Debt Question - Withdraw from Roth?

Withdrawing contributions from the Roth is penalty/tax free. Just be careful about withdrawing any earnings. You definitely don't want to do that (if you can avoid it).

ETA: Personally, I'd make a "payment plan" with your parents to get the money paid off to them in a reasonable amount of time. I wouldn't kill your only liquid savings right now if they are really not worried about the money. Although, I agree that I would have a tendency to pay it down quickly so that I wasn't in debt to my parents.

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Personally, I'd make a "payment plan" with your parents to get the money paid off to them in a reasonable amount of time. I wouldn't kill your only liquid savings right now if they are really not worried about the money. Although, I agree that I would have a tendency to pay it down quickly so that I wasn't in debt to my parents.

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Yeah, I have my own "payment plan" and they have literally never mentioned it, I just don't like owing them money. They don't care at all.

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I know it's a personal preference thing, just want to make sure I'm not screwing something up by withdrawing from the Roth (albeit small)

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I don't think you have significant tax liability but you do lose time in the market - you cannot replace that.

I would try to structure it another way and definitely keep your retirement in retirement unless a "life or limb" emergency comes up.

Not to get into your business, but you brought it here - you probably have a burgeoning spending problem that you do not fully realize yet. If you tap into your retirement to feed an overspending problem, it will just result in more of the same.

Trust me - I'm speaking from experience.

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I really don't have a spending problem, the house got a little out of control (over budget, electrical, etc) and turned into a boondoggle, that's literally it. We are very much on a budget (110-120 household income), I just want to knock these debts out (wife is cutting back to be home with the baby 2 days a week).

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And all this is happening while you're getting ready to start one in private school?(ETA: Sorry, daycare - I misread that.)

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I put 75k down on the house at age 28 (house is worth $375k and I owe 250 on it).

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No that's great - you're way ahead of most 28 year olds - but income and even solvency isn't your main concern right now - spending is very difficult to rein in and very difficult to control over time. Keeping it under what you're making seems to be off the table for you now - and all I'm saying is - get it back on the table before you really hurt yourself, retirement wise.

The numbers here are nothing - you could probably tap into your $125k equity (and this doesn't quite make sense to me - you avoided PMI, but you're that much to the good?) - it is the philosphy - no matter how much money you make, if you spend 2 to 3 percent over that, you will go broke...eventually.

No matter how little you make, if you spend 10 to 15% less than that, invest the balance wisely, if you live long enough, you will be wealthy, period.

Spending is the single thing over which you have the most control - especially at your age/income bracket.

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The numbers here are nothing - you could probably tap into your $125k equity (and this doesn't quite make sense to me - you avoided PMI, but you're that much to the good?) - it is the philosphy - no matter how much money you make, if you spend 2 to 3 percent over that, you will go broke...eventually.

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No doubt, appreciate the advice.

I contribute about 12% to retirement. I may have to cut back my optional deferred comp for a year or so (I have an automatic 8% withdraw for my govt retirement)

I never spend more than I make in a single month, but am not looking forward to the $600 daycare payment. Knocking out my loan to my parents would free up that $1k that I have been spending.

Biggest expenses outside of mortgage and loan payment are church and the kids I am supporting in Nicaragua (and I would move before I stopped that).

ETA: not meaning to come off defensive, just trying to communicate my situation. I am not a huge spender IMO.

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I contribute about 12% to retirement. I may have to cut back my optional deferred comp for a year or so (I have an automatic 8% withdraw for my govt retirement)

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I wouldn't leave any free money on the table, but I would perhaps look there for some cash flow.

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I never spend more than I make in a single month, but am not looking forward to the $600 daycare payment. Knocking out my loan to my parents would free up that $1k that I have been spending.

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I'm not saying your Roth idea is even a terrible plan - it might be the right play here, but what about that equity that is just sitting there in the home - how much of that would you need to tap to be completely free and in the clear? Could you get 100% debt free - sans the mortgage/home equity loan?

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ETA: the smart play would be to pay the car off, and then pay my parents...I just want to pay my parents - again, they have never mentioned it.

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I currently owe them $14k and have a car note for my wife's car (around 15k).

Have about 10k in cash and 6k in a Roth IRA (not including other tax deferred IRA, 401k, etc)?

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Yeah - I think I have a way to do it -

Set aside $1k cash (this is your immediate, liquid "$1000" emergency fund) - take $4500 and pay mom and dad. Ask them to take that and wait for you to pay off the car.

Take $4,500 and pay on the car. THEN surge your payments to eliminate the car in 1 year. Then pay the balance to your parents the second year.

You're not too liquid or overburdened with debt - but for your peace of mind you want to eliminate it.

I know this means mom and dad get paid last, but, this is the fairest, smartest way to do it.

And you'll have 3 layers of liquid support - $1,000 emergency fund, the $6k Roth you can tap, and the $100k HELOC (as an absolute last resort).

As long as your budget is fairly solid - you'll look a lot better on cash flow in 24 months.

The hail mary would be the HELOC, get you down to, effectively 2 payments - mortgage and HELOC.

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Take $4,500 and pay on the car. THEN surge your payments to eliminate the car in 1 year. Then pay the balance to your parents the second year.

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Yeah, I think maybe that's the way. I do like having a 10k cushion, tho.

I think I may start throwing everything at car, just to get rid of one of the 2 debts. Paying them down simultaneously doesn't feel as productive.

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It's all me.....maybe I just need to get over it

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Well - we can go back to the drawing board - you're not paying interest on the car, correct? But, paying it off will free up money to pay back mom and dad (and dad does not want you to borrow more money to pay him)?

$9k on the car, suspend payments to mom and dad (tell them what you're doing) pay car off in 6 months - then make regular payments to mom and dad until retired.

Still going to take 24 months, but this way, you'll feel like you're making progress - undiluted effort. Mom and dad are used to getting paid back last.