If you have more bills than you have money, the usual advice is to cut expenses and find additional income. However, some fundraising methods can be much more expensive than others. Here are four things to avoid if possible, and things to consider instead.

Beware of attacks on pension plans

Most severance pay is disclosed in the form of difficult withdrawals, withdrawals when changing jobs, or unpaid loans. According to a recent survey by the Joint Parliamentary Committee on Taxation, 22% of donations from people under 50 are withdrawn prematurely each year, with most being cash withdrawals when people leave their jobs.

However, these premature withdrawals are generally expensive and the retirement money may be too low. You usually have to pay a penalty and income tax on the distribution. Plus, we waive any future tax-deferred compound interest that could have made money.

There may be other options. If you’re still employed, you can either borrow from a 401 (k) or temporarily suspend your pension contributions to free up your money. If you have a Roth IRA, you can withdraw the same amount as your donation without paying taxes or penalties.

While costly withdrawals are inevitable, you can minimize the damage by taking only what you need and cultivating the rest. For example, if you want to quit your job, you can transfer your 401 (k) balance to an IRA and get only what you need from the IRA. This eliminates the need to monetize your entire account.

Don’t skip health insurance

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

If you are unable to obtain health insurance in the course of your work, check out HealthCare.gov for a replacement for the Affordable Care Act. Most people’s contributions have been cut this year, and many are free to purchase insurance, including those receiving unemployment benefits this year.

According to an analysis by the non-partisan healthcare think-tank KFF, the US rescue planning law passed in March increased the number of people eligible for grants by 20%, and four in ten uninsured people are free. Or he turned out to be almost the target. Free plan.

You can also lower your insurance premiums by opting for a high deduction plan. That means paying thousands of dollars out of pocket if you get sick or injured, but at least you won’t face a five- or six-figure bill that could go bankrupt.

Beware of high value loans

Some of the more expensive ways to borrow are payday loans, auto title loans, and loans that don’t require a credit check. Large value loans are subject to a cycle of indebtedness where you cannot pay and are forced to borrow again. Car title loans put your car at risk of delinquency forfeiture.

These options might not be as quick or convenient, but they are often better for your financial health:

● If you need help paying your bill, first visit the government and charity information center 211.org.

● If you cannot repay the loan, ask the lender to be patient and other difficult options.

● If you have a credit card, consider cash advance services. These typically carry double-digit interest rates, while large-value loans typically carry triple-digit interest rates.

● If you are an employee, you can ask your employer to prepay your salary or to make you an emergency loan.

Another option if you are hired: Payday Advance apps like Earnin, Dave, Brigit. However, be aware that the fees can make these loans as expensive as payday loans, and becoming dependent on them can lead to a similar debt cycle.

Don’t toughen up the IRS

If you can’t pay the tax, you may not want to file a tax return. However, failure to submit will result in much higher penalties than failure to pay, said CPA Neil Stern, a member of the Financial Literacy Commission of the American Institute of Certified Public Accountants. In addition, there is no limitation period for audits in the event of a failed submission. The IRS can come after you years or even decades later.

The IRS has a payment plan that allows you to pay bills over time. You can also charge taxes on your credit card or consider using a personal loan to pay off what you owe, Stern said.

Ignoring the situation is not the solution. The IRS has an automated process that matches forms like W-2 and 1099 to tax returns, and a lack of something can quickly lead to computer-generated mismatch notifications or audits. Stern says yes.

If you owe and don’t pay, the IRS can foreclose your bank account or decorate your wages and other income until all unpaid taxes, fines and interest are collected, Stern said. to say. The IRS can even seize and sell your property.

“The IRS is probably the most powerful and relentless collection agency you can meet,” Stern says. “If you have to pay taxes, you have to pay as much as you can as soon as possible. ”

This column was provided to The Associated Press from the Personal Finance website. Nerdwallet.. Contact Liz Weston, a Certified Financial Planner and Columnist at Nerd Wallet. [email protected] too @lizweston..