Should You Use Retirement to Pay Off Debts?

Retirement (Photo credit: Tax Credits)

If you're experiencing financial stress, it can be logical to look for a source of money to pay off your debts. For most folks, the largest chunk of change they have is their retirement fund. But does it make sense to "borrow" from your future to pay for your past? Let's examine both sides: 

Pay Off the Debt 

Taking money out of your retirement account to pay off hefty debts can make sense. If you're over 59 and a half, you can withdraw from your account with no penalties. While you'll be taxed (at your income bracket) for the money, if the interest rates on your debt are high, it could still be worth it. Think about it like this: If you're facing a 20% interest rate on a credit card, but only a 15% taxation on your withdrawal, you're putting yourself ahead +5%. You can start putting that 5% each month back into your retirement account to build it up even faster. 

Plus, paying off your debt comes with a whole slew of benefits. You'll pay far less in interest over time, you'll improve your debt to credit ratio and you'll have more available money each month to save or contribute to your expenses. However, there are serious downsides to pulling the money from your retirement account. 

Don't Touch That Account! 

Every story has two sides, and debt repayment is one of them. If you're younger than 59 and a half, you'll face a 10% penalty for early withdrawal from your 401k. On top of that, you'll also face taxes on the money you withdraw. While you could still come out ahead, even with those mitigating factors, it's more of a risk. Plus, your retirement fund functions as savings for a serious emergency. If you find yourself unable to work for some reason, you'll want to have the money available. Using it to pay down debt could seriously weaken your long-term financial position if you're not careful. 

Other Factors to Consider 

If you suspect that you'll pay off your debt only to have it accumulate again, then absolutely don't borrow from your retirement fund. If you build the debt back up, you emptied your retirement fund for nothing. Using your retirement savings to pay off debt means committing to living as debt-free a lifestyle as you can manage. 

This is especially bad if you decide to pursue bankruptcy at a future date. Your 401k is typically protected under bankruptcy law, and if you emptied it only to rack up more debt, you may have lost a significant portion of your savings for essentially no reason. 

The Verdict 

If you think the penalties are worth it to you and you have a financial plan moving forward that includes far less debt, then pull from your retirement account. However, try to look for alternative solutions first. First, immediately stop accumulating new debt. Cut out the non-essential "goodies" from your life and put that extra money toward your debt. Look for a credit card with lower interest, if you can. Take steps to pay off your debt with your current income. 

Remember, at retirement, you can realistically only withdraw 4% each year to make sure your money lasts. If you have $600,000 saved up, that's only $24,000 a year. Borrowing from your retirement account now reduces your starting capital and decreases the amount of money you'll have each year in retirement. Although in some cases, you can withdraw money from your retirement account to pay your debts, it's never a decision you should make lightly. 

About the Author 

Carly Lance loves to blog about personal finances whenever she can. She also is employed as the blog and marketing manager at Personal Bankruptcy Canada, a company that deals with people going through bankruptcy in Canada.

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Opportunities in Human Resource Specialist Careers

Human resources team works to improve customer service (Photo credit: USACEpublicaffairs)

If you are looking for a career in becoming human resource specialists will enjoy interesting work and exceptional opportunities. According to the governments statistics on human resources jobs, the number of jobs will grow faster than the national average for all types of jobs. It's predicted that between 2012 and 2020 the number of jobs in H.R. are expected to grow by a healthy 21 percent. The growth will be the most in the employment services sector, where jobs are expected to grow at a rate of 55 percent.

You will find that human resource directors have a college degrees and usually have a major in business, human resources or associate fields. The applicants with high school diplomas may be eligible for some entry-level hr jobs in interviewing or job recruiting. In some cases, experience in human resources can substitute for education.

There are skills associated with human resource work. The most important skill you need to succeed in human resources is the ability to get along with all kinds of people. You should have outstanding interpersonal, speaking and listening skills. Decision-making skills are also critical, as is the ability to pay attention to detail.

The modern workplace is an increasingly varied and challenging environment. Jobs often feature flexible hours, telecommuting, collaborative employees who may be based anywhere in the world, and project teams that form and fade away seamlessly as needs dictate. Human resource (HR) specialists oversee all of these moving pieces and try to make sure workplaces run smoothly, that the best new talent is recruited and hired, and that existing employees are properly compensated, fairly managed and evaluated, and, if need be, trained, disciplined, or even fired. HR specialists often deal with all employee levels in an organization, including the very top management. 

These positions are increasingly specialized with the size and scope of an employer. Large employers may require specially trained HR specialists for recruiting and hiring, training, compensation and benefits oversight, performance evaluations, employee assistance and relations, and other specialized needs. At smaller companies, an HR manager may wear many, if not all, of these hats. 

A college degree usually is required, including strong business and management course work. There is a good career advancement chain at larger companies. Top performers can reach high management positions, or may move to an HR consulting firm.

Living and Working in Egypt Provides an Opportunity to Save

English: The Nile River as it flows through the city of Cairo, Egypt. (Photo credit: Wikipedia)

Anyone moving from the United States to live and work in Egypt will notice almost immediately how the cost of living there is so much lower. Therefore, savings opportunities are easily possible. But, like anything else in life, opportunities have to be grabbed in order to turn them into reality and good savings habits are vital in this respect. For it's just as easy to blow your monthly salary living it up in Cairo as it is in the city of New York. 

It's no big deal opening a savings account in Egypt, providing you've lived in the country for at least a few months. The banks in Cairo or any of the other big cities and towns will certainly be happy to provide you with the same sorts of personal banking services that banks back home do. Thanks to the internet, it's a fairly easy matter to view available current accounts from HSBC, for example, or from any of the other multinational and indigenous banks operating in the country.

Pop into the nearest branch of the bank of your choice and fill in an account opening form. Staff there should be able to advise you about the interest rates offered by various savings accounts. You'll need to take along some official documentation, too, just as you would when opening an account back in the States. The process is fairly similar.

The sorts of documents required include your passport, work visa and your residency certificate. Take along a utility bill, too, to provide evidence of an Egyptian address. A letter from your bank back in the USA, confirming account details and the length of time you've banked with them, will also help with the application process. Some banks may also want to see the last three monthly bank account statements. Finally, take along a couple of passport-size ID photographs which will be used by the Egyptian bank for record purposes.

So how better off are you likely to be living in Cairo instead of New York? For this far from in-depth comparison, let's assume at the very least the salary earned living in either city is about the same. All the comparison figures come from the excellent website Numbeo.

In broad-brush terms, consumer prices in New York are more than twice that of Cairo. Include rent in the figure then the differential rises by over 200%. A straight rent price comparison between the two cities sees the figure jump to nearly 600%. Restaurant prices in New York are about 140% higher and groceries about 125% higher. Opportunities to save? You'd better believe it.

A meal at an inexpensive restaurant in Cairo will likely set you back about $5; the equivalent figure in New York is around $13, a 162% difference. A Coke or a Pepsi will cost you $0.49 in Cairo and $1.50 in New York. There's a 500% difference in the price of an average bottle of water. In Cairo it costs about $0.25, while in New York you'll pay about $1.50.

There's a 200% difference in the cost of a loaf of white bread. A packet of cigarettes costs about $2.10 in Cairo and more than $12 in New York. Local transport costs are also much cheaper, the equivalent monthly pass costing about $13 in Cairo and more than $100 in New York. Basic utilities such as electric, gas and water are also so much cheaper in Cairo. Expect a difference of about 400% between equivalent-sized apartments.

Click here to go to Numbeo.

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Rebuilding Credit has Positive Outcomes for the Future

 (Photo credit: Wikipedia)

Bad credit scores seem to be a growing epidemic, whether it is from job loss, injury or illness, or perhaps from overspending. When funds are limited, many people are turning to their credit cards to finance just about everything. They are using them to pay the rent and mortgage, car payments, and other household bills that require payment. 

While it may seem like a good idea at the time, over usage of credit cards can have a negative effect. Some individuals are racking up their credit cards to pay other bills and in turn, they are unable to pay the credit card bills when they arrive. 


Neglecting credit card payments can result in bad credit. Some may not think a credit score matters, but if you have ever wanted to finance anything, such as a car, home, or if you happen to need a loan, that score on your credit is going to make a difference. Banks tend to turn away from people holding a negative credit rating, even if your credit issues are a thing of the past. Circumstances and specific situations don't matter to them. They consider anyone with bad credit to be high risk. In many cases, several people are going without because banks and other financial institutions won't take a chance on them. 


It is very important to try and keep your credit untarnished, but in some cases, it just isn't possible. There are some people who have no choice but to use their credit cards. Unfortunately, the time did arise for me. I had no choice at the time. Due to job loss, I had to use my credit cards for groceries and other necessary bills. Once I found employment, it was difficult to catch up with current and past due bills. Some bills went unpaid and those events can leave you with less than perfect credit. I knew I had to take care of it so I decided to have rebuilt my credit. 

Some may not realize the embarrassment that is involved when you have bad credit. Some people may feel ashamed. They may feel that others are judging them because of it. That is why it is so important to do what you can to clean any discrepancies you may have. Once your credit has been rebuilt, it will give you a whole new sense of pride. That is why I had rebuilt my credit. 


Regardless of the reason for bad or less than stellar credit, the results will usually be the same. Taking care of what you can and getting your credit back to par is essential. It will not only affect you now, but there will also be repercussions in the future as well. If for some reason you feel that you are unable to fix the problems yourself, there are many institutes that have trained individuals that will be more than willing to help you repair rebuild and fix any credit problems that you may have. 


Carol Roberts freelance writer and mother of two. I have been currently writing for a home finance blog as well as a parenting blog. I know firsthand how important it is to have healthy credit, that's why I had rebuild my credit.

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