Quick money can be expensive. Here are some alternatives.


If you have more bills than money, the usual advice is to cut expenses and find additional income. But some ways of raising funds can be much more expensive than others. Here are four that should be avoided, if possible, and what to consider instead.

Beware of Raids on a Pension Plan

Premature withdrawals are usually costly and can leave you with too little money in retirement. You usually have to pay penalties and taxes on distributions, and you forfeit any future tax-deferred compound interest that money might have earned.

You may have other options. If you’re still employed, you can borrow from your 401(k) or temporarily suspend retirement plan contributions to free up money. If you have a Roth IRA, you can withdraw an amount equal to your contributions without paying taxes or penalties.

Don’t Skip Health Insurance

You may be healthy now, but you are only one serious accident or illness away from catastrophic medical bills.

If you don’t have access to health insurance through work, see the Affordable Care Act exchanges on HealthCare.gov. Premiums have been reduced for most people this year and coverage may be free for many, including people receiving unemployment benefits this year.

You can also reduce premiums by opting for a high-deductible plan. That means paying thousands of dollars out of pocket if you get sick or injured, but at least you won’t be faced with the kind of five- or six-figure bills that could put you out of business.

Beware of high cost loans

Some of the most expensive ways to borrow include payday loans, car title loans, and loans that don’t require a credit check. High-cost loans make it easy to slip into a cycle of debt.

If you need help paying your bills, start by checking out 211.org, a clearinghouse for government and charity resources.

If you can’t repay a loan, ask the lender about options in case of hardship.

If you have a credit card, consider a cash advance. These typically carry double-digit interest rates, but high-cost loans typically have triple-digit rates.

Don’t stiffen the IRS

If you can’t pay your tax bill, it may be tempting not to file a return. But failing to file carries far greater penalties than failing to pay, says CPA Neal Stern. Also, there is no statute of limitations for audits when you fail to file. The IRS can sue you years later.

The IRS has payment plans that allow you to pay your bill over time. You can also charge a tax bill to a credit card or consider getting a personal loan to pay what you owe, Stern says.

Liz Weston is a NerdWallet columnist, certified financial planner, and author of “Your Credit Score.”


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