Clearing the way to a comfortable retirement unfortunately sometimes involves some stumbling blocks along the way. Credit card debt is something that plagues millions of people, with the average American carrying about $15,000 in debt. You’ve likely heard of the more traditional ways in which to pay down your cards, but if you’re looking for a quicker – and riskier – way to go about it, there are ways. These aren’t necessarily approved methods, so take care before you try any of these.

  1. Cashing out Your 401(k)

Don’t jeopardize your financial future by taking money from your 401(k) for present problems. Not only will you pay up to a 10 percent penalty, you’ll also pay a hefty tax bill to the IRS for money that’s already yours. This should only be a last resort to prevent bankruptcy. That said, it’s understandable that you would need money to pay down debt with ridiculously high interest rates. A safer option is to temporarily stop contributions to your retirement account to use those funds to pay off your credit card. Just don’t forget to start contributing again once you pay off your debt.

  1. Using Your Emergency Fund

You should have an emergency fund ready to go for a rainy day – which many experts say should contain about six months of living expenses ideally. You never know when you have to make an unexpected home improvement, get the car repaired or pay for medical bills. Don’t be tempted to drain your emergency fund to pay down debt because you’re exposing your family to risk if you actually do need that money for an unforeseen circumstance.

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  1. Taking out Equity in Your Home

You may have hear conflicting ideas out there about the positives and negatives surrounding taking out equity from your home to pay off debt. You don’t want to ever find yourself in the situation where you owe more on the property than it’s actually worth. Do diligent research before you take this route, and even then, you don’t want to get to close to 100% loan-to-value due to the risk involved.

  1. Forgoing mortgage payments

Many Americans depend on their credit cards as their lifelines on a month-to-month basis, so when it comes down to paying the credit cards or paying the mortgage, they opt for the credit card payments. You’re on a fast road to foreclosure if you do this. Yes, it could take up to a year before you’re actually evicted, but you don’t want to go down this road and jeopardize the American dream of owning your own home.

All of these above options should only be used as last-ditch efforts, and are actually extremely risky. Many also decide to invest heavily in stocks to have more money to pay down their debt, which isn’t inherently a bad idea. You just have to be careful in these aggressive investments and always know the name of a trusted securities fraud lawyer.


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