This is a guest post about finances.
It is the one sure thing in life besides death and taxes. It’s called Murphy’s law and it reminds us that what can go wrong, will go wrong. The check engine light in your car comes on, and a mechanic sadly informs you of an engine repair that’s going to run in the thousands. Or perhaps your roof starts leaking in so many places you don’t have enough pots and pans to catch all the incoming streams of water. Or maybe the furnace conks out in the middle of a freezing winter. Some or all of these unpleasant surprises are very likely to happen to all of you at some point in your adult life. But will you able to pay for them?
Most Americans live paycheck to paycheck, leaving them with little or no savings to handle sudden monetary emergencies like those described above. This can be especially true for retired seniors who live on meager pensions and social security checks. So then, when something goes terribly wrong, how do you go about getting your hands on some fast cash to pay the unexpected bills and debts?
3 Ways Get Fast Cash
One sure way is to look into a reverse mortgage loan. If you’ve been living in your home for decades and making your mortgage payments religiously, you just might qualify for one. According to All Reverse Mortgage, if you’re in the market for the lowest reverse mortgage interest rates, be sure to do your research on the many program and rate options available to you on the market today. While some folks ages 65 and older might be attracted to fixed rate options that give you a lump some payout, others would rather go with the flexibility of a line of credit or monthly cash payments based on variable interest rates. In the end, both will provide you with the cash you need while you stay in your home for as long as you want.
But what if you live in an apartment or don’t have much equity in your home? Some of you might choose to tap into your retirement accounts to pay for costly unexpected repairs and financial emergencies. But according to Forbes.com, this does not make sound fiscal sense. Certified financial Planner, Michelle Buonincontri, states that by pulling cash from your retirement accounts, you’re going to be missing out on crucial market opportunities. Once you take money out of your accounts, you negate investment growth and that’s money you will never get back.
If you need cash right now for an unexpected emergency, here are three fiscally sound ways to assist you in covering the costs without dipping into your retirement accounts or without going into further debt.
Zero Percent Credit Cards
You might assume that signing on for yet another credit card would be a bad idea for someone trying to avoid more debt. But Forbes.com says that if you have a decent credit score, you can nab a credit card that is presently offering a zero percent introductory rate, some of them for up to one year. But here’s the catch. You need to pay the balance off quickly in order to avoid the interest rate once it kicks in. This takes discipline on your part. Some cards even offer a cash bonus back if you pay your balance off within a year. In that case, you could actually make money on a short-term, interest free credit card loan.
Certificates of Deposit or CDS
Back in the 1980s when interest rates were through the roof, you could place $1,000 in a CD, let is sit for a month, and accrue $80 to $100 in interest payments. Imagine if you’d placed $100,000 or $1 million in a CD? These days, interest rates are very low, but that doesn’t mean a CD isn’t a bad idea for saving money in the long term. That said, if you’ve suffered a financial emergency, you can tap into a CD that has matured and use the cash to pay for it. You can also take cash out of a CD if it hasn’t matured yet, but this will cost you a penalty of 10 percent or more. But the penalty might be quite a bit less than having to pay a high-interest rate on a credit card or a bank loan.
If you’re in need of extra cash immediately, you might want to seek out a personal loan from your bank. Presently, interest rates are very low, which means you can acquire a fixed interest rate loan with an accompanying reasonable repayment schedule fairly easily if you have good credit. Says one industry expert, personal loans work best for repaying past-due student loans, unexpected home repairs, or even new or used auto purchases. But it’s important to calculate not only how much money you need quickly, but how much you can afford to pay back on a monthly basis. If you get behind on payments, it will negatively affect your credit rating.
Life is always throwing surprises at you, some of them not very pleasant, especially when they cost you the money you don’t have. But by tapping into your home’s equity, you can easily get the cash you need right away. It’s just a matter of researching the different rates and reverse loan options out there. Or, if you don’t have any home equity, there are other, good options that can get you the money you need fast without having to dip into your retirement accounts, or without putting you into even more debt. Just do your research and seek out which option or options are right for you.