Borrowing Money During a Crisis

Being faced with the possibility of going without a paycheck for a prolonged period of time is a clear and present danger. If you are like a lot of people right now, you are starting to feel the pressure of how to make ends meet and manage your finances while the threat of a financial crisis lays in waiting. You cannot go back in time and create an emergency savings fund to tap into that does not exist, and even if you could that might not cover expenses for more than a few months. Educate yourself on the different places you can borrow money from, should you need it, so that you can have a knowledge base and prepare for that possibility for more successful crisis management.

Personal Loans

Explore your options with personal loans, since personal loans do not require borrowing money against something of value, like a house, this is an attractive option for individuals who do not have that kind of equity. You can get matched with loan options in less than 60 seconds and doing so in advance of an emergency gives you the time to shop around. A personal loan can also help you to get credit card debt under control, giving you more available credit to save for a rainy day, while simultaneously improving your credit score, which will help you be eligible for lower interest rates on any future loans.

Tapping a 401k

Advisors may encourage you to keep your retirement fund out of sight and out of mind, and not to touch it once you have made a deposit. This is a smart plan to follow for your everyday expenses, and helps you to not live outside your means, however, give yourself the option to explore this during emergent times. There are some pretty significant downsides to withdrawing from your account, such as permanent setbacks to your retirement planning timeline, giving up the power of compound interest, and if you lose your job, this loan could be due within a short window of time. Becoming educated ahead of time on the pros and cons of this choice lessens the risk of making a hasty decision that you may not be able to manage down the road.

Credit Card Cash Advance

A cash advance from an existing line of credit is a common, and quick way to borrow money, it is also one of the most expensive. You will pay a transaction fee, as well as interest on the total amount borrowed, and historically these rates are not low even for those with higher credit scores. When disaster strikes you might find yourself resorting to whatever is quick, but the lasting damages of not having been educated ahead of time can end up being larger than the initial blow to your financial situation. If you end up deciding that this path is the right one for you, explore a no interest balance transfer ahead of your cash advance to try and avoid high interest rates on large dollar amounts.