After everything that we have gone through, do you really think that we are now able to survive a financial crisis? We can never tell what will happen in the future but when something does happen, will you be one of those who will need financial help just to get past the dilemma?
Last year, Fidelity.com published the results of their study titled “Five Years Later” to document the changes that Americans went through after the recession. The research was done on investors since they have record losses when the market collapsed in 2008. According to the study, the bad effects of the economic crisis brought forth positive behaviors that included better retirement contributions, lower debt and a more secure emergency fund.
That being said, should we feel complacent about the future – knowing that we have learned our lesson in the past?
In most cases, being in an emergency will put us in a position wherein we will require financial help. That is beyond our control. What you can control, however, is where you will get that aid from. Your decision will determine how effectively you can get past that particular event in your life.
5 options to get money during emergencies
Fortunately for you, there are many ways for you to get out of the financial fix that is brought about by your emergency situation. We have 6 options for you but we will start with the first 5.
Option 1: Borrow from family.
The first option is to ask your family for financial help. Now there are many experts you will say that you should not borrow from loved ones because it will put your relationship at risk. But if you know yourself and that you will find a way to pay back the money you loaned, then you should not be afraid. Borrowing from your family is the best way to get the immediate finances that you need without going through any credit check or the usual process that will take time. In fact, a study from Cash Net USA revealed that 30% of Americans turn to their relatives to get help in times of emergencies. Most of the time, you will be given the money that you require. Of course, you want to assure the person you are borrowing money from so document the loan. Make it as formal as possible and be very careful about the terms that you will promise. Just be truthful and trust that the person you are asking help from loves you enough to give you what you need.
Option 2: Look for non-profit organizations who can help out.
Believe it or not, there are organizations that provide financial aid for people who are in need of financial help. You just have to look for them. There is a story about a group in Arkansas that campaigned to drive away abusive payday lenders by providing financial help to those in need. They accept borrowers who need a small amount and allows them to pay over the course of 6 to 16 months.
Option 3: Ask for a salary advance from work.
Another source of financial help can come from your workplace. Simply call your employer or the Human Resources to ask if you can get an advance from your next paycheck. This will be limited of course and subject for approval. The downside for this is you will be getting a lower amount when your payroll comes in. However, you don’t have to pay interest on this because you did not really borrow money. You simply took what is already yours. If the salary advance is not allowed, ask if they have financial assistance programs for employees. This will have an interest but at least they can easily take it from your paycheck. That should help with the approval process.
Option 4: Apply for a bank loan.
This is not similar to the traditional loans that you will encounter. Most financial institutions know that a lot of consumers require fast cash sometimes. It is possible that they came up with this new loan option to compete with the infamous payday lenders. When the need is immediate, there are FDIC Model Safe Accounts wherein consumers can get financial aid that is up to $2,500. This can be approved within 24 hours after the submission of the application.
Option 5: Get a cash advance from your credit card.
You are allowed to borrow money from your credit card but be cautious about this option because it does have very high interest rates. In most cases, it is even higher than those of your credit card purchases. If you will avail of this option, make sure that you have incoming money that will help pay for this amount as soon as possible. Not only will you accrue interest on the balance, you will also be asked to pay a fee that can be as high as 4%.
There is another option known as payday loans but we strongly discourage against it because of the ridiculously high rates. Sometimes, it can go as high as 400%. If you need money fast, do not opt for payday loans. It is very difficult to get out of this type of debt because of the interest rate alone. Unless you are sure that you can get the finances to pay for it immediately, then stay away from this option.
Here’s the 6th and best way to finance emergency situations
You are probably wondering, what is the 6th option? We’ve looked everywhere to find financial help but there is one source that proves to be the best option: yourself.
That’s right. The last option is to simply build up an emergency fund so you can serve as your own financial aid. Even the government understands that financial emergencies can happen and you need to be prepared for it. They put up a website, Ready.gov that provides resources for consumer to help them in times of need. May it be because of a natural disaster, calamity, economic collapse or a personal medical condition – you need to be financially prepared for it. The site even mentions that “winging it is not an emergency plan.”
We understand that you are reading this article because you are already in a financial crisis and you failed to prepare for it. Well let this be a lesson for you. Make sure that this is already included in your list of options the next time around. Or better yet, eliminate the other options and make this your only choice. We recommend this because of so many reasons.
After the crisis is over, you can rest your weary head because you do not need to think about any payment.
You do not have to worry about additional interest rates.
No need to apply for it or beg someone for it. You can immediately get the money without any hassle.
You will not fear another emergency again. Now that you know you are capable of financing any unexpected event.
Now that you know that you need this emergency fund as a future source of financial help, you need to know how you will compute your emergency fund target. It is a simple computation that is based on your monthly expenses and how long you want to be able to live off of it when tragedy strikes.
Here is a video from National Debt Relief that discusses how consumers can prepare for emergency situations.
Diana hates debt just as much as you do. She is a finance writer for National Debt Relief. She aims to provide the best information to win the battle against debt.