The last several years have been financially difficult for Americans across the nation as many people have resorted to using credit cards to keep up on bills during the financial crisis. Now, many Michigan residents are attempting to pay down their amassed credit card debt, and they are looking for capital wherever they can find it. But some experts say certain revenue sources should be left alone.
Digging into a retirement nest egg might seem like a quick way to pay down outstanding credit card bills, but some experts warn the long-term implications of that decision could leave card owners worse off than they already are. For one thing, taking money from a 401(K) or other retirement source actually costs money -- in banking fees and applicable taxes. It is possible to lose significant percentages of the total amount by removing it from its account.
It is important to note, experts say, that retirement savings are automatically protected from a bankruptcy declaration, making a filing the better choice if debt becomes unmanageable. Considering the nation as a whole is carrying approximately $856 billion in credit card debt, it would be understandable if an individual or a family found the burden too heavy to bear. Experts suggest seeking out debt restructuring counseling or bankruptcy support before delving into protected savings.
Credit card debt is among the most troublesome debt types a Michigan resident can carry, mostly because it is notoriously difficult to get rid of. However, choosing what appears to be an easy answer is not always the best idea. It is best to seek out additional information and become informed about all the options available before making fiscal decisions that could adversely affect one's future.
Source: CNBC, "Suze Orman: Don't put your retirement on a credit card," Sakina Spruell, Aug. 7, 2013