Don't Pay Off A Credit Card With A Roth

Matthew is down to one credit card after paying off $45,000. He owes $9,000. He has a Roth IRA and wonders if he should just cash it in to pay off the remaining debt. Dave says no.

QUESTION: Matthew in Lexington is down to one credit card after paying off $45,000. He owes $9,000 on the credit card. He has a Roth IRA and wonders if he should just cash it in to pay off the remaining debt. Dave says no.

ANSWER: No. You’re within eight months of being debt-free. Don’t give up your Roth. You’ve made so much progress! You’ve got to take one more breath and finish your swim. If the Roth is in a bad mutual fund, you need to consider moving it to a different mutual fund, though. Most mutual funds have taken a beating because the market has. Mine have. But they haven’t taken a beating like they’re in half or something. They were, but they’re back up. If your stuff is in half of what it was a few years ago, then you’ve got a different situation. You need to look at the particular mutual fund you’re in and decide if it’s in the wrong fund.

No, I wouldn’t cash out retirement to pay off debt unless it’s to avoid a foreclosure or to avoid a bankruptcy. You’re definitely not in either one of those situations.