Where to Get Cash Quickly When You Don’t Have an Emergency Fund

Financial emergencies happen for all of us, and when they occur, you’ll need a stash so that you’ll be able to cover any expenses. However, many Americans don’t have any sort of emergency fund, and will need cash with a quickness. There are a few ways to get that cash. Here’s a quick look at a few options.

Loan

You could always get a loan. This might be a more attractive option than the other we’ll talk about, or not, depending on how you feel about dealing with a loan company. That said, you won’t incur any sort of penalties for getting a loan, you’ll just have to pay it back.

Home Equity

A home equity line of credit, or HELOC, is another sort of loan in which your home is used as a sort of collateral. If you don’t have an emergency fund, you might have this as an option. With a HELOC, you won’t be loaned a specific dollar amount. You’ll be given a line of credit, sort of like a credit card, complete with a limit. Typically, interest rates on HELOCs are variable.

401(k)

If you’re allowed to get a loan from your 401(k), you can typically borrow either 50% of the vested balance or $10,000, whichever is greater. Even though all 401(k) plans are different, most won’t let you borrow more than $50,000. Doing it this way has a benefit. There isn’t a requirement for a credit check, so your credit won’t be affected.

What you do need to keep in mind is that generally, you have only 5 years to repay the loan, unless you lose your job. There’s good news though because you’re technically borrowing your own money, so when you pay it back, everything you pay back, including the interest, goes right into your account.

If you can repay it within the 5 years allotted this is potentially a low-interest method of accessing the funds you need. As long as it’s allowed by your plan, participants can generally borrow from their 401(k) for any reason they want. That said, some types of plans only allow it for specific reasons, so before you attempt to borrow from yours, check the rules. Also keep in mind that when you pull money from your plan, you’re missing out on potential compounded returns and retirement savings, so this should be considered only in a true emergency.

Roth

This is sort of like the 401(k). With the Roth IRA, if you’ve contributed to it, you can withdraw your contributions at any time with no penalties or taxes. You aren’t able to withdraw earnings unless certain requirements are met.

HSA

One more potential source of a bit of emergency cash might be your HAS. For example, if you’ve used other money to pay for medical expenses, you’ll be able to save the money that would have been contributed to the HAS and utilize it as a sort of backup fund. You just need to match any withdrawals to eligible medical expenses incurred since the account was opened, even if that was years before. You should always keep any receipts for expenses you’ve paid for medical expenses for this very reason.

When Your Emergency Has Passed

After you get the money you need and your emergency has passed, it’s time to start planning for the future. Make sure you start putting money away when you get paid so you have a robust emergency fund next time you face a problem. The goal is to build up a fund that has enough money to cover your expenses for three to six months. Even if you put $20 away a week, that is $20 less you will need the next time you are facing an emergency.

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