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Help me decide - Page 2

Poll Results: What should I do?

Poll expired: Aug 12, 2012  
  • 53% (7)
    1. Roll the money over to a Roth IRA
  • 46% (6)
    2. Take the distribution
13 Total Votes  
post #11 of 17
8/8/12 at 7:24pm
Thread Starter 

I re-read through the paperwork and it specifically says that I can't roll over to a Roth, it would have to be a traditional IRA. Cookie is spot on about the $ limit b/c of the roll over. I wouldn't be contributing any additional for another 2 years. Texas teachers have their own retirement thing they contribute to, so I am not sure how that would all work. I'll have to research that. 

 

I am thinking seriously about taking out enough to fix my van and pay off all debt, then roll the rest over. 

 

We aren't talking about a huge amount of money here either, well it is a lot for me in my situation b/c it would solve my $ issues, but it isn't some grand amount. 

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post #12 of 17
8/8/12 at 8:07pm
Normally I'd recommend putting it into some form of IRA. However knowing your situation the last few years, I'm going to go against my normal sage wisdom biggrin.gif and say pay off debt first.

First off, we just finalized my DD's school loans for this fall. We've luckily never had to do school loans before. I was somewhat shocked at the rates and how they accrue interest even while you're not paying. It showed how in reality, you're paying about double what you actually borrow by the time the loan is paid off. So if you don't have to borrow, you're saving an enormous amount of money in the long run.

Second, if you have credit card debt (which I think you've said you have?) you're paying quite a bit already on interest on those.

Third, you've been under so much stress the last few years that I think it would be great for your mental health to not have to worry about all the debt you have and to be able to do some things you've put off.

So my advice is to try to think of it as free money, or a gift perhaps. Spend it on yourself in ways that make you happy or makes your stress level lower. If there's any left over (or if you figure out what you'll need to spend) THEN put that into an IRA. Realistically you're still very young and if you start working, you'll have many years to contribute to retirement.

Enjoy!!! biggrin.gif
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post #13 of 17
8/8/12 at 8:22pm
Thread Starter 
Quote:
Originally Posted by Cookie2 View Post

Even if you're considering taking some of it, roll it ALL over into the 401k first. Like I said earlier, you may take less of a hit if you take it from the 401k.

I'm going to look into that, thank you! I thought it would be an additional 10% fee if I took it out at a later date (so 30%). The paperwork said something to that effect, but I'll research it. 

 

Quote:
Originally Posted by aliadam View Post

Normally I'd recommend putting it into some form of IRA. However knowing your situation the last few years, I'm going to go against my normal sage wisdom biggrin.gif and say pay off debt first.
First off, we just finalized my DD's school loans for this fall. We've luckily never had to do school loans before. I was somewhat shocked at the rates and how they accrue interest even while you're not paying. It showed how in reality, you're paying about double what you actually borrow by the time the loan is paid off. So if you don't have to borrow, you're saving an enormous amount of money in the long run.
Second, if you have credit card debt (which I think you've said you have?) you're paying quite a bit already on interest on those.
Third, you've been under so much stress the last few years that I think it would be great for your mental health to not have to worry about all the debt you have and to be able to do some things you've put off.
So my advice is to try to think of it as free money, or a gift perhaps. Spend it on yourself in ways that make you happy or makes your stress level lower. If there's any left over (or if you figure out what you'll need to spend) THEN put that into an IRA. Realistically you're still very young and if you start working, you'll have many years to contribute to retirement.
Enjoy!!! biggrin.gif

I can't believe I just got a free spending pass from Aliadam, lol. I'm shocked!!!! You know, my debt isn't too bad, but it does have high interest. I could pay off my credit card and the one student loan I have, plus pay next year's tuition so I don't have to take another loan. I get grants and scholarships, so I haven't had to take out much in loans, I've been very lucky! I do kind of feel like this is a gift to me, a parting gift if you will from the crazy drama I've had to go through. 

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post #14 of 17
8/8/12 at 8:52pm
Quote:
Originally Posted by stacia View Post

I can't believe I just got a free spending pass from Aliadam, lol. I'm shocked!!!! You know, my debt isn't too bad, but it does have high interest. I could pay off my credit card and the one student loan I have, plus pay next year's tuition so I don't have to take another loan. I get grants and scholarships, so I haven't had to take out much in loans, I've been very lucky! I do kind of feel like this is a gift to me, a parting gift if you will from the crazy drama I've had to go through. 

Yes, I was shocked as the words were coming out of my normally stingy little fingers ROTF.gif But I do think at least paying off all the debt that has interest is just about as wise, and would have the added benefit of peace of mind.....that's certainly worth a bit of money IMO.
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post #15 of 17
8/9/12 at 5:09am
Quote:
Originally Posted by stacia View Post


I am thinking seriously about taking out enough to fix my van and pay off all debt, then roll the rest over. 


That is exactly what I would do. And like aliadam pointed out- the peace of mind ALONE will be worth the withdraw penalty amount.
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post #16 of 17
8/9/12 at 5:23am
Quote:
Originally Posted by stacia View Post

 

I am thinking seriously about taking out enough to fix my van and pay off all debt, then roll the rest over. 

 

I would do this also. You need your van to be in good condition since you have 4 kids to drive around in it! 

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post #17 of 17
8/10/12 at 12:45pm

Well depending what the amount of penalties were to cash it out versus rolling over and taking out a small amount wich ever lost me the least amount of money is what I would do.

 

Also if you do cash it out what about paying for repairs for the van because would you be able to repair a big expense like a transmission ect wich is generally over $2000 bucks pay of some of the debts leave you a little savings then put some of it into a traditional IRA. I guess in your situation if the numbers were better to cash it out I would then make sure I opened an IRA.
 

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