You may be trying to keep yourself from needing cash advance lenders by pulling money out of your retirement fund early, but you may be doing more long-term damage than you realize. Not only will it take a few weeks in order to receive money withdrawn early, but it can also come back to bite your finances come next tax season.
There are significant differences between cash advance lenders and retirement plans.
Many people who have no other financial option will turn to online cash advance lenders when there are emergency money troubles. When the application is sent in Mon-Thurs and before processing ends on Thursday, the fast cash will be deposited overnight. It’s fast money! Just what your emergency is looking for.
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Taking money out of a retirement fund will not be an overnight transaction. Depending on your financial adviser’s protocol and where the money is located, it may take up to two weeks before you get the funds. It is no immediate emergency solution.
The pros to using a retirement fund:
- More available money
- No required payoff. You will be advised to repay the amount as soon as possible for the least negative impact on your retirement funds.
- No interest applied towards the amount borrowed.
Cash advance lenders online are not the only service which will charge a fee.
There are cons to using retirement funds for current money troubles.
- The money is being withdrawn early, so if you are not at the age of retirement, you will be penalized with fees.
- The financial adviser service will collect a fee for transferring the money.
- If your retirement fund was based on money deposited before taxes, the amount will have to be claimed as income on the upcoming tax return. If this amount added to your typical yearly earnings puts you in the next tax bracket, you may see a significant difference in a potential refund or possible liabilities.
It is important to have a realistic view of your finances. Understand your current income and how it supports your cost of living as well as the importance for saving for later. There are retirement options before taxes are taken out of your paycheck. Check with your employer and see what retirement opportunities are supported by the company. Hire a financial advisor to lay out a plan based on your options. The most important factor in having a plan is to stick to it.
Cash advance lenders online offer quick money for many who have never had a financial plan. These loans tend to be used as a band-aide between budget and the next payday. Many problems arise when these loans are used without a concrete payoff. Using money from the next paycheck to pay off the loan and then needing another one to carry the household to the next paycheck after that is a debt cycle nobody wants to be in.
Pay attention to the financial charges attached to any financial transaction. Fees and interest are not the sole propriety of online cash advance lenders.
