Comments on: Paying down debt … an instant Net Worth fix? http://7million7years.com/2009/03/27/paying-down-debt-an-instant-net-worth-fix/ How to make 7 million in 7 years ... Thu, 24 May 2012 09:20:05 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Scott http://7million7years.com/2009/03/27/paying-down-debt-an-instant-net-worth-fix/comment-page-1/#comment-2540 Scott Fri, 27 Mar 2009 18:49:19 +0000 http://7million7years.com/?p=1897#comment-2540 Yeah this is just a situation that requires 'income'. Yeah this is just a situation that requires ‘income’.

]]> By: Moneymonk http://7million7years.com/2009/03/27/paying-down-debt-an-instant-net-worth-fix/comment-page-1/#comment-2541 Moneymonk Fri, 27 Mar 2009 17:08:52 +0000 http://7million7years.com/?p=1897#comment-2541 Same as rolling credit card debt into a heloc, nothing has changed, you simply moved the debt. When I was in debt I thought about many ways for it to disappear, I just paid it with my cash flow Same as rolling credit card debt into a heloc, nothing has changed, you simply moved the debt. When I was in debt I thought about many ways for it to disappear, I just paid it with my cash flow

]]> By: Rick Francis http://7million7years.com/2009/03/27/paying-down-debt-an-instant-net-worth-fix/comment-page-1/#comment-2542 Rick Francis Fri, 27 Mar 2009 16:26:14 +0000 http://7million7years.com/?p=1897#comment-2542 She may end up losing a lot in taxes and penalties if this is a standard IRA and she isn't 59 1/2... I don't know enough specifics to calculate her actual losses but I have seen calculations that come out as high as %40 for taking money out of a 401K, that makes 10-20% interest seem tame! If it is a Roth IRA- she is unlikely to have taxes or penalties but has the opportunity cost of the tax free compound growth. We won't really know how much that is until she retires... but it could be fairly large. With a Roth IRA she can choose her investments and get index funds with expenses as low as 0.1% yearly. Let make a conservative estimate... say she retires in 20 years and a low cost index fund returns 7.9% after expenses: 10,000*(1.079)^20 = $45,753 tax free. Granted that inflation will erode the purchasing power, but I suspect it would have the purchasing power of at least $20K today. -Rick Francis She may end up losing a lot in taxes and penalties if this is a standard IRA and she isn’t 59 1/2… I don’t know enough specifics to calculate her actual losses but I have seen calculations that come out as high as %40 for taking money out of a 401K, that makes 10-20% interest seem tame!

If it is a Roth IRA- she is unlikely to have taxes or penalties but has the opportunity cost of the tax free compound growth.

We won’t really know how much that is until she retires… but it could be fairly large. With a Roth IRA she can choose her investments and get index funds with expenses as low as 0.1% yearly. Let make a conservative estimate… say she retires in 20 years and a low cost index fund returns 7.9% after expenses:

10,000*(1.079)^20 = $45,753 tax free.

Granted that inflation will erode the purchasing power, but I suspect it would have the purchasing power of at least $20K today.

-Rick Francis

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