Most people struggle when trying to figure out a way to come up with money quickly to cover an emergency. This can cause the stress of the situation to grow exponentially, making it feel overwhelming in a matter of minutes. Luckily, there are options for you that can help you avoid stress and fix the situation at hand, with minimal interruption to your life. Here are some options that you may want to consider if you are facing an urgent need for cash.
Payday Advance Loan
When the need for cash is immediate, one of the best places to turn is to an emergency loan company. While they can cost you more than other methods, the turnaround rate to when you will have the money in hand is often very minimal. You typically are required to provide proof of how much income you earn, and to prove that you have some type of an account that the money can be deposited and withdrawn from when it comes to repayment time.
Cashing Out Your Investments
In a style that is similar to other emergency loan options, cashing out an investment can be an option for some people. The only real difference is they are not often repaid the same way that other quick loans are. If you cash in a stock, bond, or CD, you will be faced with a fee for early withdrawal, and then have to speak to your financial advisor about how to repay this money properly.
Family and Friends
It is never easy when facing family members and friends and asking for a loan. This is stressful for you, plus stressful for them. They do not like seeing you in a bad spot, nor do they want to put themselves in a bad spot in an attempt to help. The best way to approach this is to show the person you are asking what the money would be used for and how you plan to pay it back. The best thing in the world to do is put the entire loan in writing that you both sign, so that you are both protected should the other not fulfil their end of the bargain. If you think it would help encourage the person you are speaking with to help out, you can even offer that interest be repaid along with the original amount to show them both sincerity and appreciation for them helping you out of a tough spot.
Cashing Out Life Insurance
If part of your lifelong investments includes a term life policy that has the ability to gain value in the form of cash over time, this can be the backing source of a loan if you are desperate. The cap is often 95% of the policy’s cash value, but this can vary by company. This money has the ability to be taxed at the end of the year because it appears on your annual taxes as a form of income.
401K—The Last Resort
If you are truly desperate and have nowhere else to turn, the final option you may want to explore is removing money from a 401K. There is a harsh 10% penalty you will owe if you do this, so this should only be an option if you have exhausted all other options. You will have to provide proof that your current dire straits are beyond what you can control, and it would devastate your life if you could not get financial control over the situation. A few acceptable hardships include foreclosure of home, funeral expenses, necessary medical expenses, avoiding eviction, or covering some college tuition if a family member that is very close required it.
All loans have penalties, but some will cost more than others. Make sure you understand fully what you will be responsible for with any option you choose. Make sure you repay the loan as quickly as you can, so if you ever face needing to borrow again, your source can still be available to you. Plus, it will make your hardship more manageable.