Why You Should Avoid Paying Off Debt With Savings
For example your debt is costing 19%, your retirement account is making 4%, you may think that by swapping the retirement for the debt you will be pocketing the difference.
The problem here is that withdrawing funds is easy, but it's very hard to pay back those retirement funds. With the right mindset, borrowing from your retirement account can be a viable option, but even the most disciplined planners have a tough time placing money aside to rebuild these accounts. When the debt gets paid off, the urgency to pay it back usually goes away. It will be very tempting to continue at the same pace, which means you could go back into debt again - but this time five years of savings will have been wiped out too.
If you are going to do it, you have to live like you still have a debt to pay - to your retirement fund. Keep that need-to-pay mentality you had with your credit cards, and create a plan to pay yourself back.
Call me today for a FREE evaluation of your specific financial situation.
Jesse Alvarado
(562)822-5565
No comments:
Post a Comment