I am 72 yo widower spending above my retirement income. I can refinance 2 mortgages and use equity to pay off $40K cc plus take out $50K cash. That would leave me about $200,000 in equity still in house worth about $570,000 located in good housing market area. I will have no other debts, but my living expenses will take up all my retirement income and more from the remaining IRA income that must be taken out anyway under IRS(but not very much). I have sufficient life insurance/health insurance and hope to live moderately, but not skimping on travel and fun things until age 85 (13 years) since I am single. After 85 I will rely totally on retirement income, all of which is from governments and indexed to COL. Before or at that time I might sell the house which should have appreciated 100 % in 10 years based on past 20 years appreciation continuing. Is it best to use only IRAs to pay off the $40 K cc or to use a new home equity loan to pay it off. Need ANSWERS, spec. from experts, pls.
2007-01-09 12:40:45 · 10 answers · asked by agreeableone 3 in Business & Finance ➔ Personal Finance
I appreciate all the answers so far! Thanks. Added detail: I am a very healthy 72 and from a long-lived family so I MUST plan to live a long life, even if I do not. I won't do away with the credit cards because I travel and they are necessary in the 21st century. I know I am spending too much though and am going to stop that. A reverse mortgage was considered, but is not any advantage. I live in what some people would consider an outrageously expensive home, but it is just one that appreciated in value fast over the past five years due to substantial and unusual demand for housing in an area of the country which ALWAYS has home prices increasing above the national rate and they have never fallen below the national rate. So, it is a modest home and not unusual for a single person in any area of the country, although it is pricey. I could not buy this house now, but I can get refinancing and have offers to do so at about 6 % which will give me money to pay off the credit card debt +.
2007-01-11 11:25:50 · update #1
Sell that house now, if you are 72 and single you don't need an expensive house like that if you are having money troubles, the house is draining you. Get a smaller place, maybe in a low cost state in a small town where costs of living are lower. If you sell the house when you are 85 (if you live that long) chances are nursing homes may get the proceeds and not you.
2007-01-09 12:53:13 · answer #1 · answered by victorschool1 5 · 0⤊ 1⤋
Not an expert, but personally I would not be "juggling the books" with refinancing and equity loans, and pay this off with IRA's. 17% is a killer and eating up any interest on your IRA's anyway in terms of your total net worth. Just having those monthly payments out of the way improves your cash situation, and it sounds like you are definately cash poor and house rich. I don't see a good reason to lower the equity in your main asset if using the IRA's has little actual effect on your lifestyle. Your personal finances are substantial enough that I could easily be missing something, but either choice doesn't change your net worth, the question is now one of lifestyle. If you can live off of your remaining IRA income, and other income, without issue, using the IRA's seems best to me and especially if we have this "elephant in the room" of you spending beyond your income. This could help reel you in a little and allow you to operate from a more realistic financial perspective.
2007-01-09 13:36:18 · answer #2 · answered by The Scorpion 6 · 0⤊ 0⤋
You should break it down to the simplest comparison. The IRA performance vs. Home equity loan cost.
Obviously each of these are better than the Credit card debt. One is a less costly form of debt, and the other is unlikely to outperform the credit card debt.
So just compare what you expect the return of your IRAs to become (example: $90000 compounded annually at 5% would be $161627 after 13 years for gain of $71627 minus expected taxes due) vs. home equity loan interest due over life of loan minus expected tax deductions.
Bottom line, if you think the IRA would outperform what you'll pay in home equity loan interest, keep the IRAs and take the loan. If the loan debt would equal or exceed the money made in your IRAs, use the IRAs.
If you need more help, perhaps post another question with the vital statistics of the contenders! :)
2007-01-09 13:14:58 · answer #3 · answered by kcincon 3 · 0⤊ 0⤋
practice the $1600 to the $1800 CC bill. Then pay off your charge playing cards and substances up utilising them. in case you positioned it into reductions, you'll earn a measly 2% at suitable. no longer paying off the CCs value you about 18% in pastime. Then desire your BF pays you lower back so that you'll be able to pay off the basically accurate CC balances. pay off the playing cards and use the funds from those playing cards to attack the different playing cards you've. once paid off, commence a reductions plan for emergencies. Your BF's automobile isn't a emergency. Your husband's automobile might want to be an emergency. how are you going to pay on your next semester's preparation? Reimbursements come when you bypass your direction, no longer in the previous. Why did you undertake a dogs? That dogs is going to value you in feed and vet costs. fixing your BFs automobile and adopting the dogs is now water over the dam. that money is lengthy gone.
2016-12-28 13:48:40 · answer #4 · answered by Anonymous · 0⤊ 0⤋
You are 72 years old and you have credit cards? You should know better than that! Credit cards are nothing but legal loan sharks.
You have gotten yourself into a fix! In my opinion, the smartest thing that you could do is pay off the cards immediately with whatever cash you have. Mortgaging your properties would certainly be cheaper than 17%. I would like to see everybody stop using these damn things.
2007-01-09 12:52:26 · answer #5 · answered by iraqisax 6 · 1⤊ 0⤋
Don't know where you live but you could sell that house. Buy a very nice one near where I live (middle Georgia area in southeast US) for around $150-160K (brand new adult community). Cost of living here is much less than Southwest US (where I grew up) you can pay off all your debt, pay cash for the new house and bank some extra all w/o touching the IRA.. That sounds like a good bet to me. Once you do that cut up those cards!
2007-01-09 12:52:33 · answer #6 · answered by PRS 6 · 0⤊ 1⤋
Hey Moms,
At 72, I think you are too young to use your IRAs for debt.
See if you can find a few cards with 0% interest on balance transfers and lower your debt that way.
2007-01-09 14:01:40 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Get rid of the credit card debt, your home is good for the long term but you have to consider if you get sick you might not have that 13 years ahead of you.
Are you sure they will let you refinance? you know they might not considering you are not pulling in a salary anymore.
Housing markets can turn on a dime there is nothing like a sure thing anymore. If you can get good money for the house now and you can downscale without a problem I would do it.
2007-01-09 13:06:39 · answer #8 · answered by Tapestry6 7 · 0⤊ 2⤋
I advise - Get rid of that card. NOW. kill the debt all at once whatever it takes.
The rest of your money - put back in to investments , i'd go to your local broker and get a good stable portfolio going -
and sell your house, why do you need a half million dollar home?
2007-01-10 04:39:25 · answer #9 · answered by Tom 3 · 0⤊ 0⤋
have you explored a reverse mortgage
2007-01-09 14:37:55 · answer #10 · answered by Byron W 3 · 0⤊ 0⤋