Suspend Roth IRA to pay of cc?

[eeyoresmom]

I started a Roth last January and obviously lost like everyone else. I'm not really concerned since I had just started it and only lost around $600. Now, if I suspend my Roth contributions,I can be completely out of debt by the end of 2009 (except for mortgage) I do have to make at least 2 contributions to the Roth in 2009, but that won't effect the outcome. What would you do? Interest rate I'm paying on the debt is just about 7.5%. Thanks

[maat55]

I would payoff the CC debt before adding to the Roth. I would also be sure to have an EF in place( amount depending on your income and job security).

In any economy, being debtfree with an EF is a safer place to be. Some might payoff the CC debt then go back to the Roth and justify it as touchable for an emergency, but I like to keep them separate.

[fruitbowlk]

1. Pay off your debt.
2. Create an EF
3. Contribute to roth ira

[Ima saver]

I agree, I would pay off the debt first.

[disneysteve]

Since you would be debt-free within a year, I'd pay off the debt. You can't ever make up missed Roth contributions, but missing one year isn't going to make a huge difference in the long run. Plus, there is always the chance that you could make at least a partial 2009 contribution before 4/15/2010.

[eeyoresmom]

Thanks everyone. I'm going to stop contributing to the Roth for 2009. I do have an EF, although since it's not as big as I'd like, I'm going to continue to contribute to that.

[creditcardfree]

Sounds like a great plan!

[webcontacts00]

1. Did you look into moving your CC debt to 0% balance tranfer card. So that at least you are not paying interest. That way probably you might be able to save some for ROTH IRA.

[eeyoresmom]

I have looked into it, but don't think it's the thing to do. Details... balance is 19,000. Plan is to pay 1,200 per month plus some extra $1000 payments throughout the year. I'm not comfortable transfering the whole balance to 0% for a year IN CASE I run a few months over ( Unless... If I go over the year, will I be charged interest on the entire transfer amount, or just the remaining balance? ) If I do a balnce transfer it will cost me 3% or almost an additional $600. I was thinking of doing half at 0% and half @4.99% ( which would be for the life of loan ) Can't figure out which way makes the most sense

[asmom]

If the payoff period extends beyond a year, then you will only be charged interest on the amount you have left on the balance ie if your balance at 13 months is $3000, you are charged interest on the $3000 only.

As for the balance transfer fee, how much interest would you pay over the life of the loan at 4.99%? If it's more than $600, then go with the 0%.

[webcontacts00]

Not call cards charge you 3%. There is a maximum limit. A friend just did 12k balance tranfer on chase card . They charged 99 dollars. (You may check online or call and see if they have same offer still availble. Sometimes they have different offer online and on phone.)

Please search for 0% balance tranfer in google and you will some websites providing comparision between different cards.

You want to make sure they dont have annual fee.
Also check what interest rate they charge after the tranfer period.
Also see if they have tranfer period at least for 12 months.

Once 12 months period run out, go for a loan on a small left over amount or another card where you can do balance tranfer at a lesser rate.