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MEMPHIS, Tenn. — You’ve probably heard plenty of advice before about getting rid of credit card debt.

Tracy Harmon is a financial well being coach with Operation Hope. It’s a non-profit organization that offers free financial education.

Harmon says anyone looking to get rid of credit card debt should start by creating a budget.

She says a budget allows consumers to tell their money where to go!

Harmon suggests the following:

  • Pay more than the minimum
  • Snowball payments
  • Consider a consolidation loan

WREG also talked to Harmon about some non-traditional ways to pay down debt. Each comes with a risk, but might be worth considering depending on the situation.

Consider a home equity line of credit:

Harmon said not only is the consumer paying off high interest cards with a lower rate loan, but there’s another benefit.

“The thing with having a home equity line of credit — it is your home, therefore it’s an asset and you can use that as a tax write off. You can claim the interest on your taxes as well.”

But be careful. Experts say you have to treat home equity products like a mortgage because a default could lead to foreclosure.

Another option: borrowing from your 401(k):

The upside is that you’re not only getting lower interest rates, but you’re paying yourself back!

However, if you leave the company before the loan is paid in full, all of that money is due immediately, plus you could be taxed if it goes unpaid.

There are also limits on how much of your money you can have.

Harmon says anyone considering this move should speak directly to their company first.

“Typically if you`re borrowing from your 401(k) it’s only a specific amount that you’re eligible to borrow, so that individual would need to contact their H.R. person to get advice as far as borrowing from their 401(k),” said Harmon.

Borrow against life insurance policy: 

“Typically when you`re borrowing against a life insurance policy, your interest rate is minimal. Your interest rate is lower and then too you will have a longer term as far as availability to pay,” explained Harmon.

Experts say the risk when borrowing against life insurance policies is that if the individual passes away before the loan is repaid, the balance plus interest gets deducted from the value leaving their family with less financial stability.

Operation Hope offers free financial education classes and one-on-one counseling sessions. They have several MidSouth locations. To reach Harmon’s branch on Union in the Medical District, call 901-318-1264.