Everybody knows that emergencies happen. Cars break down, loved ones get sick or injured, and jobs disappear. The worst thing you can do is to find yourself in the middle of an emergency with no cash on hand.
That’s why it pays to be prepared for a financial crisis. Here are some steps you should take to avoid finding yourself in a crisis with no cash when an emergency arises.
How To Raise Cash In An Emergency
1) Take Out A Loan
If an emergency is looming, and you just don’t have the cash for it then you might want to take out a loan. While this isn’t always the solution people want to hear, quick loans can be a way to raise cash in an emergency. You can take out various different types of loans depending on your needs, situation, and how quickly you want to pay it back. Here are a few:
Personal Loan: A personal loan can be used for a variety of purposes, including consolidating debt, home repairs, and medical expenses. Personal loans typically have a fixed interest rate and a set repayment term.
Car Title Loan: A car title loan is a short-term loan that uses the value of your vehicle as collateral. The loan amount is based on the value of your car and you can typically receive the money in a few hours.
Payday Loan: A payday loan is a short-term, high-interest loan that is typically due on your next payday. These loans are designed to help people cover unexpected expenses and should be used as a last resort.
2) Create An Emergency Fund
One of the best ways to prepare for an emergency is to have an emergency fund. This fund will help you cover unexpected expenses in case you don’t have enough money saved up. You need enough money in your savings account so that if something happens – like a job loss or major expense – you don’t have to resort to credit cards or loans from friends and family just to survive until things settle down again. Ideally, this fund should cover three months’ worth of living expenses but even having one month’s worth set aside will help ease any short-term financial pain. When you save up you know you have a cushion in case of an emergency.
3) Stay Out Of Debt
If you’re in debt, it will be difficult to raise cash quickly in an emergency. This is because you will need to go through your creditors to get the money and this can take time. In a crisis, you need money now, not next week. That’s why it’s important to stay out of debt as much as possible. If you have credit card debt, try to pay it off as quickly as possible. And if you have any high-interest loans, look into refinancing so that you can get a lower interest rate. This will help you save money in the long term.
4) Have A Solid Saving Plan
You can’t just hope that cash will magically appear in case of an emergency. Instead, you need to have a solid saving plan so that you know exactly how much money to set aside for emergencies and when to put it back into your savings account. The best way to do this is by creating a budget and then finding ways to cut back on expenses. This may be tough in the short term, but it will be worth it when you have money saved up for a rainy day.
5) Have A Backup Plan
No matter what you do, sometimes emergencies just happen and there’s nothing you can do about it. That’s why it’s important to have backup plans in place. For example, if you lose your job, what will you do? Have a plan for getting money quickly, whether it’s through selling assets, borrowing from friends or family, or taking out a loan. An emergency can be a stressful time, but by preparing ahead of time, you are giving yourself the best chance at raising cash quickly.
6) Keep An Eye Out For Upcoming Expenses
If you keep an eye out for upcoming expenses, you will be able to prepare better than somebody who simply waits until the last minute before purchasing something. Instead of waiting until tonight’s dinner needs to be planned, start thinking about what groceries need to be purchased during the weekend so that when Sunday rolls around, all that has to be done is a quick trip to the store. Expenses can sneak up on you, so it’s important to always be prepared and stay ahead of them as much as possible.
7) Get Cash Quickly In An Emergency
If you find yourself in an emergency without any cash, there are still ways to get your hands on some money. You can try to sell things you own. Or you can give yourself a short-term loan using your credit card. If possible, it’s best to avoid taking these types of measures because they are usually costly and end up costing more in the long run. But if there is no other option, then this may be your only choice. Of course, once the emergency has passed, you should work to pay off your debt and rebuild your savings as quickly as possible.
8) Put An Emergency Fund On Auto-Pilot
The easiest way to make sure you’re covering your emergency fund is by putting it on auto-pilot. This means having money taken directly out of your paycheck every time you get paid. If you don’t have enough money in savings, then this can be overwhelming and much faster than you’re used to. But if you can afford it, this is the best way to build up your savings account and an emergency fund as quickly as possible.
Emergency funds are the key to not only surviving an emergency but also avoiding long-term financial pain. The steps above will help you get started on setting up your own emergency fund and should give you peace of mind when it comes time for unforeseen events in life. It’s important to plan ahead so that, no matter what happens next, you know exactly where your money is going and how much cash you have available at all times.