Using The Roth To Pay Off Debt?

Tom has a credit card with $3,000 on it, and he's about to pay it off. He has a Roth IRA with enough money to kill it. Should he just pay it off with interest or take some money out of the Roth to pay it off?

QUESTION: Tom in Montana has a credit card with $3,000 on it, and he’s about to kill it. He has a Roth IRA with enough money to kill it. Should he just pay it off with interest or take some money out of the Roth to pay it off?

ANSWER: You can’t borrow on a Roth. You’d just be taking it out. You can’t put it back. You can only put money into a Roth each year according to certain guidelines, but you can’t put money back that you take out.

You’re on track to have this done well before Christmas. The amount of interest that is paid is not much. That’s really not screwing with your Roth for. I’d leave my Roth alone. It’s not much interest. I hate interest, too, which is why you cut the card up and never do business with the doofuses again. It’s the last time you’ll ever pay interest. That’s a cool thought. I really wouldn’t mess with my Roth for $100. I just wouldn’t. There’s got to be some big money involved here, and then I probably still wouldn’t, but I wouldn’t even have that discussion for $100.