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Withdraw Acorns savings to pay off card?

Member

Withdraw Acorns savings to pay off card?

I am looking for some help in deciding what I should do.

 

I have an Acorns savings account (the one that puts your change into a fund automatically).  Over the course of a year, I have saved about $900 in this account.

 

I have approximately $13,000 in credit card/car debt which I have been chipping away at.  My goal is to have this all paid off by May.  I have been putting in extra hours at work and plan to use my tax refund to fast forward and hopefully be out of debt sooner then May.

 

I know it makes financial sense to withdraw this acorn money and put it towards a CC with high interest.   But I really don't want to see my savings money go away, kind of like a feel good feeling to know I have something in savings.  I don't know what kind of tax implications will arise if I withdraw from Acorn.  I make approx $53,000/year.

 

I am not sure if the savings cost will really be THAT substancial since I am on course for paying everything off by May.

 

The one CC I could pay off with the acorns savings has an APR of 24.9%.  Over the course of the past year, I have made about $45 on my acorns account.

 

Any advise?

Thank you!!

 

''

Message 1 of 8
7 REPLIES
Established Contributor

Re: Withdraw Acorns savings to pay off card?

If this is your only savings, I wouldn't touch it. Just keep plugging away and get everything paid off by May Smiley Happy

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Message 2 of 8
Regular Contributor

Re: Withdraw Acorns savings to pay off card?


gingerhead wrote:

I am looking for some help in deciding what I should do.

 

I have an Acorns savings account (the one that puts your change into a fund automatically).  Over the course of a year, I have saved about $900 in this account.

 

I have approximately $13,000 in credit card/car debt which I have been chipping away at.  My goal is to have this all paid off by May.  I have been putting in extra hours at work and plan to use my tax refund to fast forward and hopefully be out of debt sooner then May.

 

I know it makes financial sense to withdraw this acorn money and put it towards a CC with high interest.   But I really don't want to see my savings money go away, kind of like a feel good feeling to know I have something in savings.  I don't know what kind of tax implications will arise if I withdraw from Acorn.  I make approx $53,000/year.

 

I am not sure if the savings cost will really be THAT substancial since I am on course for paying everything off by May.

 

The one CC I could pay off with the acorns savings has an APR of 24.9%.  Over the course of the past year, I have made about $45 on my acorns account.

 

Any advise?

Thank you!!

 

''


I agree with steelers; having some emergency savings is a neccesary part of a sound financial strategy. You're definitely not making more than you're losing to interest, but having a cushion changes your entire financial outlook in the long term. Once you're up to $1k in total savings, focus on eliminating the high interest debt. After you've cleared the debt, consider keeping 3-6 months of cushion in cash or very stable investments.

 

Regarding tax implications, you only pay taxes on gains that are 'realized' (sold positions.) In this case, your gains are short term (under 1 year) and only $45. You'll pay your standard tax rate (likely ~25% in total) on $45 if you realize the gain. If you hold longer, you'll pay either 0% or 15% depending on your total earnings in the year.


Gardening from 10/1/2017 to 4/1/2018.
Message 3 of 8
Regular Contributor

Re: Withdraw Acorns savings to pay off card?

Side note: you should also adjust your tax withholding so you have no refund. It is silly to let the federal government hold your money at 0% interest while you pay 25% interest to borrow. Plenty of calculators online can help you make an adjustment, put the money in your pocket now, and let you dig out a little sooner.


Gardening from 10/1/2017 to 4/1/2018.
Message 4 of 8
Member

Re: Withdraw Acorns savings to pay off card?

Thank you both for your help!! I will take your advice and appreciate your input! I will be looking at the calculator for withholding, never thought about that but it completely makes sense. Thanks again!!
Message 5 of 8
Contributor

Re: Withdraw Acorns savings to pay off card?

I am glad to see someone else using acorns. I did use it and built up savings too. I withdrew the money and put into Robinhood totally free stock trading, acorns fees are avoided with Robinhood and the money I used to pay in fees goes to actual stock and increased my savings faster. Btw, if ur interested I can pm u with a link to robinhood and u will get a free share of stock if sign up. When I followed the link, I got a free share of conagra (cag). Kept it for 30 days and sold for $44. With no trading fees or any other fees, the savings pile up fast.
Current Scores as of 8/18/17 all FICO 8 EQ: 695 EX: 673 *fico2 699 TU:645 bio has more.
Message 6 of 8
Contributor

Re: Withdraw Acorns savings to pay off card?

How are the acorns fees avoided with Robinhood? Recenlty just opened an acorns account myself to build up some savings.


EX FICO 8 - 763 (11/17) | TU FICO 8 - 777 (11/17) | EQ FICO Bankcard 8 - 798 (11/17)
Message 7 of 8
Contributor

Re: Withdraw Acorns savings to pay off card?

Acorns, Stash...etc, act like a mutual fund, they pre pick stocks and with every deposit you buy into the fund and acquire partial and whole shares. Some pay dividends and some dont and long settlement times to withdraw. Plus they charge a monthly fee.

Robinhood let's u deposit any amount u want, usually u can trade immediately upon account opening. There is no minimum to open, there is no management fee, there are no commissions when u buy or sell. U pick the stock you want to buy and decide what and when to sell. It's really addictive I throw every extra penny in, I buy monthly dividend stock and reinvest them. I started with 1 buck Oct 2016 and have grown to over 5k in contrabutions. If I were u, I would Google robinhood app and check out the reviews. I love it.

If u want to sign up, robinhood has a special signup offer, I'll PM you a link that gives you your first share of stock on robinhood for free otherwise u can sign up directly and skip the free stock. I save the monthly fees I used to pay acorns and not get a dividend on them, lol. Stocks like ORC cost about 10 bucks a share and pays .14 cents every month. CLM cost about $15 and pays about.24 cents a month. So no fees to buy or sell 1 or 1000 shares of most any stock, no acorns management fee.

I am not a stock advisor or affiliated any way with Robinhood, I mention because it's a great way to build my savings in furtherance of repairing my credit, saving for a mortgage and emergency. In full disclosure they have a referral bounus, i also get a share of stock if u sign up under my link but u can sign up any number of ways via Google.

Current Scores as of 8/18/17 all FICO 8 EQ: 695 EX: 673 *fico2 699 TU:645 bio has more.
Message 8 of 8