<prompt> Human: Hi all,37yo M here, had a rough year with job change, but generally been a stable worker. I have a lot of CC debt and am working on changing my habits. Its been pretty stable the last couple years, and now I earn more, but not significantly more...Anyway, Im thinking about how motivational and liberating it would be to cut a huge chunk out of my debt, and I am set to get a pension payout an old job where Im vested is shuttering their pension plan, just got approval from the IRS, I expect the payout in the next 3-4 months. Im planning to use that chunk of change with a good portion set aside for year-end taxes for my CC debt.I also have two traditional IRAs, and its very tempting to use them to cut into my debt, too. Im hesitant to touch my retirement funds, but I also am in a good field IT, learning a lot, and working on my underearner habits and hoping to earn more and put more to savings once Im not paying it all to my credit cards.Heres the run down:ASSETS:TIAA-CREF TAX DEFERRED ANNUITY PLAN: 4,007.00 20 fed - 10 penaltyTIAA-CREF DEFINED CONTRIBUTION RETIRE PLAN: 11,537.63 20 fed - 10 penalty- combined overall personal rate of return 2013: 24.8 -- 2014-to-date: 4.0Vanguard Traditional IRA: 9,852.3820 fed - 10 penaltyFidelity 401k TOPS: 1,928.81- current employerDEBTS:REI VISA US Bank 0 thru 112015: 3,525.00First Internet Bank of Indaina 10: 6,529.19CitiBank 14.99: 14,889.37Discover 16.99: 11,503.48Barclay US 18.24: 4,348.81Chase 29.99:3,092.59Mohela student loan 3.5: 1,647.22ANTICIPATED ASSET:Pension plan payout: 10,800 after taxes? - within the next 3-4 monthsAn old employer I worked at 9 years and got fully vested in their Plan D Retirement Plan is closing that pension plan. The IRS has not yet approved it, but as soon as they do Im supposed to get a payout estimated around 18000. But I figure therell be 60 taxes making it only worth about 10,800 really?I make 67,470year, which after taxes, FSA, healthcare, etc, is about 3250 guaranteedmonth. My current budget allows for 476mo groceries, cat food, household, spending, restaurants 50, fun money - and 30 renter insurance, emergency, bike repairs. That sort of stuff. So I have 2744mo left over for bills.Bills 2566mo, including CC payments, gaselectric can be up to 105, more like 70 in winter months, cellular 54.44, internet 65, rent 1155.44, CC 1102 minimums, student loan 81.92This is after knocking my internet down to 55mo, canceling netflix, spotify, cutting my emergency budgets down a bit, and a couple other things.Ive been saving for taxes since I had unemployment the job change last year, and just wanted to feel safe and not get hit with owing taxes. I also work overtime sometime, and have about another 600 holiday OT pay coming in the next week, for example. Im hoping I wont owe too much in taxes and can draw on that savings, too. Part of me wants to wait a month and come ask for advice then when my debts are even lower, but it probably doesnt make too much difference!So, should I draw on my investment accounts, take the tax penalty hit, and free myself of my debts? It seems like it would be very motivational. But possibly stemming from impatience?  <response>: OK, first of all, I should say congratulations. Because youre halfway to fixing your financial situation, merely by laying everything out. Just getting a handle on what you make, what you owe, and what you have is pretty critical.Now lets talk about the sense that it makes to withdraw from retirement plans. First off, Id say, if theres any way you can avoid that, please do so. Because youre going to get hit with some pretty onerous withdrawal penalties. There may be other options.First of all, you might want to consider a reverse-rollover with an eye toward taking out a loan against the 401-K. It works like this: Roll up all your IRA accounts into your current employers 401-K. You need to confirm, first, that your employer allows this! This is called a reverse rollover. All your retirement accounts appear to be pre-tax money, so you should be OK there. Take out a 5-year general purpose loan vs. your now larger 401-K. Use it to pay off all your credit card debt. You need to ALSO confirm that your employer allows THIS, as well!If you can do both of these things, and there may be some period of time you need to wait before you can do the latter, even if its allowed at all - you really need to talk to your employers 401-K plan manager, and tell them exactly what you intend to do. This is not a good place to leave shit out, cuz if someones going to get surprised, its going to be you, and its not going to be a fun surprise, then you can consolidate your retirement accounts into a single 401-K, and then take a relatively low-interest loan out against that balance that you can pay off over 5 years.This has a couple of advantages. First if lets you avoid any withdrawal penalties. And avoid any taxable income penalties, as well. Plus, youre replacing high-interest loans including that no interest until 2016 bullshit, cuz you and I both know in 2016 it becomes whorehouse rates with a low-interest loan against your 401-K, and youre paying the interest to yourself!There are downsides, however. Youre not really taking out a loan against the 401-K as collateral. Youre taking out a loan from the 401-K. That means if you withdraw, say, 20K from the 401-K, your 401-K balance will be lower by 20K. Thats 20K worth of capital appreciation you wont be enjoying.If you dont want to avail yourself of that option, and I suggest you try very hard to do what I just described then I dont think it makes sense for you to cash out your retirement plans. As youve discovered, the penalty on your pension is massive. By the way, that math doesnt exactly work out - a 60 penalty on 18K leaves 10.8K for you? It leaves 7200 for you. Maybe you meant a 40 penalty. So while the return youd earn on 10.8K in an IRA wouldnt exceed your interest on your credit cards, the return on the 18K would.So at that point, I think youre best off, just biting down, taking the extra 180mo you earn between your income and your expenses, and using it to slowly, agonizingly, pay down your credit card debt. Start with Chase, for obvious reasons. 