We’re all feeling the effects of the credit squeeze. Many people are staggering their way through a financial balancing act that only gets harder month after month. They have to choose which debts to deal with each month, and which ones to delay. Sometimes they have to dip into their retirement accounts to meet their monthly costs. When that strategy isn’t available, too many people fall into the trap of making minimum monthly payments on their credit cards, only to use those cards to make ends meet. That’s not a sustainable solution. What will happen when the cards are maxed out?

When you find yourself choosing between your credit card payments, car payment, or the mortgage, it’s time to learn how to deal with your sticky debt scenario.

Scenario #1: You got laid off. Which resources should you tap for financial relief until you find another job?

Whatever you do, don’t touch your 401K. It’s a terrible time to pull your money out, since stocks are tanking so badly. Also, you’ll end up paying a steep price in fees and penalties.

Instead, draw on your ROTH IRA. Even if you’re nowhere near retirement age, you can withdraw money from this account, tax-free. Funds in a ROTH IRA aren’t subject to withdrawal penalties, even if they’ve only been in the fund for a short amount of time.

Also, apply for unemployment benefits as soon as possible. Every little bit helps when you’re between jobs.

Scenario #2: You can’t make your house payment now, and aren’t certain you’ll be able to in the foreseeable future. What should you do?

If you’re in this sticky scenario, you’re certainly not alone. Millions of Americans have found themselves crumpling under the burden of mortgages they can’t afford. Many struggling home owners don’t want to acknowledge the hard truth, but the solution is cut and dry: put the house up for sale.

This might sound crazy given the state of the housing market, but getting out from under this debt now can save you financial ruin in the future. Find a good agent who is dedicated to your cause. Read up on home selling and marketing tips. Also, contact your bank to explore short sale options.

Scenario #3: You just can’t pay the bills. If you’re forced to choose, which ones should you forego?

This is another tough choice, and one that will certainly have an impact on your credit score. But sometimes we have to make hard decisions. If you’ve got to default on a debt, let it be credit card debt. In the event that you have to declare bankruptcy, this unsecured debt can be discharged. Student loans can’t. 

Before you default, call your credit card companies to see if you can arrange a payment plan. Some credit counseling programs can work with lenders to get fees and penalties waived, on the condition that you don’t incur new debt until your old debt is paid in full. Whichever route you go, be prepared to kick your credit habit; additional credit card use will only dig you into a deeper hole of debt.