Should I sell the entirety of my investment portfolio ($32k) that I’ve had since 2020 to pay off my wife’s credit card/loan debt? Or keep all my investments and use extra monthly income to slowly pay down the balance?
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While I’d need to know more about your specific situation, I can give you some thoughts. The first thing you should look at is the interest rate on the credit card debt. Recently most have been in the 18+% range unless you’ve done some type of consolidation or transfer. You’ll want to compare that with how much you think you’re investments will return in the future. Understand that your investment return isn’t guaranteed but that interest payment is going to be due every month. You’ll also need to consider the type of account your investments are in. If they are in a taxable brokerage account and they’ve gone up in value, selling the investments could generate a tax bill. If the investments are in an IRA or 401K there also could be taxes and penalties if you tax money out of those accounts.
I know this isn’t a yes or no answer, but hopefully it helps you to think through whether it could make sense for you to do this.
The last point I’ll make is to whatever you do it will make sense to try to avoid getting in this situation, if at all possible, in the future. The interest you’re paying doesn’t do anything to improve you quality of life or increase your savings for the future.
Mike Hunsberger, ChFC®, CFP®, CCFC
Owner, Next Mission Financial Planning, LLC