Smart Money Podcast: Options for Paying Off Credit Card Debt: Hardship Programs, Balance Transfer Cards, Loans and More

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Hear Nerds’ “financial horror stories” and explore solutions for paying credit card debt, from 401k loans to bankruptcy.

This Week in Your Money: Hosts Sean Pyles and Sara Rathner share their personal “financial horror” stories, including Sean’s rejected credit card application and what happened to some of Sara’s retirement account funds. They’re cautionary tales that will help you make sure you’re getting the most out of your money.

Today’s Money Question: Sean welcomes Nerd Liz Weston and Tommy Tindall to help answer a question about whether a listener should consider taking out a 401k loan to pay off credit card debt. Tommy explains how calculating your debt-to-income ratio can help you understand your options. He also shares the pros and cons of various methods for paying off credit card debt, including credit card hardship programs, balance transfer cards, personal loans, and filing for bankruptcy. He also shares his personal experience of taking out a $15,000 loan from his 401k to make a down payment on a house, breaking down both the benefits and opportunity costs associated with the decision.

Check out this episode on your favorite podcast platform, including:

• Apple Podcasts

• Spotify

NerdWallet stories related to this episode:

I Have Good Credit. Why Don’t I Qualify for That Card?

What Happens to Your 401(k) When You Quit a Job?

What to Know Before Using a 401(k) Loan for a Down Payment

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

This transcript was created from the podcast audio by an AI tool.

Sean Pyles:

Hey, Sara, when was the last time your finances gave you a fright?

Sara Rathner:

Well, since having my son six months ago, I've probably spent about a million dollars on the resulting hospital bills, which is a little scary, not literally a million dollars, but it felt like it.

Sean Pyles:

Yeah, that sounds terrifying, I'm sure. Well, this episode we're going to exorcize some of our financial demons, or at least chat about them a little bit.

Sara Rathner:

Ooh, cue spooky noises.

Sean Pyles:

Welcome to NerdWallet's Smart Money Podcast where you send us your money questions and we answer them with the help of our genius Nerds. I'm Sean Pyles.

Sara Rathner:

And I'm Sara Rathner. So, listeners, you know the deal. You've got questions about money, like how to budget for the holidays or what you should know about buying a house in this spooky market. So send your questions our way.

Sean Pyles:

You can email a voice memo of your money question to [email protected] or leave a voicemail on the Nerd hotline at (901) 730-6373. That's (901) 730-NERD. You can also text your questions to the Nerd hotline or write an email to [email protected]. In this episode, Liz Weston and I answer a listener's question about pulling money from a 401k to pay off credit card debt. But first, in the spirit of Halloween, Sara and I are going to share some financial horror stories.

Sara Rathner:

All right, Sean, I've got my candy corn ready because I don't care what anybody says, candy corn is delicious and I will die on that hill. What have you got?

Sean Pyles:

I'm not going to yucky or yum, but I will just grimace at that.

Sara Rathner:

That's just more candy corn for me, Sean. It's okay. I'll eat your portion.

Sean Pyles:

Okay, great. Well, admittedly, my story is maybe not scary in the traditional sense, but I did gasp when it happened. Sara, I was denied for a credit card.

Sara Rathner:

Dun-dun-dah.

Sean Pyles:

I know. This was mostly scary for my ego, but let me just give you a rundown of what happened. I saw a travel credit card that I've had my eye on for a while. It was offering a really extra juicy signup bonus and I wanted it, so I unfroze my credit at the three credit bureaus and then I sent in my application. I took a very self-satisfied sip of coffee and I almost spit that coffee all over my laptop because I saw that I was instantly denied for this credit card.

Sara Rathner:

Honestly, that's happened to me, too. It hurts every time.

Sean Pyles:

I mean, I assumed that something was wrong. I thought that maybe my temporary credit thaw hadn't gone through in time from when I submitted the application or maybe someone trashed my credit when I wasn't paying attention despite the credit freezes. So I called the bank and asked what happened because, after all, I do have a credit score above 800, so surely there was some mistake, I couldn't have done anything wrong.

Sara Rathner:

Do they even know who you are?

Sean Pyles:

I know. I was deeply offended. But no, they said, "We don't care who you are or what your credit score is, you just have too many credit cards," and I also don't have an existing relationship with this financial institution. So they looked at me and thought, you're kind of risky. And then after that, when I tried to talk through why I should still get this credit card, I haven't missed a credit card payment in over a decade, and I again have that really high credit score, they said, "Well, thanks for talking that through, but you might want to check out our website to learn a little more about how credit works." And that was just salt in the wound, so anyway.

Sara Rathner:

Once again, do they even know who you are?

Sean Pyles:

I know.

Sara Rathner:

You're like, "I literally run a podcast about this stuff."

Sean Pyles:

Exactly. But the bottom line is really that no matter how good you think your credit or your finances are, some things are just out of your control. So this bank will be losing out on having me as a customer and I will be losing out on a bunch of credit card points. Yeah, terrifying. I know.

Sara Rathner:

Well, I hope the next time you apply for a card, you are accepted so your ego can be reinvigorated.

Sean Pyles:

Thank you. Apparently it's really fragile, so I need credit cards to prop it up. Well, Sara, do you have any actually scary financial stories for us?

Sara Rathner:

Yeah, I have given this piece of advice on this very podcast that, when you have money in an investment account, the money is not invested until you actually invest it. When you deposit the money, it's held basically in cash. So no big deal but I totally checked on my retirement accounts the other day and I have a traditional IRA that is the result of rolling some old 401ks out of former employers and, for whatever reason, a pretty big chunk of it was held in cash and not invested.

Sean Pyles:

Oh, no.

Sara Rathner:

I don't know what the heck happened, but that's a big mistake.

Sean Pyles:

Yeah.

Sara Rathner:

Don't be me, take my advice, do as I say, not as I do, basically. But I did immediately go buy a giant chunk of funds with the money that was sitting in cash so now it is all invested. I was wondering why that account was not performing as well as I would've hoped. Now I know why.

Sean Pyles:

Yeah. Well, for folks who might not understand the mechanics of what was going on there, can you describe what you did and didn't do in that account and what maybe could have been very scary to see years down the road if you hadn't made this change?

Sara Rathner:

Yeah. An IRA is one of a number of different types of investment accounts that you could use to save for retirement. The other ones could be a 401k, 403b. Those are usually done through your employer. Long story short, you deposit money into these kinds of accounts and then, once the money's in the account, you can decide how to invest that money. So, putting the money in the account is not investing. That's just transferring money. It's still cash, essentially.

Then, once you decide how you want to invest that money, a number of different funds or individual stocks or whatever, based on your own goals and your time horizon and your risk tolerance and all these other factors, then the money is invested. Somewhere along the line of opening that account, maybe I did something technically wrong in doling out where that money was supposed to go. I will say that I have noticed this particular fund provider has a difficult-to-understand website and app.

I will not call them out on this podcast, but there aren't that many. So, if you're listening and you work for one of them, it's probably you. So here's what makes this so scary in the long term. Money that's held in cash doesn't really earn much of a return. We know this because our checking accounts and our savings accounts only earn so much. Money that's invested has the potential, not the guarantee, to earn a nice return, especially if you remain invested for a long period of time, which, when it comes to retirement accounts, people tend to do. You open them up and begin investing earlier in your career. And then after you retire is when you begin to withdraw money from these accounts.

So, by missing out on a period of time because your money is held in cash by accident or on purpose, you can't get that time back and that can translate to missing out on potential money that I could have had in retirement. And I don't even want to do the math on what that could be because, I mean, really why do that to yourself?

Sean Pyles:

Just take the lesson and move on, but-

Sara Rathner:

Yeah, just take the lesson and move on. Sometimes you just have to do that.

Sean Pyles:

Yeah, this is unfortunately not horribly uncommon. A lot of people will put money into an account like a traditional IRA and then it won't be invested. And so the account is essentially defaulting to being just like a bank account and they're not taking advantage of the real potential growth opportunity that they have with a traditional IRA by being able to invest it, right?

Sara Rathner:

Yes.

Sean Pyles:

So, that's the real risk, and the fright is that people might not notice this mistake until decades down the line and they've missed out on all of that growth and they've just had money sitting there doing nothing except really losing value because of the way inflation works.

Sara Rathner:

Yeah. Do yourself a favor, everyone listening, sign into whatever app or website you use to manage your retirement accounts and just take a look at them and just make sure that they are invested the way you want them to be invested right now. And then hopefully you will not make the same discovery I did.

Sean Pyles:

Yes. And if you do, now you know how to amend that. All right, well listener, if you have any scary stories about your finances that you learned a good lesson from, share them with us on the Nerd hotline. And also, before we move on, listener, I have a question for you. What is the best thing that happened to you and your finances this year? We are putting together a special end of year episode all about your financial wins. So whether you made good use of your vacation fund, paid off some debt, or bought a house, we want to hear about it.

Sara Rathner:

Leave us a voicemail of your money win on the Nerd hotline at (901) 730-6373. That's (901) 730-NERD. You can also text it to us there if you'd like, or you can email it to us at [email protected].

Sean Pyles:

Now, let's get on to my Money Question conversation with Liz Weston. Stay with us. I'm Sean Pyles.

Liz Weston:

And I'm Liz Weston.

Sean Pyles:

This episode's money question comes from a listener who sent us an email. Here it is. "Hi. I have $20,000 in credit card debt with interest rates between 19% and 26%. I was wondering if it would benefit me to take out a loan from my 401k to pay down $10,000 at the interest rate of 9.5%. I was reading and it looks like if I take a loan for myself, it will not count on my credit report. I am 35 years old, have $40,000 in my 401k and don't plan on retiring early. Thanks for your help."

Liz Weston:

To help us answer our listener's question, on this episode of the podcast, we're joined by NerdWallet debt writer Tommy Tindall. Great to have you on Smart Money, Tommy.

Tommy Tindall:

Hey, thanks so much. It's great to be back on the show.

Sean Pyles:

Tommy, good to talk with you again. So, before we get into the nuances of our listener's question, I want to start by setting some context for credit card debt right now. In August of this year, the Federal Reserve Bank of New York announced that credit card balances had surpassed $1 trillion for the first time and, at the same time, 401k hardship withdrawals, where someone takes money out of their retirement account due to financial difficulty, are on the rise. Our listener is asking about a 401k loan, which is a little different from a hardship withdrawal, but it seems like they may be in a similarly challenging financial place that many others are in at the moment.

I spell this all out to remind folks that credit card debt is a pretty common thing in America, even if they feel alone with the debt that they're carrying. The truth is that the world is really expensive, especially now. So, please, if you do have credit card debt, don't beat yourself up for what you're carrying and working through because there are ways to get out of what you owe and we're about to talk about all of them with Tommy. So, Tommy, I would love to hear how you think about paying off credit card debt.

Tommy Tindall:

Well, first of all, I mean I totally second your sentiment. It's an expensive world out there. Everything from gas to groceries, interest rates, cars, homes, rent, everything is expensive and that can easily overwhelm. But when it comes to credit card debt, paying that off I think is really critical. So I think our listener's definitely asking the right questions and I think a first step is really to take a look at your overall financial situation and decide whether paying the debt down is within your means.

And I think that first question really is how much debt do you have and how much of your income does that debt account for? We call that debt to income. So if your debt payments are around 40% of your income or less and you're not experiencing any major problems, there's no collection calls coming in, there's no lawsuits over your debts, it's likely something you can manage on your own over time. If DTI, debt to income, is more, we'll talk about other approaches later, but if it's about that or less, you might be able to hunker down and increase payments where you can or look at some financial tools that are out there.

Sean Pyles:

Yeah, another good question for folks when they're beginning to make a plan to pay off their credit card debt is whether this is a spending problem or an income problem. Is the issue that the world is just so expensive now in between groceries, gas, car payments, etc., they can't keep up and so things are going on the credit card or is it maybe more of a lifestyle issue where they're spending beyond their means?

That's something to think about as well because how you tackle your debt will depend on which issue. Obviously, if it's a spending problem, you find ways to rein that in. Maybe you're going out to eat less. If it's an income problem and you can't afford your expenses, that is a situation where you might have some tougher calls to make. That's something that I want people to consider as they're working through how to pay off their credit card debt.

Liz Weston:

And, Tommy, you mentioned a number of financial tools that can help people pay off their debt. I'm assuming we're talking about credit cards with the 0% teaser rates, personal loans, and probably most relevant to our listener, 401k loans. Can you give us a rundown of these options and maybe some pros and cons?

Tommy Tindall:

Yeah, absolutely. And before getting into those, I don't want to leave out a credit card hardship program, which could be a good first step, where you would simply make a phone call, call up your credit card issuer and see if they even offer such a program and what they may be able to offer you. Generally, that can come in the form of a payment plan where interest may be lower and fees may be waived, but just a first step that might be worth checking out. You want to be polite and expect to be tossed around on the phone a lot, and patience would be the way to be, too.

But yeah, let's talk about a balance transfer card. Maybe a lot of people have heard about this option, don't really know what it is. What this does, it's a tool that gives you the ability to move the balance from a high interest credit card, or several of them, to a card that's made for this type of transfer and typically will come with a low or zero interest period. This is a good way to get rid of high interest quickly, but there's some things to consider and you're going to need good to excellent credit to qualify.

There's typically a fee to initiate the balance. That fee is usually 3% to 5% of the amount being transferred because nothing in this life is free it seems. If the limit on the balance transfer card is low, you may not be able to transfer the full balance and whatever balance you do transfer, you want to try to pay that off during the promotional period so you don't slip into a higher interest rate again.

Liz Weston:

And these promotional periods can be from a few months to a year and a half. Is that about right?

Tommy Tindall:

Yeah, that sounds right.

Sean Pyles:

Let's also talk about personal loans. How do you think they fit into the slew of options?

Tommy Tindall:

Yeah, I think a personal loan is another solid option to consider, at least. Personal loans are good for paying off lots of things and they can range anywhere from $1,000 to $100,000. And, ideally, you find a loan with a better interest rate than that of your high interest credit card and then you would use that to pay off the balance. But a con to consider is credit is going to be a factor here again, and that's going to influence your interest rates. So better credit, ideally a lower interest rate.

Liz Weston:

So a personal loan would allow you to take more time to pay off the debt, maybe a few years, whereas before, we were talking about balance transfers where you may have to pay it off in a few months.

Tommy Tindall:

Yeah, exactly. That is a really good aspect of the personal loan is you can have from two to seven years, potentially, to pay that off. So you're going to get more time to get your finances in order.

Sean Pyles:

I do want to mention a potential risk with personal loans for credit card debt in particular. And the risk is that, once you have your balance transferred over to this personal loan, essentially, your credit cards are freed up. Your balance looks like zero. And sometimes people can really easily rack up that credit card debt again. And then they basically have twice as much debt as they started out with, which isn't a great place to be.

One tool that people will use sometimes is taking out those scissors, cutting up the credit cards. They don't rack it up. Or maybe changing their logins and giving their friend or a loved one that they trust the password to their account so they can't actually spend on these credit cards, some way of controlling their spending so that they don't end up in more debt than they were to begin with.

Tommy Tindall:

Discipline, key factor there. So hard, probably, in this environment. I'm a person who shops a lot, writes about shopping, so it's-

Sean Pyles:

... part of your research.

Tommy Tindall:

Yeah, exactly. Part of my research. Exactly. So discipline, even harder in the age we live in, but such an important point.

Sean Pyles:

Yeah. All right, well now let's turn to 401k loans, which is what our listener is asking about specifically. Can you give us the rundown of how that might work in our listener's situation?

Tommy Tindall:

Now, our listener mentions that they can take out a $10,000 401k loan with a 9.5% interest rate. Assuming they'll have to pay off that loan in five years, which is typical of 401k loans, they would pay roughly $2,600 in interest, but that doesn't really cover the whole cost of the 401k loan. That's because there is opportunity cost to withdrawing retirement investments. And the primary concern really is you're taking money from an account that you want to be earning. This is your retirement account that you're saving for after work and you're missing out on gains and the magic of compound returns.

Sean Pyles:

There are other concerns, as well. If you lose your job and you can't pay the loan quickly, you'll likely pay income taxes plus a 10% federal penalty because an unpaid balance is considered a plan distribution. Plus, you can't put the money back. Figure at 35 years old that every $1,000 withdrawn costs you $8,000 or more in lost future retirement income. That's a lot of money.

Liz Weston:

Yes.

Tommy Tindall:

Yes. But there is a reason this option exists. I have some experience here, which is probably why you asked me to talk about it. And, like the listener said, taking a loan from your 401k won't impact your credit score and the interest does go back to your account. So my experience with this, if you'll indulge me, I took a $15,000 loan out of a 401k about seven years ago. This was for a mortgage down payment and it helped us out. We were a bit short. We needed $15,000 to make the 20% down payment, which saved us from having to add PMI, or private mortgage insurance, just an additional fee on the mortgage.

But the kicker is I am still making the $148 a month payment seven years later and I will be for three more years, so this was a 10-year loan. I left the company that sponsored that 401k since, and they didn't make me pay it back when I left, but I cannot roll the account over until I pay it off. And I've been at NerdWallet a couple of years and I'd like to roll that money into my NerdWallet 401k account, but I cannot do that because I still owe $5,000. But, really, the key factor here for me was it was a reasonable payment that I could swing and I have always continued to contribute pre-tax dollars to my 401k wherever I was working and made sure to get my employee match. So always contributing while I was paying this loan back, I thought that was important.

And just some other thoughts on the process. It was pretty simple for me to request and receive the loan. It's been a lengthy process to pay it back, but I liked that I didn't owe a creditor, per se. The money and the interest paid went back into my account. If this isn't a sign of the times, I don't know what is, but my interest rate seven years ago was 3.5% versus today's going rate, as the listener mentioned, of about 9.5%.

Sean Pyles:

Wow. Tommy, thanks for sharing that story. I think it shows how there is a time and a place for a product like this. My main worry with a 401k loan for credit card debt in particular is that there may be options that allow people to pay off their debt faster and cheaper if they qualify because, like you pointed out, a 401k loan can be extremely expensive in the long run. Beyond just the interest rate, it's the amount that you're paying in fees and lost returns. That's just how I think about it personally.

Liz Weston:

And, Tommy, I'm glad you talked about the specifics of your situation because it shows that 401k loans can really differ. A lot of them are five years, but sometimes you have more time, especially if you're taking out a home down payment. Sometimes the plan will let you pay back the amount you owe in a lump sum. Other times you have to pay it all over time. And research has shown that most people do pay off their 401k loans if they stay employed, but if they lose their job, the vast majority don't pay them back. So that to me is the big risk of the 401k loan, that you'll wind up having a distribution, having to pay taxes and losing out on all those future compounded gains that you could have earned.

Tommy Tindall:

Yeah, and this was seven years ago for me. I think I've learned a lot since and I think I know more about the options that exist now and would consider all of those, thinking back. I mean, at the end of the day, it was a good option for me and it's worked out.

Sean Pyles:

And I think that that goes to show how there is no one size fits all solution for any one person's situation. You had a cashflow challenge and so this was a solution for that and that's fine. I tend to be really risk-averse with things like this, so that's not something that I would want to do, but it worked out well for you and you were able to buy that house so it worked and that's fine. It's not like it's a good thing or a bad thing, it's just a different option.

Tommy Tindall:

Yeah, exactly. And I think it just speaks to the importance of exploring all of your options, though, because there's likely a better one out there if you take the time to research and see what options are available and pick up the phone and call or go online and fill out a form and see what you can do.

Sean Pyles:

Right. When people are trying to figure out how to get out from under a bunch of credit card debt, my go-to recommendation is for people to think about what is the route that is fastest and cheapest and helps them maintain their lifestyle. And that isn't always an easy balance, but there are different ways to do that. Speaking of which, I think it is about time that we talk about one of my favorite and perhaps least known ways to resolve credit card debt, and I am of course referring to a debt management plan from a nonprofit credit counseling agency. Tommy, can you please give us a rundown of how these work?

Tommy Tindall:

Yeah, absolutely. And I think this is one of our favorite options to mention because I think it reminds us that there's still some decency left in the world. And that's because a debt management plan is the type of payoff plan that's facilitated by a nonprofit credit counseling agency. This is an agency that exists to help people with debt and there are many of these agencies, but it is a path to help pay credit card debt with no party trying to profit off of you, which is different than what comes to mind when you hear debt settlement where there's going to be a fee at the end of the road.

So yes, credit counselors, credit counseling agencies, they are there to give you financial advice or, depending on your level of debt, your situation, can recommend a debt management plan potentially. And why these are helpful or good is they are designed to help you pay off debt, typically from credit cards, so this can be multiple credit cards and you can do so in a consolidated fashion with a much reduced interest rate, typically, because the credit counseling agencies negotiate lower rates with creditors or the credit card companies that you owe.

But important things to consider, these things typically take three to five years. You need to plan to be in it for that, and you're generally going to need to give up credit cards for the duration. So, not opening any new, not using existing. And you want to make sure that you can cover those payments to avoid setbacks. And when I say setbacks, if you miss a payment, you could risk losing that lower interest rate that has been negotiated for you. Also, debt management plans generally don't cover debt from student loans or medical bills, so keep that in mind as well. But a good place to start looking at credit counseling agencies would be NerdWallet. We've written reviews over the years of nationally accredited counseling agencies.

Sean Pyles:

One thing people should know, as well, is that these nonprofit credit counseling agencies have agreements with credit card companies where they can slash your interest rate. And so people can think about it in some ways like a more formalized souped up credit card hardship program where you're on a path to make set payments for a set amount of time that will help you get out of your credit card debt. It's just a really helpful tool, but it's not the only tool that people have when things are really challenging. Bankruptcy, especially chapter 7 bankruptcy, can help you get out of your credit card debt faster and possibly cheaper than many other options.

Liz Weston:

Yes. And bankruptcy isn't quite as scary as many people think. It's not ideal, either, but it's a legitimate way to deal with serious debt. It might be worth a look if you are struggling to repay what you owe, if you're being sued over your debts, or your erasable debt, and we'll define that in a minute, but your erasable debt is approaching half your income. So chapter 7 is the most common bankruptcy. It's typically the fastest. It's usually over in a few months. It erases most unsecured debts such as credit cards, medical bills, and personal loans. And most people who file chapter 7 don't have to give up their stuff. Your credit scores may well take a major hit, but it's probably the case that when you're dealing with so much debt and you're struggling to repay it, you've probably already got some credit score damage going on.

Sean Pyles:

And we've laid out a number of different options, from the credit card hardship programs to balance transfer cards, personal loans, and going back to the idea of what is fastest and cheapest and best for your lifestyle. I would recommend people make a spreadsheet where they can list out different options, how their debts might be processed through them, and then what can get them to their end goal of being out from under this debt as easily as possible for their situation.

And Liz, I just really want to underline what you said around chapter 7 possibly being done with in a matter of months. I don't think people realize how quick chapter 7 bankruptcy can be for some people and that's one of its major benefits. Sure, it'll be on your credit report for 10 years, typically, but just being able to get that debt off your shoulders, stopping the collection calls, stopping potential lawsuits is a huge relief for so many people.

Liz Weston:

Yeah, and technically bankruptcy is the single worst thing you can do to your credit scores, but as we mentioned, they're probably suffering damage anyway if you are considering bankruptcy as an option. Once you file, your scores can recover.

Sean Pyles:

Liz and I obviously have strong feelings about bankruptcy. We could go on and on about it, but I think that we've laid it out pretty well for now. Tommy, thank you for running through all of these options with us. Do you have any thoughts that you would like to leave our listeners with?

Tommy Tindall:

Absolutely. Thanks for having me. I think just the thought that I would try to drive home is explore your options. The internet will tell you all about them. I know I sounded very pro-401k loan, but not so much. If I could go back seven years ago and if I knew then what I knew now, I may have taken a different route. So, I think, look at your options, see what's out there and try to do what's best for you.

Sean Pyles:

Great. Well, Tommy, thank you for talking with us.

Tommy Tindall:

Yeah, thanks for having me.

Liz Weston:

Okay, Sean. What do you think of our listener's choices?

Sean Pyles:

I think they have a lot to consider because, as I laid out, some are going to be more expensive and time-consuming than others, and that's why I really am a big fan of those spreadsheets. It helps you view everything in one place and you can just look at it all without someone who maybe has a vested interest because, of course, credit counselors are fantastic, but they kind of have a vested interest in getting you to maybe sign up for a DMP, debt management plan, that is. So I will recommend again, just lay everything out, see what works for your situation, what you would qualify for, and make the informed decision. Liz, what about you? What do you think?

Liz Weston:

Well, I'm really glad that we mentioned there are people who can help you make these decisions and talk you through your options. We mentioned the debt management plans and the credit counselors. There's also the option of a bankruptcy attorney if things are really bad, but again, we have lots of information on the site about what you need to know about 401k loans and the various ways of paying off debt. So, come check it out.

Sean Pyles:

Love a plug. All right. Well, that is all we have for this episode. If you have a money question, call us or text us on the Nerd hotline at (901) 730-6373. That's (901) 730-NERD. You can also email us at [email protected] and you can also send us your voice memos to [email protected].

Liz Weston:

Also, visit nerdwallet.com/podcast for more information on this episode and remember to follow, rate and review us wherever you're getting this podcast.

Sean Pyles:

This episode was produced by Tess Vigeland and myself. Kevin Tidmarsh mixed our audio. And a big thank you to NerdWallet's editors for all their help. Here's our brief disclaimer. We are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Liz Weston: