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Consider consumer credit counseling and avoid tapping into retirement accounts
By Oscar Monfort on Apr 19th, 2010
In trying to maintain their finances, consumers may have taken steps to improve their monetary position as a result of the recession.
However, there are mistakes people can make that may reverse any positive gains from paying off debt or increasing savings. A recent report from USA Today highlighted a number of financial faux pas that consumers should avoid.
For example, during tough times consumers may consider withdrawing funds from their 401(k) or other retirement account. Doing so could jeopardize a person's future, especially if they are close to bankruptcy.
Mackey McNeill, a certified public accountant, told the paper that retirement funds are generally held separate from any bankruptcy proceedings.
"Some people use their IRAs, and then they wind up in bankruptcy, anyway," McNeill said. "So now, they're bankrupt and they don't have any retirement."
Other actions people should avoid include walking away from an underwater mortgage or ignoring credit card debt. Consumers who are having trouble making payments on their bills may still have options, including consulting with a consumer credit counseling organization.
These firms can help by reducing monthly expenses through a budget that takes into account a consumer's income. Doing so may help people pay off bills by eliminating unnecessary expenses.
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