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Paying Off Debt

Q&A: Should I cash out my pension to pay off my home?

July 28, 2025 By Liz Weston Leave a Comment

Dear Liz: I was recently and unexpectedly laid off. Money will be tight on Social Security alone. If I take the lump sum of my pension, the amount would be almost enough to pay off my home. Should I do that?

Answer: Pension payments typically continue for life and you can’t lose the money to fraud, bad investments or stock market downturns. If you had plenty of other assets and the pension was small, you might be fine cashing it out. Under the circumstances, though, consider hanging on to this valuable asset.

In general, you should be extremely wary about tying up a large sum in any one investment. That includes paying off a mortgage. You won’t have monthly loan payments anymore but you may have trouble accessing that cash again in an emergency.

Also be cautious about taking Social Security too early. Your benefits will be permanently reduced, which can have a huge effect on your future quality of life. While finding another full-time job can be extremely tough late in life, even a part-time job might be enough to help you delay filing.

You could benefit enormously from individualized financial advice. Consider reaching out to free or low-cost services, such as Advisers Give Back.

Filed Under: Q&A, Retirement Tagged With: delaying Social Security, lump sum vs annuity, maximizing Social Security, paying off a mortgage, Paying Off Debt, pension lump sum vs annuity, pension payout, prepaying a mortgage, Social Security

How to tackle holiday debt in January

January 17, 2023 By Liz Weston

After years of being in debt, Rachel Kramer Bussel came to a realization: “If I don’t become proactive about it, I will be in debt for the rest of my life.” For Bussel, a freelance writer near Atlantic City, New Jersey, that meant scaling back spending and putting any available money toward the debt principal.

“Starting to see it go in the right direction helped me amp it up,” she says. “I felt like, maybe there is light at the end of the tunnel.” Bussel, whose debt came from credit cards, student loans and back taxes, finally paid off all of her debt, which at one point exceeded $100,000, in 2020.

Paying off debt is a common goal as the new year kicks off. Bills for holiday shopping and other end-of-year spending often come due in January, and this year, rising interest rates make debt increasingly expensive. According to the Federal Reserve, revolving debt, which includes credit card balances, continued to rise throughout 2022, increasing at an annual rate of 10.4% as of October, the most recent numbers available.

In Kimberly Palmer’s latest for the Associated Press, learn strategies to attack your debt in January.

Filed Under: Liz's Blog Tagged With: holiday debt, Paying Off Debt

Monday’s need-to-know money news

July 20, 2020 By Liz Weston

Today’s top story: 6 credit card scams and how to avoid them. Also in the news: A new episode of the SmartMoney podcast on COVID impulse spending and building credit while paying off debt, how Black Friday shopping could look very different this year, and making a plan to repay your borrowed 401(k) money.

6 Credit Card Scams and How to Avoid Them
Crooks don’t have to steal your card — just your card information. Keep your money and your identity safe.

Smart Money Podcast: COVID Impulse Spending, and Building Credit While Paying Debt
Finding the right payoff method for your debt.

Black Friday Shopping Could Look Very Different This Year
Lining up for doorbusters could be a thing of the past.

Make a Plan to Repay Your Borrowed 401(k) Money
Start thinking of a payoff strategy.

Filed Under: Liz's Blog Tagged With: 401(k), Black Friday, building credit, COVID impulse spending, credit card scams, payback plan, Paying Off Debt, SmartMoney podcast

Monday’s need-to-know money news

October 7, 2019 By Liz Weston

Today’s top story: SmartMoney podcast on how to pay off debt faster. Also in the news: What to expect when requesting a credit limit increase, why you should always pay in local currency when traveling, and 10 money mistakes millennials should avoid.

SmartMoney podcast: ‘How Can I Pay Off My Debt Faster?’
Tips from the experts.

Requesting a Credit Limit Increase? Here’s What to Expect
Question and answerr

Why You Should Always Pay in Local Currency When Traveling
Avoid markups and fees.

10 Money Mistakes Millennials Should Avoid (No. 10’s a Shocker)
These mistakes could come back to haunt you.

Filed Under: Liz's Blog Tagged With: credit limit increase, debt, local currency, millennials, money mistakes, Paying Off Debt, SmartMoney podcast, tips, travel

Free of debt – with regrets

July 6, 2017 By Liz Weston

Stories about how ordinary people pay off debt quickly can be amazing, inspiring — and somewhat deceptive.

These tales often mention the sacrifices debtors made but may gloss over the cost to their quality of life or the misguided choices they made. Becoming debt-free can be a worthy goal, but understanding the pitfalls can keep you from repeating others’ mistakes.

In my latest for the Associated Press, why some folks wish they hadn’t paid off their debt in such a rush.

Filed Under: Liz's Blog Tagged With: debt, Paying Off Debt

Americans Are Pissed — This Chart Might Explain Why

May 11, 2016 By Liz Weston

iStock_000087400741_SmallPeople are angry. Voters demanding change have helped make Donald Trump the presumptive Republican nominee for president and fueled Bernie Sanders’ ferocious challenge to Democrat Hillary Clinton.

But what are they angry about? Ask and you’ll hear about Washington gridlock, Wall Street greed, trade, stagnant pay, immigration. In my latest for NerdWallet, the one huge factor that’s making this election especially unique.

Filed Under: Budgeting, Saving Money Tagged With: Budgeting, Paying Off Debt, personal finance

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