
I'm curious about what you think.
Submitted January 28, 2019 at 03:39PM by picabostreet420 http://bit.ly/2TkrwbZ
