Early last week, my husband and I made an important decision. One I thought I’d never make. But before I tell you about that, let me back track.
I quit being an Illinois state employee in 2011, but I let the money from my retirement sit there. (It was a pretty good sum because 8% of my gross pay had been taken out of every paycheck for 11 years for my retirement, and because I was employed at my job for more than 5 years, the company matched my retirement savings.)
My husband and I have been trying without much luck to find a financial planner. Finally, we chose the one my mom and her neighbor used. I felt a sense of urgency this summer to get the money out of the state because Illinois is in terrible financial shape.
When we met with the financial advisor, he shocked both of us by suggesting that we take enough out of our retirement to pay off our debt.
I know. I know. It’s been beaten in my head that this is one of the worst financial mistakes a person can make. But being deep in credit card debt is right up there in the bad mistakes department, and honestly, on our current income, it will take us a long time to get out of credit card debt.
In the end, my husband and I decided to follow the financial advisor’s advice. We took out enough money to pay off our credit cards.
What can I say? After two years of battling the credit card demon, I feel relief.
I also feel a sense of obligation. We freed up a couple hundred dollars a month from our budget, and it’s our responsibility to use that money wisely. We plan to save for a car (ours is 9 years old and has 121,000 miles on it), and we plan to put money in a Roth IRA, something we hadn’t been able to do before.
So, here’s the numbers in light of the decision to pull some money out:
Personal credit card: $0 -12,225
My student loan: $1,369.37 -182.23
Husband’s student loan #1: $12,922.18 -232.50
Husband’s student loan #2: $16,483.66 -200.70
Personal credit card #2: $0 -3,580.94
Personal credit card #3: $0 -4,106.37
Total: $30,775.21 -20,527.74
A few notes:
Of course, the hit to the retirement is definitely a negative.
We’re out of credit card debt!!
Our emergency fund is now at $3,700.
When we became Gazelle Intense on October 20, 2011, our balance was $57.966.01. Since then, we have paid down 46.9% of our debt, or $27,190.80.