Need Cash? What Are the Options?

According to Bankrate.com, if you need cash, there are several ways--each one has its pros and cons:

Option	Pros	Cons	Tip
Balance transfers	Lower interest rate	Often involve fees; may need to apply for new credit. Watch out for bait-and switch tactics.	If you're in debt already, use transfers to pay down existing debt, not to fund new purchases.
Home equity	Convenient; lower interest rate; interest may be tax deductible	Increases the amount owed on the house; many borrowers run debt up again; puts house at risk when used as collateral	Only borrow what you absolutely need and only if you have a lot of equity.
Borrow from family or friends	Lower or no interest; flexible terms	Risks an important relationship	Use a contract; find one online or at the office supply store to use as a template, or set up official loan arrangements through a firm such as Virgin Money.
Peer-to-peer lending	Interest rate may be lower	Make sure to apply the funds to your existing debt; otherwise, you're just racking up more debt.	Several online social networking sites act as middlemen between lenders and borrowers. Be sure to understand how they work as well as loan terms and fees before signing up.
Borrow from Your 401(k)	Good interest rate	May be required to pay taxes and penalties on amount borrowed if the loan isn't repaid within five years; may be required to pay back the loan in full if you lose job; less money will be compounding for retirement	Avoid this at all costs since it puts your retirement plans in peril. An exception might be if you're way ahead of your retirement savings goal and you find yourself in dire straits.

As for taking money out of your IRA, a more in-depth discussion can be found here.

Traditional to Roth IRA Conversions: No Income Restrictions Starting 2010

Congress passed a new law which allows the conversion of traditional IRAs into Roth IRAs without income restrictions starting in 2010. This presents golden opportunities for people who makes more than the current Roth's modified AGI (MAGI) limits (for singles it is $95000 phasing out at $110000; and for married couples it is $150000 phasing out at $160000): note that AGI is gross income - pre-taxed contributions such as 401k). Although taxes (but not penalties) will be levied on any converted amount, Roth IRAs are better than traditional IRAs in several ways:

• No tax on gains (whereas gains in traditional IRAs/401ks are subjected to INCOME taxes: this is even worse than long term capital gain/dividend taxes!).
• Penalty withdrawal of principal after 5 years (whereas withdrawls from traditional IRAs are subjected to various rules and taxes are always calculated using a "proportional" ratio of non-contribution/total)
• No minimum distribution required at age 70 1/2 (as a matter of fact, you can still contribute then--provided you are still working).

If you cannot contribute to Roth IRAs right now (due to MAGI limitations), then it makes sense now to contribution the maximum to traditional IRAs now and convert them to Roth IRAs in 2010.