In general, I know the recommendation is to go ham on debt then invest and not to rob your investments to pay off debt. I’m wondering if those recommendations hold true to my situation or if maybe I should do something different.
The background: A year ago I had a job loss related to covid budget cuts. When I found a new job, I took a $20k base pay budget cut (I was getting a lot of OT at my last job) along with worse insurance (resulting in over $15k in medical bills from June 2021 to now). Add those to the now rising costs of living and I’m dying financially.
With my previous income, I had gotten myself out of all debt except my student loans and had just begun investing. However, with the reduced income, increased cost of living, and previous one-time contractual commitments (that I could afford with my old income but not the new), I’ve wiped my savings clean and I’m now just at $40k in credit card debt. All but one of those credit cards has 0% interest and I’m hoping I’ll be able to pay those balances before the 0% offer expires. One card has an interest rate of 24%- it’s at $11k.
I have about $6900 saved in a Rollover IRA (I just started investing in that in 2020, but haven’t contributed to it at all 2021 or 2022 because I’m focused on surviving and paying debt back down). I do have a few sources of income lined up come May. Until then, I do not have extra income to pay on these debts. In fact, each month I am still over budget. I literally have nothing left that I can cut- I’m over budget with just my rent, internet, phone, groceries, gas, health co-pays, and minimum payments.
The question: Would it make sense to withdraw what’s in my IRA to pay down the credit card with 24% interest? There’s barely anything in my IRA the way it is, and the loss I might take, seems to be less than the cost of 24% interest on this credit card. I figure I can start investing again once I get these debts paid off.