Within every household, the battle between short-term financial needs and long-term financial goals rages constantly. Instead of dipping into retirement funds to soothe the short-term beast, consider using a flexible home equity line of credit (HELOC).

We hear it over and over again. Save for retirement. Plan wisely. Make sure that your nest egg is big enough to allow you to peacefully enjoy your senior years. Unfortunately, life doesn't always allow us to create the nest egg that we need. If a person wants to go back to school or pursue a new career, cash flow could be a real problem.

The easy solution for some people is to dip into their retirement funds. However, there are some extremely good reasons why you should turn to a home equity line of credit (HELOC) instead for your short-term financial needs.

Pay the penalty

The most common tools for retirement savings are 401(k) and IRA accounts. If a person is on the verge of making a career switch, both these accounts can be tapped for cash. However, there's a steep price to be paid for accessing these funds.

If you have a 401(k) set up with an employer, you can take a lump sum cash distribution. Financial advisors strongly suggest that you avoid this option, as it includes a stiff 10-percent early withdrawal penalty. If you have an IRA, you could set up an income stream to take early withdrawals. In this case, you don't pay a penalty, but your funds are taxed.

Tapping a retirement fund may get you over the short-term hump, but will substantially hinder your nest egg's ability to grow with compounding interest.

Short-term loan to avoid long-term pain

Another option is to take out a HELOC. This is a second mortgage on your home, but it works like a line of credit. You only pay interest on the amount of money you borrow. This can be extremely helpful if you anticipate a lack of short-term funds, but don't know specifically how much cash you'll need. By opening a sizable line of credit, you have instant access to cash. And because the loan uses your home's equity as collateral, the interest you pay on the loan is tax-deductible.

The interest rate on a HELOC is generally very good. Most are based on the prime lending rate. The rates are variable, but generally they tend to stay in the single digit range. When you take into account the tax deducibility of the HELOC, it can prove to be a relatively inexpensive way to access cash.

You need to be willing to take a risk and tolerate a cut in pay if you want to pursue a career change. However, be smart about how you finance your dream. Consider using a short-term loan like a HELOC. It's a great way to keep the cash flowing without risking your retirement nest egg.