Did I Give The Right Advice? – Real Life Situation

I think this is going to become a new series for me. At least until friends stop telling me about their financial issues.

I gave a friend some advice yesterday. I am not sure if it was the 100% proper advice, but I think it was good. Keep reading and let me know.

Real Life Situation

$2,000 in IRA
($10,000) in credit card debt at 4.3% interest (24 month introductory rate)

Should she take the money in her IRA out and pay off some of the debt.

Other things to consider: She is currently paying down the debt an extra $500 a month. My guess is that it will be 15 months and they will be debt free.

My Advice

I told my friend that she should either not touch her IRA or consider converting it to their Roth if they were annoyed that it was sitting in a traditional IRA. I thought that completely pulling it out was a bad idea because of the 10% penalty for pulling funds out of an IRA.

She responded to this advice “it would only cost $200 to pay off $1800 in debt”. While technically correct, I rephrased it for my friend. I said, “if it was $200 for $1,800 or $200K for $1.8M, it shouldn’t make a difference. 10% is 10% and thinking like an economist, the person should try to optimize every dollar they have or will receive.

So how did I do? Is this what you would have advised?

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Did I Give The Right Advice? – Real Life Situation

I think this is going to become a new series for me. At least until friends stop telling me about their financial issues.

I gave a friend some advice yesterday. I am not sure if it was the 100% proper advice, but I think it was good. Keep reading and let me know.

Real Life Situation

$2,000 in IRA
($10,000) in credit card debt at 4.3% interest (24 month introductory rate)

Should she take the money in her IRA out and pay off some of the debt.

Other things to consider: She is currently paying down the debt an extra $500 a month. My guess is that it will be 15 months and they will be debt free.

My Advice

I told my friend that she should either not touch her IRA or consider converting it to their Roth if they were annoyed that it was sitting in a traditional IRA. I thought that completely pulling it out was a bad idea because of the 10% penalty for pulling funds out of an IRA.

She responded to this advice “it would only cost $200 to pay off $1800 in debt”. While technically correct, I rephrased it for my friend. I said, “if it was $200 for $1,800 or $200K for $1.8M, it shouldn’t make a difference. 10% is 10% and thinking like an economist, the person should try to optimize every dollar they have or will receive.

So how did I do? Is this what you would have advised?

4,442 Responses to Did I Give The Right Advice? – Real Life Situation
  1. dreams punta cana reviews
    February 14, 2019 | 1:52 pm

    I truly appreciate this post. Really Great.

  2. investment definition
    February 14, 2019 | 2:08 pm

    Thank you a bunch for sharing this with all of us you really recognise what you’re speaking about! Bookmarked. Kindly additionally visit my site =). We can have a hyperlink alternate arrangement between us!

  3. towel supplier
    February 14, 2019 | 4:07 pm

    Wolverine, in the midst of a mid-life crisis, pays a visit to an old comrade in Japan and finds himself in the midst of a power struggle.

  4. Francisca
    February 14, 2019 | 4:18 pm

    A financial advisor is your planning associate.

  5. 안전공원
    February 14, 2019 | 5:23 pm

    check beneath, are some entirely unrelated sites to ours, even so, they’re most trustworthy sources that we use

  6. see the website
    February 14, 2019 | 6:20 pm

    that should outweigh Owens touchdowns. I think all of it

  7. Allan
    February 14, 2019 | 8:13 pm

    That is true for funding recommendation as well.

  8. central business
    February 14, 2019 | 9:34 pm

    Great amazing things here. I am very glad to see your article. Thanks a lot and i am having a look forward to contact you. Will you kindly drop me a mail?

  9. international flights
    February 14, 2019 | 11:24 pm

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  10. fireplace remodel
    February 15, 2019 | 1:20 am

    My brother suggested I might like this blog. He was totally right. This post truly made my day. You can not imagine simply how much time I had spent for this information! Thanks!

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    February 15, 2019 | 1:20 am

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Trackbacks/Pingbacks
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  2. Marcel Fernandes
  3. Cheap Sunglasses
  4. His Secret Obsession
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