I owe $25,500 at 7.74% for a home equity loan. Unfortunately, I can pay only the interest for now (and until my car is paid off in another 16 months), and the interest charge is $168 /month. Balancing that out (in theory, I guess) is my IRA account with $31,000 – earning 4.87%.
I’m tempted to cash out my IRA to pay off my home equity loan, and put the rest aside to pay the tax penalty. Then I wouldn’t have the HELOC debt, but I also wouldn’t have any retirement savings either. (I’m 47 with no other retirement acct. or savings. And about $5,000 in credit card debt.)
What should I do? Is one option smarter from a financial perspective? Or should I just leave things as is — where the two accounts seem to even things out … but then what’s the point of keeping them? Any help from financial experts would be greatly appreciated!