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 I
am a retired senior with about $400,000 in CDs,
IRAs and stocks (now falling quickly). My youngest
son had accumulated enormous "living" credit card
debt while in graduate school. He was earning
a starvation stipend as a post doc, while living
expenses in Cambridge, Mass., were astronomical:
for example $800 + $350 per month for one room
and utilities. Consequently, he charged everything
else on credit cards. When he finished the program,
he had a $25,000 in debt (plus enormous school
loans now due), and it seemed as if the only choice
was bankruptcy. (He knew the school loans had
to be paid.) It also took him quite a while to
find a teaching position in academia. He was quite
despondent about the whole thing by that point,
and had never asked me for any help -- so I volunteered
to take over the credit card debt. (I'm not sorry
about this, as he has been quite heroic about
being responsible for his own education, has had
much and still has enough on his shoulders.)
OK, I've paid the debt down to about $15,000. Interest on it is 9.9 percent. I still have a mortgage of around $100,000 at 5.5 percent. Social Security income plus interest income plus stock dividends amount to about $30,000 per year.
Question is: Should I take my required minimum distribution
from my IRA early in 2008 to pay off a chunk of
the credit card debt? I would not want to take
a distribution of, say, more than $7,000 to put
toward this credit card. The IRA is in a "super
money market fund" that earns about 5 percent.
L.Z.
Weston, Conn.
 L.Z.,
We all love our kids and want to help them any way we can. I have three kids of my own -- I know how you're feeling. But, you are a retired senior. You have to live off this money. You are not in a financial position to help your son with this kind of debt. You can help him month to month, but don't take out a large chunk of your money to throw at this. I'm not saying your son has to file bankruptcy. He needs to find additional forms of income -- sell stuff or get a second job -- and start paying down this debt. He can do it -- he's obviously a hard worker.
| -- Posted: March 24, 2008 |
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