money management

It’s my money, and I need it now?

Money GirlHave you seen those commercials? People screaming from rooftops and apartment windows about the cash settlements they have coming to them…but apparently not fast enough.

First of all, who are all these people waiting on legal settlements that it’s a big enough market to warrant these commercials? Is America really that litigious a society that people with lawsuit winnings coming to them (but not fast enough) are a demographic big enough for whole companies to go into business to service their needs?

Apparently so.

Anyway, it made me think of the whole concept of getting funds you “need (or want) now” but don’t currently have. We all get into situations sometimes where we could use more money than we currently have on hand. If you’re smart about your finances, you should have some stashed away in an emergency fund you can tap into, or be able to find a way to slash your budget to free up some extra cash. But what if you don’t? Or what if your savings isn’t enough?

There are plenty of ways to get your hands on some extra cash in an emergency, but some are better than others. Here are some of the more popular ones, and the pros and cons of each:

Cash advances on your paycheck. Depending on how understanding your employer is, you may be able to explain your situation and get an advance on your paycheck. This is good because you’re not borrowing money at an interest rate, but risky because you won’t have that money to use in the future on the things you’d normally spend your paycheck on…groceries, bills, etc. So you’ll have to be careful about how you cut back on your budget for the rest of that month in order to avoid going into even more debt.

Cash advances on credit cards. If you’ve got a decent credit history, you probably get plenty of offers in the mail for cash advances on your credit cards. (They look like little checks you can make out to yourself.) This is good in that you’re not taking money out of your budget like you are above, but bad because now you’re setting yourself up to incur interest charges. So think about how quickly you’ll be able to pay those advances off to avoid as many extra charges as possible. That said, depending on your card, you may be able to get these advances at a promotional rate that’s a lot better than consumer loans, so that’s something to consider.

Personal consumer loans. Many banks and local credit unions offer small personal loans to consumers for a number of purposes…home improvement, debt consolidation, medical expenses, and other major purchases. Secured loans (where you put something like your house or a boat up for collateral) can get you better interest rates, but then you risk losing that collateral if you can’t keep up with the payments, so consider that option carefully. Unsecured loans can be easier to get, but come with higher interest rates. Weigh your choices, and keep in mind that you usually need a decent credit score in order to get these loans in the first place or to write a check.

Vehicle Title Loans. I hadn’t even heard of this type of loan before, but just recently came across it. If you’re having trouble getting funds through more traditional loans or advances, getting vehicle title loans is a way to get your money (when you need it now) by putting up your car as collateral. In order to secure the loan, you sign over the title to your vehicle (it has to already paid off so you own it free and clear). This lets you get money much faster and usually with much less of a background check and paperwork that other loans. However, you’re putting your car up as collateral. So make sure you’re absolutely clear on the terms of the loan. Some companies will try to work out payment plans with you if you’re having trouble paying them back, but others may not be so kind. Make sure you’re 100% confident you can pay back the loan within the given period, or that the company will work with you, to make sure you’re not gambling your car.

Borrowing from family. This can be a touchy subject, and one that some of us can’t even consider because our families don’t have extra funds, either. But, in a pinch, sometimes your family can be your best bet. They’re not going to start a collections proceeding on you if you have to miss a month’s repayment because things are tight (hopefully). They’re not going to charge you interest (hopefully). Just make sure not to take advantage of the family connection…try to pay them back on a regular schedule just like you would any other lender, and show them that you’re using the funds they lent you wisely. Loans can cause huge rifts in families if you don’t handle them responsibly and gratefully, so be extra nice to Mom and Dad if you go this route, and respect them just like you would a big national bank.

Have you ever needed to explore one of these options? Which one did you go with? What were the pros and cons you found?





photo credit:  Tax Credits

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