Are you blindsided by an unexpected event and need financing to cope with the emergency? Whether it’s a funeral, emergency house repair, or sudden medical expenses, the unexpected need for money can be significantly stressful.
While some are able to get out of such circumstances with family estates or life insurance policies, other individuals aren’t so fortunate.
Before you’re left wondering, “How will I cover this?” consider the following financing options.
- Credit Union Borrowing
Credit unions offer lower interest rates than if you borrow from a commercial bank but keep in mind that you need a membership before a loan can be established. You can satisfy this requirement by keeping a saving or checking account in the credit union. While there could be added requirements, it’s worth the hassle if you can prevent further financial woes with the borrowed amount.
- Installment Loans
Monthly installment loans are a viable alternative to the usual payday loans because they provide simple repayment terms that don’t require buyers to cough up a big lump sum immediately. They give you the option to save on interest by repaying the loan quickly or set up a certain number of repayments over the loan’s life – whatever is more suitable. With a fixed repayment schedule, budgeting becomes easy to ensure that you do payments within time and avoid extra charges for defaulting.
- Personal Assets
If you run a business, you may already have some of your net worth tied up so that it’s safest to keep away other personal assets from your venture. But if you face an emergency situation such as the risk of losing your company, the better option may be to sell some of your personal assets to address your immediate money needs. It’s not the ideal option, but can be a better alternative than going to a conventional bank. The assets you sell do not need to be of very large value but should be worth just enough to get you through a difficult situation.
If you face short-term debts or run out of savings but want to get back on your feet as soon as possible, borrowing from your IRA is one of the options available. In the case of traditional IRAs, you can borrow without paying taxes or penalties once a year up to 60 days. Individuals with multiple IRAs can borrow once a year against each one. However, it is vital to pay back the loan on time; you’ll have to pay extra taxes and maybe a penalty too if you fail to make a payment within the 60-day deadline. All things considered, it’s not the best of options to take out a loan from your retirement nest egg.
- Emergency Fund
Tapping into your emergency fund will be a no brainer if unexpected events occur. If you don’t have an emergency fund, start building one. Having an automatic savings plan is the easiest route to create an emergency fund. Get a savings account in your choice of bank, and then set up automatic payments to go from your current account to your savings account. Even if you transfer $20 weekly, it will add up to $1040 per year, and some extra as the interest accumulates.
Consider these resources when you’re gobsmacked by something unexpected.