Financial Planning for Generation X & Y Women
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Expert Q&A Archive

Is it better to take credit trouble and save my small retirement fund?
On 7/16/10 [my job ended] with no notice. I am a single mom, and worked hard to get A+ credit, but have debt without savings. I have no prospects for full-time work w/benefits in this area. I could do freelance work but it would not be enough to sustain, or possibly move across country to work for my previous company and start over at age 46, or stay and slowly get into credit trouble (unemployment won't cover bills)?

If I choose to move, I can't rent a home because of the monthly costs of it, but I could take out a state retirement fund to cover most of the cost of a 2nd mortgage, and then rent to cover the first mortgage. I am upside down on my mortgage, but I am not late on anything else. One option is to do a short sale and damage my credit, or sell and use the retirement fund to cover the rest (after taxes withheld would get about $21,000) to keep credit but have very little money to move? Besides retirement fund I have a small 401k, not enough to take a loan from to cover my 2nd mortgage.

Is it better to take credit trouble and save my small retirement fund (it would give me approximately $800/mo. for life @ retirement)?
Heather Green:
expert info »

Sounds like you have a pretty complicated situation with a lot of different scenarios to sort through. I strongly suggest that you sit down with a financial counselor certified by the National Foundation for Credit Counseling to help you understand your different options, and look more in depth into the pros and cons of each.

Answering your questions in this forum is probably a bit short sighted without really looking at your financial situation as a whole. You can find a financial counselor in your area by going to Good luck!
Jane Zucker:
expert info »
The first thing to do - before you draw down on your retirement savings or make any other big move - is to make sure that you have explored all the free help that might be available to you. To see what government programs can help you with your mortgage call the Making Home Affordable free hotline for guidance--1-888-995-HOPE For help with food for you and your children, check out the SNAP program, visit or call your local social service agency. Also, if you need health insurance for your children, visit CHIP Food, shelter, health care -- these are priorities.

Frankly, economic times have changed. So many people are in reduced circumstances nowadays that keeping your perfect credit score is not something you should lose sleep over. In fact, some mortgage modification programs actually require you to miss a few payments before you can qualify for a reduction. So please ---stop worrying about damaging your credit. Your record is clear, and everything that you are doing has a good explanation behind it.

It sounds like you and your children would be the most comfortable staying in your current home. So try to lower your mortgage payments (mortgage modification) and also apply for public assistance. In the long run, you WILL get a new job; it is much better to lower expenses now (by taking in boarders, freelancing, bartering with other moms for services, etc.) than tapping into your retirement funds. Good luck!