Dear Helaine: Help me decide what I should do. I’m a 53-year-old who had it all but lost everything in the recession beginning 10 years ago. I sold off real estate at a loss, closed my business and tried to pay everything I owed. In the end, I had to declare bankruptcy after running through my retirement funds.
Now I have a new career, and I am trying to plan for the future. I purchased an apartment, which I am planning to sell at a profit next year. I have $25,000 in an IRA, but no other savings to speak of. Plus, I still have $40,000 in credit card debt.
When I sell the apartment, I’ll get about $100,000 after paying the mortgage. What should I do with that money? I am afraid of rising rents, so I feel like I should buy a place to live. However, I also feel I should pay off my debt because I am paying high interest rates. I also feel like I should put money aside for retirement, but there just isn’t enough to do all of those things.
— Back From the Financial Abyss
Dear Back From the Abyss: I wish you had written me a decade ago! Retirement funds are, for the most part, safe from creditors in bankruptcy court. Unfortunately, all too many people — including yourself — use that money in an unsuccessful attempt to stave off bankruptcy. I understand the desire to pay back money owed, but bankruptcy laws are written this way for a reason.
