If you’ve got more bills than money, the usual advice is to trim expenses and find additional income. But some ways of raising cash can be a lot more expensive than others. Here are four that should be avoided, if possible, and what to consider instead.
Beware raiding a retirement plan
Premature withdrawals are usually expensive and can leave you with too little money in retirement. You typically must pay penalties and income taxes on the distributions, plus you give up all the future tax-deferred compounding that money could have earned.
You may have other options. If you’re still employed, you could borrow from your 401(k) or halt retirement plan contributions temporarily to free up money. If you have a Roth IRA, you can withdraw an amount equal to your contributions without owing taxes or penalties.
Don’t skip health insurance
You may be healthy now, but you’re just one bad accident or illness away from catastrophic medical bills.
If you don’t have access to health insurance through work, check the Affordable Care Act exchanges at HealthCare.gov. Premiums have been lowered for most people this year and coverage can be free for many, including people who get unemployment benefits this year.
You also can lower premiums by opting for a high-deductible plan. That …….