Five Ways to Get Money in an Emergency

Do you have an understanding of how your money is being used? Financial planning involves setting goals so you will have money to pay your bills. Without a plan, how you save and spend money can lead to financial problems. Managing money responsibly is a good financial habit. Despite best practices, there are times when you might need cash fast. Let us consider five ways to get money in an emergency.

Loan from 401(k)

If you are looking to fill a short-term financial need and you want a quick, simple, and low-cost way to get cash, a 401(k) loan may make sense. In general, you can borrow up to the greater of 50 percent of your vested account balance or $50,000, whichever is less. Your plan may provide for an exception to this limit and allow you to borrow up to $10,000, if 50% of your vested balance is less than $10,000. Check with your employer, since this exception is optional. Loan repayments are typically made through payroll deductions and must be paid back within five years, unless funds are used to purchase a home. There are no lender evaluations and no early repayment penalties with 401(k) loans. Keep in mind that plan sponsors are not required to provide 401(k) loans, so check with your sponsor to confirm if such loans are available.

Personal Line of Credit

A personal line of credit (PLOC) can be used with an irregular income or toward unexpected expenses. Like a credit card, money is drawn from the PLOC and funds are repaid during the draw period. In general, PLOCs have lower interest rates than credit cards, making them more desirable for large cash advances. PLOCs are unsecured, which is best suited for consumers with a strong credit history. PLOCs require no collateral; this can be a good option if you do not own a car or a house. While PLOCs can give you quick access to cash, interest on a line of credit is not tax deductible and interest rates can vary. Because you must repay credit you have used when the draw period ends, there is a risk you may over borrow money if you have not established a re-payment plan or do not use credit responsibly. 

Credit Card with 0% APR

Some credit cards come with quick delivery or instant card numbers that can be used right away. Additionally, credit cards that offer 0% APR on purchases can help if you need additional time to pay off emergency expenses charged to your credit card. These cards can save you large sums of money on interest and may offer rewards as well. If you are looking to consolidate other high interest debt, look for credit cards that extend 0% APR on balance transfers, too. While 0% intro APR cards can help lower monthly payments and help you save money on interest, these cards can also provide a false sense of security. Be diligent in making payments on time and work to avoid stacking on balances you cannot afford to pay off.

Personal Loans

Bank. An emergency bank loan is ideal for customers who have good credit. Lenders may be able to get money to you the same day, or within just a few days. A personal emergency loan from a bank can offer more flexible repayment terms than a credit card and with a lower interest rate. Additionally, because interest is already factored into the monthly payment amount, you can likely work with the bank to find a repayment amount that works within your budget.

Friend or Family Member. Unlike a typical bank or online-lender loan, a friend or family loan can yield a much lower interest rate and can also enable you to avoid loan origination fees or even late fees. Furthermore, friend and family loans require no formal application or credit check. However, family loans can have tax implications and may require filing of a gift tax return. A friend or family loan with interest must follow IRS interest rate guidelines and may require the lender to report the interest as income. Therefore, document the agreement and keep ongoing records. Lastly, repay the loan in accordance with its terms to maintain good friend/family relationships and to minimize the financial impact on the lender.

Sell Online

Selling online is simple and reaching your target audience has become very easy. Reselling is widely accepted among consumers, and bargain shoppers, being mindful of their spending, are constantly seeking good deals on electronics, clothing, appliances, and books. Costs involved in selling items online are typically low and you can receive payments quickly to a bank account, PayPal, Venmo, or Cash App when your item(s) sell. Selling online can not only provide cash to pay off debt or bills but can also provide extra cash for savings.