Q. My wife and I are paying 20.4 percent annual interest on a $9,800 debt with a furniture store, and we have a $9,700 credit-card debt charging 18.9 percent. Should we pay these off by withdrawing from my 401(k), despite the penalty? The account is worth $21,773. We earn about $100,000 a year and are in the 27 percent tax bracket.

A. Let’s hope you can find an alternative to plundering your retirement account.

Though there are some exceptions (which apparently don’t apply to you), many who take money out of their 401(k)s before turning 59 1/2 incur a 10 percent penalty on the withdrawal, plus income tax.

That means you’d pay a 37 percent tax on the withdrawal. So emptying your 401(k) would net you just $13,716. (To get the $19,500 you need, after paying tax and penalty, you’d need a 401(k) of nearly $31,000.)

Of course, you could drain the 401(k) and then scrounge elsewhere for the rest. But with a 37 percent tax and penalty, you’d hardly come out ahead anyway; you might as well keep paying on the loans you already have.

Also, once you’ve made an “unqualified withdrawal” from the 401(k), there’s no way to put the money back. So, in addition to paying all that tax, you’d be losing out on all the tax-deferred investment gains the account could have earned.

One alternative is to pay off part of your debts by borrowing against your 401(k). If your employer allows this, your interest rate would be substantially lower perhaps half of what you’re paying on those debts now. In addition, the interest you pay on the 401(k) loan would go back into the account. In effect, you’d be paying interest to yourself. By law, participants can take out loans equal to no more than 50 percent of the value of the account.

Keep in mind, though, that you would be missing out on potential investment gains. That’s because assets in the 401(k) would be sold to raise money for the loan the value of the account would fall by the amount of the loan.

Also note that if you borrowed, say, $10,000 from your 401(k), it would cost you $13,698 to pay the loan off. That’s what you’d have to earn in order to have $10,000 after paying 27 percent income tax. This would be the case with any $10,000 debt, of course. But it seems especially bad to have to come up with this extra money on top of losing those potential investment gains.

Yet another alternative is to borrow against other assets, such as your home. If you have equity in your home if it is worth more than you owe you could take out a home equity loan and probably pay an interest rate of 7 percent to 8 percent. For most people, interest on home equity loans is deductible against federal income tax, while your furniture-store and credit-card debt are not.

With the deduction, an 8 percent home equity loan really costs about 5.8 percent, assuming a 27 percent tax bracket. On an after-tax basis, this approach would cut your annual interest payment to about $1,140, compared to the approximately $3,700 you’d pay by making minimum payments on the two debts you have now.

Another alternative: Transfer these debts to credit cards with lower interest rates. If you have a good credit history, you should be able to find a card charging a single-digit interest rate on a balance transfer. To hunt for a better card, try the Web site of Bankrate.com, the rate-tracking company, at www.bankrate.com.

I’d also check out your credit union at work. You might find a good deal on a personal loan.

Whichever approach you settle on, there’s no getting around the fact that reducing your interest rate is just solving part of the problem. One way or another, you’ll still have to come up with $19,500 to pay off your loans.

So it’s time to find ways to cut back on expenses. Obviously, you should cut out frills such as expensive lunches and fancy clothes. But also look at necessities. Car and home insurance might be a lot cheaper, for instance, if you raise the deductibles.

And while you’re knocking down your debts, leave your credit cards at home. Better yet, throw them away.