DW and I have found ourselves in a situation that isn't grave, but definitely qualifies as poor timing. TL;DR: just bought a house, very little non-EF cash on hand; large medical expenses coming up. Take a loan for them, and/or cash out HSA + Roth IRA?
DW and I just bought a house in December, in a HCOL area (Northern VA suburbs). We spent down just about all our "discretionary" cash in order to make the 20% down payment + necessary repairs, but kept our EF intact. We now find ourselves needing to do IVF, and costs are looking like about $30,000 + maybe $10,000 in meds and tests (possibly more of the latter if multiple cycles needed). Insurance is unlikely to cover much or any of this.
A few months ago, we could have just paid cash and maybe waited longer to purchase the house, but what's done is done. We're rebuilding our savings, which fortunately won't take us too long provided there aren't [any more] surprise home repair costs. But we don't want to touch our EFs, those are for "real emergencies" (lost job, major medical incident) -- but due to wife's age, it's not prudent for us to delay IVF any longer. It feels like we're in a bit of a bind.
The clinic partners with a company that specializes in financing, and I'll have a call with them a bit later. From what I've read, their loans fall right around the APR% for "personal loans", and have no pre-payment penalty. So it's possible I could shop around (credit union, SoFi) to refinance it afterwards. DW does not like the idea of 401k loans and won't consider that an option.
My question: I have about $8000 in an HSA I no longer contribute to, and $6000 in contributions in a Roth IRA, which I could potentially throw at this to reduce our loan amount. I'm a bit torn as I fell in the camp of keeping the HSA as a last ditch emergency fund, and otherwise saving it for retirement. On the other hand, I don't relish the idea of more debt right now, and possibly at an unfavorable rate.
- Cash out HSA and Roth IRA, take loan for remainder?
- Take the full loan, drop 401k contributions to match, pay off as soon as possible?
- Try to get a 0% balance transfer CC? (if 3% transfer fee < loan APR%)
- Some combo of the above?
- Take the full loan, try to pay off as soon as possible?
Here's our info:
My income: $145,000, fairly stable job, but a contractor (so who knows)
DW income: $110,000, very stable job
Income after tax/deductions: ~$11,000/mo
My 401k: ~200,000 (playing catch up for not contributing enough in my 20s)
DW 401k: ~$350,000 (a good saver!)
Both maxing 401k contributions
Credit scores: Both ~800s (may not have recalculated after the mortgage yet)
EF: ~6mos, don't want to touch this
My HSA: $8000
My Roth IRA: ~$6000 in contributions
Fixed expenses: $3600 total ($3200 mortgage: $580k @ 3.625%, $400 car loan: $12k @ 1.9%)
Appreciate any thoughts you have, or let me know if there's more info I should provide?