When you’re faced with the potential of bankruptcy, you often think about tapping into your retirement funds. After all, that’s where a good chunk of your money lies. Unfortunately, though, this is not a good move for most, as that will only lead to further problems. Here are some of the best options to consider before thinking about using your retirement money to pay for debt:
Instead of taking money out of your retirement funds, you can always opt for debt consolidation. In fact, debt consolidation is often looked at as a way of refinancing your debt. In other words, you are taking out one loan to pay off the others loans and debt you may have accumulated over time. This usually leads to achieving a lower interest rate and only having to focus on one loan, which are all much more beneficial to you than dipping into your retirement funds. Be sure to talk with a financial expert to help you with debt consolidation so you can quickly get back on track financially, say the professionals at D. Thode & Associates.
Another option that is more worthwhile than turning to your retirement money is contacting a consumer credit counseling service. When you do that, you are getting advice about your specific situation from experts. These individuals can tell you exactly what you need to do next to pay your debt and avoid bankruptcy without jeopardizing your retirement.
Of course one way to help pay off debt and prevent bankruptcy is setting up a strict budget. With one of these set in motion, you’ll be able to set forth a plan that will help you methodically pay all of your debt away.
Negotiating your payment plans with the credit card creditors is also a better option than tapping into your retirement money. This way you can still pay back money that you owe without having to look to other funds to do so or becoming bankrupt. Lump sum settlements is a similar option to payment plans that may help you as well.
Without directly tapping into your funds, you can always choose to take out a loan from your retirement plan. While you obviously have to pay back this money over a certain length of time, this may be a better option for you than making payments on your debt.
The only time that turning to your retirement is beneficial to you is when you already have a surplus in your account. In that particular case, you’ll be able to make up the difference in practically no time.
Typically, it is not the best idea to take money out of your retirement to pay debt and avoid bankruptcy as that can cause you to not be able to take care of yourself in your old age. Not only that, it can also completely ruin your credit rating which causes numerous problems in its own. In most cases, it’s best to turn to other options that your retirement funds.