Dear Dave,
I’m retired, and I have $400,000 in an IRA that’s earning 10 to 12 percent. The only debt I have is $20,000 on a home equity line of credit, and my home is worth $500,000. Should I pay off the home equity loan using funds from my IRA?
Janet
Dear Janet,
Wow, you have a half-million dollar home on the line for only $20,000? There’s no way I’m going to have a $500,000 asset pledged for that kind of money. No way! If I were in your shoes, I’d pay off the loan today.
You’re obviously a smart lady. You’ve got an IRA that’s busting it, and this little loan is the only thing standing between you and complete financial freedom. But that loan represents risk you don’t need in your life. I know you probably haven’t been lying awake at night worrying over it, but you’re going to have a wonderfully weird experience when you knock this thing out. A wave of peace is going to wash over you, and you’re going to feel lighter and more liberated than ever before.
Your retirement isn’t at risk, and it won’t cost you much money. Pay it off today, Janet, and discover the true meaning of financial peace!
—Dave
* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.