Should you get out of debt fast or safely?

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A couple argues about how they should pay off their debts: slow and steady or all at once.

Question: My husband and I weathered the recession better than most of our friends, but it caught up to us last year, when he lost his job and mine was restructured into a lower-paying classification. We’re only now rebounding, and even though my husband has a new job, we had to put almost $10,000 on our credit cards just to make ends meet.

Now we want to pay off the cards. My husband wants me to borrow against my 401(k) savings. I’m allowed to take out half of that, which would just cover the debt. He’s also thinking about borrowing against his life insurance policy (since our children are grown) or taking out a second mortgage (since the housing market in our area is rebounding).

I’m nervous about both options and would prefer something safer, like dipping into our savings and cutting back on our budget. But that won’t pay off the debt quickly, and my husband says the interest rates are eating us alive. Is he right? Am I just being overly cautious?

— Rebecca, Georgia

Howard Dvorkin CPA answers…

Howard Dvorkin on how to get out of debt fastCongratulations, Rebecca, your husband has proposed three of the six worst ways for getting out of debt, according to the What Not to Do section of

Your husband is right about one thing: You’re losing money each month you carry that debt. Essentially, you’re paying your credit card companies money you could spend elsewhere.

There are good reasons for ignoring the allure of a quick solution, however.  Borrowing against your 401(k) seems like a good idea, since you’re paying yourself back and not those credit card companies. But if you don’t pay it all back within a certain time (usually five years), you’ll pay taxes for what’s called an “early withdrawal.” That means you’re paying Uncle Sam instead of the credit card companies.

Borrowing against your husband’s life insurance could hurt you if he dies before the loan is paid off – because the loan is still due, with interest. Even though your children are grown, his policy could help you with your mortgage payments so you don’t have to sell your house.

The worst of your husband’s ideas is to take out a second mortgage. Your credit card debt is called “unsecured,” which means it would require extraordinary circumstances for you to lose your house to pay off that debt. A second mortgage, however, is a “secured” debt. If you fail to pay that off, the bank can foreclose on your home.

Your plan is much safer, Rebecca. Cutting back on your weekly household budget is all about small savings that add up to big dollars, whether it’s spending smarter at the movies, avoiding bank fees, saving on gasoline, visiting your local library, or timing your purchases better.

I built to give you advice on how to save money, and those resources are free, including interactive calculators and in-depth self-help booklets.

One other option is debt consolidation. You can learn more about that on our Credit Card Debt Help page. Bottom line, Rebecca: It’s not easy to get out of debt fast and safely, otherwise nobody would be in debt. Shortcuts can cost you if you’re not careful.


Have a debt question?

Email your question to and Howard Dvorkin will review it. Dvorkin is a  CPA, chairman of, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

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Meet the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

CPA and Chairman

Dvorkin is the author of Credit Hell and Power Up and Chairman of

401k, credit card debt, debt consolidation

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