I want to inlarge my kitchen, no new appliances, but extra oven, enlarge dining room, new carpets throughout house, pay off college loan and car loan. This would wipe out my IRA. But, I would have no home loan, nor any other bills, other than nomal cost of living.
2007-06-11 02:38:44 · 8 answers · asked by Margaret 1 in Business & Finance ➔ Personal Finance
If you are under 59 1/2 years of age, using the IRA would be a bad thing. You would pay ordinary income taxes as well as a 10% penalty.
Personally, I would take out a Home Equity Line of Credit. You can draw on it as you need it.
2007-06-11 02:44:20 · answer #1 · answered by Wayne Z 7 · 1⤊ 0⤋
Look at the long term picture. If you wipe out your IRA will you have to pay a penalty and how much? How much interest will you be losing? Then look at how much you are paying on your college loan and car loan. How soon do you think you could put money back into your IRA. Do you have estimates on enlarging the kitchen & dining room and the new carpets? Write down the pros and cons of each. You might even want to take some of your IRA and pay off the loans and then wait a few months to enlarge the kitchen. If you pay off the loans then you could put the amount you were paying on them into a savings account. After a few months you should have enough saved up to start the enlarging project.
2007-06-11 02:45:34 · answer #2 · answered by angela 6 · 1⤊ 0⤋
Financially, your best bet is to borrow from your IRA, if possible. That way, you preserve the IRA for future retirement and will be making principal and interest payments to yourself.
If this is not possible, then it's better to borrow the money. Of course, don't borrow money to pay off the college or car loan if the rate on the money you would be borrowing is the same or higher than the rate on your current loans (which would probably be the case at least for your college loan).
You should NOT cash in your IRA. This would require you to pay taxes on the money as well as pay an extra penalty if you're under age 59 1/2. It would be better to forget about the home improvements and continue to pay off the college and car loans via the normal monthly payments.
2007-06-11 02:52:31 · answer #3 · answered by Tomel 3 · 0⤊ 1⤋
I don't know about your IRA. I could borrow from mine.
Why pay someone else interest, when you can pay it back to
yourself in a loan. I did it when I bought my garage, again to
get kitchen and bath updated, then again when I had new
shingles on the roof. Take loans out for one project at a time,
so you can easly pay it back. They only let you borrow a set
amount anyhow at a time.
If you are retired. That's what you saved it for, but factor in the
economy right now with the bushes screwing up the country. The worst has not yet come, so play it safe.$$$- (^_^)
2007-06-11 03:00:47 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Why don't you just save up for these improvements? Cashing your retirement for a car, some carpet and some debt seems very short sighted.
By the way, it's enlarge, not inlarge. Public schools just stink.
2007-06-11 02:44:53 · answer #5 · answered by Anonymous · 1⤊ 0⤋
That's easy - never borrow from an IRA unless you have a family emergency, like a life-saving operation or something. Kitchen remodels should be funded by second mortgages, leveraging your home equity.
2007-06-11 03:07:16 · answer #6 · answered by Anonymous · 0⤊ 0⤋
What's the point? if you can't pay off the loan they'll just
end up repossesing your property. You're better off taking
that load and going to the start market which is equally
dangerous and getting cash off of shares. Make up the
money you loaned, give it back fast so you get no interest
added, and get yourself what you want with no strings.
2007-06-11 02:45:07 · answer #7 · answered by Anonymous · 1⤊ 0⤋
oh ok .. i got this for you...
better check it out, im pretty sure you'll discover something...
http://www.home-loan-made-ez.com/
2007-06-12 12:38:48 · answer #8 · answered by Anonymous · 0⤊ 0⤋