We all have heard of the saying that desperate times require desperate measures (Hamlet) but in these difficult times many should re-consider liquidating their IRAs.
Before making the rash decision of liquidating your IRA, first consider these other options
- If you still have a job try SAVING
Cutback on expenses you do not NEED (i.e. restaurants, cable, movies, gifts, cleaning services etc.
Scan your credit card & bank statements and go down the list of transactions and ask yourself this question, “Do I really need this to live?” Unless it is a necessity, buying an item at a discount is NOT SAVING.
2. Sell Certain Possession that you can live without
I’m sure there’s a stereo, bicycle, video camera or other material possession that you do not need to live with.
Items that Decrease in Value Over Time. I can guarantee you that Unlike Hard Cash, these items will only decrease in value over time so it makes sense to get rid of them now.
3. Request More Responsibility at Work
We’re all in agreement that it is very difficult to get a raise, let alone a bonus in this difficult economic environment. However, there maybe ways you can provide a convincing argument for your boss to pay you more. For instance, if you work more hours or take on more responsibility that would be an example of how you would save the company $.
“You’ll never know unless you ask.” If you focus on how the company would benefit (i.e. save) by paying you a few extra dollars and you working longer/harder, you may get your request honored.
4. Supplemental Income
There may be a way you can utilize your skill-set online to earn extra cash (i.e. writing articles, consulting, selling).
Use Online Resources. There are a lot of online resources out there that allow users to make extra cash on their own time without having to deal with the hassles of travel, face-time etc. Investigate to see what’s available.
5. Re-evaluate your existing Portfolio
Outside of your IRA, there maybe certain assets in your portfolio that may make more sense from a tax perspective to liquidate. You should most likely consider those assets first.
If you ABSOLUTELY believe you need to liquidate Keep in Mind this TAX CONSEQUENCE:
If you’re under 59 1/2, the penalty (certain exceptions apply) is steep. Precisely, 10% in addition to the taxes you already have to pay on the proceeds from liquidation.
