SO YOU NEED MONEY NOW?

For whatever reason(s), you need money now.  For business or personal reasons, the need is dire and immediate.  Let’s look at some of the ways to create that liquidity.

Do you have an emergency fund that has been a topic in a number of my columns?  Clearly that is the best and safest place to start.  And if you don’t have one, please remember to start building one when time permits.

Do not touch your retirement plans, such as your 401k or IRA.  Yes, it is tempting, and yes, it may be readily available (minus any taxes and penalties).  However, you need to consider that retirement plan.  Social security will not cover more than 25% to 35% of your lifestyle.  You are responsible for the rest.  And in theory, once you approach retirement, it is difficult to replenish those funds.

You can certainly look into borrowing money.  Now it may sound like I am contradicting myself, but you may be able to borrow from your 401k.  The reason I suggest it is threefold – 1) much less expensive borrowing alternative; 2) easier approval process; and 3) there is a repayment schedule, so you are forced to replenish your funds.

Clearly watching your interest cost is important when borrowing money.  A home equity credit line is usually near the lowest rate, as are loans secured by stocks and bonds.  (Try to avoid the temptation to sell them.  See the third paragraph in the column.)

Credit cards should be close to a last resort.  Yes, it is easy, but yes it is very expensive.  And it is difficult to stop the interest.  (See my last column.)

If you have a loan and need more time, contact the lender.  It does not hurt to ask.

If the cash need is truly temporary, and you have the discipline to repay it in the projected timeframe, there are “payday” or cash advance loans.  Don’t make a steady diet of it, but it is an option.

Did you explore all of the social safety nets that are out there?  Maybe there are some funding alternatives that may reduce your expenditures?  Food programs come to mind.  If the problem is still pandemic related, check with your local government for programs.  There is a website “clearinghouse” for these resources – 211.org. 

Some other “don’ts” come to mind.   Don’t drop out of health care insurance in order to cut costs.  That definitely is a risk not worth taking.  Don’t “take” from the IRS by not paying estimated or annual taxes.  Particularly those of us who are self-employed, it can be tempting.

Now for a “maybe.”  Do you have a relative or wealthy friend that might entertain a short term accommodation?  If you do not ask, you are saying “no” for them.  It might not hurt to ask.  As long as you have a sound plan to repay, it is OK.  Many in the position to lend might have been in your financial position at one time.  But if you do this and are successful, please honor your commitment.  Otherwise, Thanksgiving can be very uncomfortable.

If you have other suggestions, please feel free to drop me a note.  I can share with everyone in a later column.  harvey@gempire.com