A financial roadblock — an unexpected expense that leaves you strapped for cash, or scrambling to generate funds — can happen at any moment. Your child might get sick. Your car’s transmission might blow. You might lose your job the week before your rent check is due. Whatever the reason, you need to find cash and fast. What can you do?
Your resources for emergency cash vary depending on whether you need to raise funds in a few weeks or a few days. Some options are safe; others present serious perils to your financial future.
1. Sell unneeded possessions
Everyone owns something they never use. Why not sell it? Post an ad on Craigslist or host a good old-fashioned yard sale. You may surprise yourself with how much money you raise. As a bonus, you’ll clear the clutter out of your house or apartment. Of course, this option will probably only help you to raise a sum in the hundreds or below. And if you need the money right away, you may want to seek a more reliable option.
2. Take on odd jobs
If you have a month or two to raise the money you need, consider taking on odd jobs to raise cash. Sign up to become a dog walker, or set up a TaskRabbit account and find out what your neighbors need help with. If you’re only trying to raise a few hundred dollars, consider Lyft — new drivers receive a $500 bonus for completing 150 rides in the first 45 days.
Can’t decide which side gig you should take on? SuperMoney can help you out with side-by-side reviews of some of the best odd jobs out there.
3. Cash in your investments
Cashing in investment instruments is not an ideal means of obtaining cash. But if you’re facing an emergency and you have the resources available, they may be your best option. Just be careful. If you cash in bonds or stocks, you may have to pay taxes or even tax penalties – especially if those funds were in a retirement account. You are also unlikely to walk out of your bank or investment broker’s office with cash, so they’re not the best choice if you need money immediately.
4. Tap into equity on your life insurance policy
If you have held a whole-life insurance policy for several years, you may have built up equity that you can borrow against. And since it’s a loan, you won’t have to pay taxes on it. But withdrawing money from a life insurance policy reduces the amount of cash available for payout. As an alternative, you can cash out your policy altogether. However, this might incur tax obligations on any proceeds over and above what you’ve paid in premiums.
5. Use an overdraft loan
Your bank or credit union may offer overdraft protection on your checking account. You probably won’t be able to write a check for cash, but you may be able to pay a bill with a check or debit card that would otherwise bounce. Overdrafts allow you to purchase groceries when there’s no food in the house, or to pay a utility bill to prevent having your services shut off. But many financial institutions charge high-interest rates on overdraft loans. And if you don’t pay the loan back, you could lose your account.
6. Take out a home equity loan or reverse mortgage
If you need to raise a more considerable sum of money, you may be able to borrow against the equity of your home. Home equity loans are advantageous for several reasons. Because the loan is secured by equity, interest rates are usually low, and that interest is tax deductible. Loan terms are 0ften long as well. Just be sure to repay your loan before the term is out — if you fail to do so, your home could be at risk.
Seniors who own their homes may also be eligible for reverse mortgages. A reverse mortgage is a loan that allows older homeowners to borrow from their equity *without* having to make monthly mortgage payments. Borrowers can take the money as a lump sum, a line of credit, or a series of payments. Again, if you go this route, be sure to make your payments on time, lest you risk your homeownership.
Considering a home equity loan? Compare home equity lenders here.
7. Apply for a personal loan
If you have good credit, consider a personal loan. Many online personal loan lenders can approve your request within 24 hours, and transfer the necessary funds to your account in another day. Some lenders, such as OppLoans, NetCredit and Speedy Cash, will also consider borrower with bad credit. However, these lenders charge very high interest rates, so make sure you can afford the payments or you will just compound your financial difficulties.
8. Use a credit card advance
If your credit cards aren’t maxed out and your desired sum is within your credit limit, a credit card advance could be a “least bad” option. Be cautious: credit card companies charge steep interest rates on cash advances. If you miss a payment, you may incur penalty interest rates or the credit card company may close your account. But if you are sure that your can repay the loan before the closing date, this is a great way to get fast cash.
9. Get a pawn shop loan
Pawn shops provide no-questions-asked loans with no restrictions on how you use the money. So Aunt Mildred’s fur coat can keep you warm by fetching a large enough loan to cover your heating bill. However, pawn shops only lend a fraction of what your items are worth. They also charge sky-high interest rates. And if you fail to repay the loan, you lose your possessions. Only take this route if you need the money desperately, and are sure you can repay the loan quickly.
10. Apply for a payday loan
Payday loans are one of the least desirable ways to acquire cash. They’re convenient, and they provide funds fast. But they prohibitively high-interest rates over concise loan terms. And if you can’t pay in full, you get sucked into the trap of renewals, partial payments that make little or no dent in what you owe. A Consumer Federation of America study found that over half the people who acquire payday loans default on them within the year.
If your back is against the wall and you have no other resources, proceed with caution. Borrow the very least that you can, and pay the loan back in full as soon as possible. Once you repay the loan, begin to raise an emergency fund so that you never find yourself in such dire straits again.
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Audrey Henderson is a Chicagoland-based writer and researcher. She holds advanced degrees in sociology and law from Northwestern University. Her writing specialties are sustainable development in the built environment, policy related to arts and popular culture, socially and ecologically responsible travel, civic tech and personal finance.