Finding Yourself in a Pinch: 9 Ways to Access Money in a Dire Financial Emergency

Saturday, October 20, 2018, 6:00 PM | Leave Comment

Life events such as calamities, expensive home repairs, or health crisis have one thing in common: these events take place when they are least expected.

Many people worry about the steps they would take when faced with a financial emergency and in such situations, stress levels increase if one is on a fixed income.

However, it is important to note that there are approaches you can take when you are in a financial emergency.

Here are nine ways to access fund during an emergency:

  1. Home Equity Loan

    When facing an emergency, it is imperative to note that there’s a possibility of accessing funds using your home as collateral. However, if you do not pay back the loan, you stand a risk of losing your property, so it’s imperative to consider all possibilities before you can enter into this agreement.

    The rate of interest for home equity loans are generally low and you can easily qualify for them since they are secured by the value of your home. Home equity loans function like a second mortgage as long as there’s some equity established. These kinds of loans are complex, so make sure you understand how they work before deciding to get one.

  2. Peer to Peer Lending

    Various P2P lending sites make it possible for you to access a personal loan. As with any other kinds of loans, the interest rates usually depend on your credit score and could have a great impact on the kind of deal you strike.

    If you fail to stick to the payment schedule, you may risk penalties and therefore, it’s advisable that you have your payment plan in place before you can go for this option.  Before applying, check your credit score for free so you determine where you stand.

  3. Sell a Big-Ticket Item

    Another approach for accessing emergency funds is selling a large asset you no longer require. Begin by identifying the items you do not require or items you don’t use often.

    Many people have two of the same items, such as two working cars in their garage. If one of these sits weeks after weeks without being used, it is best to sell a car to access some immediate funds. This will provide the cash needed to cover the emergency and save on insurance and maintenance costs in the future.

  4. Ask Your Parents for A Loan

    Asking your parents for help during an emergency is not a bad idea. The trick is to think about the best way to approach them. First, consider if they are able to assist you. After all, your mom and dad need not to go broke bailing you out of your financial situation.

    If you finally resort to seeking help from your parents, figure out the amount you are willing to borrow, as well as the terms of repayment and the interest you would pay. Parents usually have some cash sitting somewhere in their savings or checking accounts which earn next to nothing. If you can pay an interest of two to three percent, then it’s a win-win.

  5. Look at Your Life Insurance

    If your life insurance policy has been running for a decade, you may be in a position to gather funds from it. People usually have these kinds of plans to cater to their children, but after they have grown, had jobs and their own families, it becomes sensible for them to cash in the policy.

    You may want to replace your life insurance with the term insurance which is affordable and could be useful when covering final expenses.

  6. Consider Your Roth IRA

    Pulling funds from the retirement savings is not an option. Nonetheless, the advantage of tapping a Roth IRA is that a person is in a position to withdraw the contributions they have made to their account without having to incur penalties or taxes. However, if you withdraw your earning in the account, you may be subjected to penalties and taxes.

    Click here for more information about IRA withdrawal rules.

  7. Consider Relocating

    If your plan is to downsize so you can create money for your emergency situation, it’s imperative to weigh the pros and cons. You can raise the funds you require by relocating to a smaller apartment in an inexpensive neighborhood. Going forward, you’ll have fewer expenses with lower living costs and property taxes.

  8. Online Loans

    Online loans or private lenders are among the common emergency loan providers with the simplest application process and the fastest approval rate. Emergency loan applications can be filed online and you’ll be in a position to know whether or not you qualify for the loan within five to ten minutes. With this option, you can receive money within minutes or after a few hours of approval.

    Given their advantages, the emergency loans are usually appealing to the low-income individuals or people with poor credit history. However, it may be challenging for the unemployed to access these loans because they do not have proof of income.

    Another problem a person may face when looking for emergency loans is deciding which lenders to work with given the numerous options available out there. If you find yourself having this problem, you can visit today to get help choosing the right lenders.

  9. Look for 0% APR Opportunities

    A lot of credit cards have free interest rate in the initial period. During such a time, you will not need to pay any interest on the card’s balance.

    You can use your credit to cover your emergency if you qualify. The idea is to ensure you can pay off the balance before the deadline in order not to pay interest at higher rates.

Wrap Up

When you are in dire need of emergency funds, it can be challenging to go through the options available to you. It’s imperative not to rush yourself as financial decisions require time to make. Weigh the pros and cons of the options available so you can find a lender who can meet your emergency needs in the best possible way.

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