The most frustrating part of adult life is dealing with unexpected expenses as up until being an adult, our parents usually took care of all financial matters for us. It could be a sudden car repair or a home fix that just can’t wait.
In those moments, you need to have a clear direction on where to find emergency cash. Being prepared for this is a hard task and it involves a great deal of responsibility and planning.
If you haven’t created an emergency fund or any other form of saving that you can use when required, you may make an impulsive and wrong decision that will only affect you in the long run, so it is best if you have a rather wide set of options you can choose from, for when the unexpected strikes.
Ask friends or family
This is a very useful approach only if you have that one relative that is willing to lend you money to get you back on track. The good thing is that this type of loan is usually one where you pay very low interest if any.
The bad side is that if you fail to repay on time or if you don’t pay at all it can damage the relationship with your friends or relatives. Your credit score will remain the same, but it will definitely affect the family and friendship bonds you currently have.
Look for additional loan options
Credit unions offer low-interest personal loans so you may want to check what options they offer. Some employers have low-interest credits that can help you through rough times.
Keep in mind that it’s still a loan, which means that this solution is also debt that you’ll have to pay eventually - but it’s still a better option than cash advances or borrowing from financial institutions.
Pay first before you add more credit to your debt
Technically not an option, but definitely a good strategy to handle unexpected situations better. It is better to face an emergency cash situation with no debt at all.
Go to your card company and renegotiate terms so the repayments are more affordable and easy to meet.
Consider consolidating debt in case you have more than one credit, that way you can have more affordable payments and a lower interest rate. They usually charge a fee for transferring a balance, but it is better than having several high-interest rate credit card debts.
Cash advance from a credit card
This is also a loan, so it is wise to explore other options before going with this one, but it does guarantee fast access to funds. Now keep in mind that banks usually charge larger interest rates for cash advances and other cash advance fees.
Take money from retiring funds
First of all, you can’t access that money unless you’ve reached the legal retirement age even though some vicious companies try to convince people that they can, it is not possible and if by any chance you manage to do this, you’ll be charged a substantially large tax for this.
The retirement money you’ve saved over the years should not be touched under any circumstance not even for an emergency. Now, if you really must use the cash, then be very aware of the consequences and risks of touching your retirement money, make sure it’s worth it.
Borrow against home equity
This means to borrow money against the property you already own. It is a high-risk maneuver that puts your house at stake if you fail to meet the payments. This type of cash-out refinance may seem like a solid way to get money but at a much higher cost.
They do have lower interest rates than other forms of loans but make sure you give plenty of thought to the foreclosure risk and the impact this can have on your loved ones.
Boost your savings
The best, solid and reliable way to overcome an emergency cash situation is having an emergency fund created for those scenarios. This means that you need to find ways to boost your income and have solid ways to build a strong emergency fund.
For instance, the PPI scandal provided many credit card holders with money they thought was lost. It was because of the government’s decision to make banks pay the money back to its owners.
If you ever had a credit card, mortgage or loan in the past and you wish to inquire if there’s any unclaimed mis-sold PPI for which you may have been unfairly charged, you can work with a company so you can have your money back.
A specialized team of professionals will handle your inquiry and will let you know if there’s a claim to be done or not, remember that the due date to file any claim against financial institutions is 29th August 2019.