<prompt> Human: I know there have been a number of these types of posts, but I think my situation is a bit different than those ive read. So please bear with me. First, let me explain my circumstances. Im married and a stay at home Mom with young two kids. My husband is working and makes a very good income 220K and has been maxing out his 401k for the past 10 years and is continuing to do so. He has about 25 years until we want to retire. Before kids, I was working and contributed to a 401k which has been rolled over into an IRA which now has about 150K. During that time, we lived pretty lavishly and created a 130K credit card debt. Over the past year or so, we have been living pretty frugally and have paid the debt down to about 80k. We also did a 401k loan to help bring the total amount down and to pay ourselves the interest. My husband just had his salary cut about 20 as his work has slowed down a bit, so the extra money we had been socking away is now gone. We are now on the razors edge in terms of incomeexpenses and now I need a new car I have a 2005 that is getting ready to collapse. In our last come to Jesus meeting about a year ago we cut out all of the things we need to cut we have fixed costs such as a mortgage and significant student loans, car payment. Weve are also playing the credit card rotation game for 0 for some of the cards, but we have a couple that average around 9. We do not have enough equity in our house to take out a home equity loan bought at the height of the market and there are no relatives who are ablewilling to loan us any money. I know that the math doesnt really make sense to cash out the IRA. With the tax hit and penalty I will be netting about 90K. However, this will pay off all of our debt other than the 401k loan and will take the enormous pressure off. Ive been losing sleep and stressed out. My husband is leaning toward the status quo. We are able to make payments greater than the minimums and he thinks he may be able to bring in more money over the next few years. I know this is a lifestyle choice as I am choosing to stay at home with the kids and my husband does not want me to go back to work either. If I go back, in my line of work, I will need to go back full time 50 hours a week, long days, etc.. There really arent any part time jobs in my area of expertise. If I go back I will have very little flexibility to deal with family issues and my husband also does not have this flexibility. Both of our kids are in school public, but I do not want to put them in before and after care 7:30 to 5:306 is much too long for young kids.... I dont think this is fair to them. Plus, if I go back they will miss out on a lot of after school activities which I take them to. Another reason I want to pay off our debt is to have a better lifestyle for the kids NOW. They are only going to be in the house for another 10-13 years and I hate having to pass up something because we are scrimping. Ive never considered this IRA to be our retirement fund and was planning on using it to help pay for the kids colleges. I believe that one of the grandparents is leaving a decent amount of money to our kids to help pay for college, so this is less of an urgent concern. My thoughts are that I can either cash out the IRA or go back to work to eliminate the pressure. If I cash out the IRA, we can have a fresh start and start using the surplus credit card payments to start saving again. In a few years when the kids are older, I can always go back to work where I can likely make 120K ishyr. So, I can make up the loss in the IRA pretty quickly ifwhen I return back to work I figure the IRA will be worth about 350K at retirement after taxes. For retirement, we have his maxed 401k and we can hopefully sell his business and have a paid off home, plus any inheritance from the folks should be a decent sum, unless there are long term health issues that are not covered. We both have term life insurance to protect our kids over the next 15 years and my husband has disability insurance that will help if he has problems continuing his job which is a risk in his line of work this insurance costs about 7k a year!. I guess what it comes down to is that the pressure in the foreseeable future and me wanting to take care of my kids and enjoy their youth is more important to me than this IRA. Does this make sense? Am I looking at things incorrectly? Thanks for your attention! EDIT: Here is our monthly budget -Revenue after 401k loan which is approx 800 a month - 11,850Auto Loan, Insurance, Gas, Registration - 1,122Home Mortgage, Groceries, landscaping, insurance, pool - 4,100Utilities - 928 internet, tv, gas, security, water, electricity Health - Disability insurance 525 monthKids activities - 375Credit Card payments - 2900Student loan - 1550Misc. Entertainment, clothes, etc. - 300Total Exp - 11,800Because we are on the razors edge, there are expenses that have cropped up during the year that we have put on the credit cards - car repairs, tires, etc. We also put a family vacation on a credit card 2500 this is what I mean by not wanting my kids to suffer, we still need to do these types of things as a family, which is more important to me that .  <response>: You should be taking home 13,500 - 14,000 a month from your husbands job alone, and thats after deferring the full 18,000. Your kids are in public school. You just said that a 20 pay cut led to you being unable to pay back debts. Even 5,000 a month in house costs, 1,000 for groceries, 1,000 for car payments, 2,000 in debt payments would still leave 5,000 a month, more than most people take home. What on earth are you spending all this money on?You need to explain your take-home income and your monthly expenses all of them, by category. You said you paid back 50k of the 130k debt in the last year however you are not counting the 401k loan as debt which you should be.It does not make sense to pay a penalty on your IRA. Thinking that you will make it up is a poor line of thought. You will never make up that money. It will be gone. What you will be doing is costing yourself current contributions in order to replace prior contributions you lost, as well as the lost earnings. 