I'm wondering about the possibility of using my 403b to pay down credit and student loan debt. I'm 42, and am a tenured professor. I'm carrying too much debt to maintain, and I would like to pay off a majority of it now so I'm in a better position to save for the future. I *think* the penalties I would incur from withdrawing about 15% of my total investment are less than I'm paying in total interest rates on my debt across the board, although I'm not sure how to accurately calculate that. I live in Florida, and I'm not sure if there are any state-by-state restrictions on something like this. I have no other savings or investments to speak of, aside from a small emergency fund in a high-interest online savings account (which I've had to dip into several times to maintain my credit debt). Any suggestions or advice would be appreciated. Thanks!

You'll pay a 10 percent penalty on any funds you remove from your 403b. You'll also have to pay state and federal income tax. Since you live in FL and don't pay state income tax, you would realize the amount you withdraw minus your marginal tax rate (28%) and the early withdrawl penalty (10%). So, basically, you lose 40 percent of what you take out... NOT great.

I definitely wouldn't take money out of a 403b to pay off a student loan. But I might consider it for a credit card if I was 100 percent certain: 1) there was no other way to get it paid off (extra job waiting tables?); and b) I knew I wouldn't run up the card again.

Here is a website that might help you Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan. with some strategies.

Good luck!