Bad Credit Cash Loans to Save the Day
A financial crisis can happen to anyone. Here’s how to survive one – and make money, too.
Say the roof blows off your house. Or you switch practices and experience a temporary income drop. Or, heaven forbid, an accident leaves you unable to work for six months. What will you do? Run up credit-card charges? Sell investments you should hold? Put your house on the market? Extreme measures, but not improbable ones if you haven’t socked away some money for emergencies. One option you may forget to consider is to get a bad credit cash loan.
Crises aren’t the only reason you need a cash cache. A readily accessible account should also contain money for major purchases within the next year or so – say, for a new car or a down payment on a house.
Deciding how much your emergency fund should be
How much cash should you keep for emergencies? Becoming disabled with bad credit is probably the biggest threat to your financial stability, and disability insurance usually doesn’t kick in for three to six months, it’s a good idea to possess enough to cover your living expenses for that period of time. For this, using a cash loan is another good option. Those living expenses costs include your mortgage, car and student-loan payments, food, and entertainment costs. (Don’t count the money you invest outside your retirement plan – or what you contribute to it, assuming your plan would permit you to suspend those payments if you were to need cash.)
A three- to six-month cash reserve may be too conservative for some, however. “I don’t see a problem with people having as little as two months of living expenses in their emergency reserve if their debt is under control, they have appropriate insurance coverage, a diversified investment portfolio, and reliable cash flow,” says John G. a financial advisor in Seattle, Washington.
“I like to encourage people to, if they’re comfortable with the risk, invest their money, to get a higher return rate,” G. continues. “If a crisis arises and they’re in need money, I suggest they borrow against the equity of their home or life insurance. Interest on home-equity loans is low and also has the benefit of being tax-deductible.” Avoid touching the investment. If a crisis comes up, it is wiser to use a bad credit cash loan instead. Pay it back, and financially you’re back on track.
Other financial planners get nervous when their clients play so close to the edge. Richard R. of Bohemia, N.Y., cautions, “As painful as it is to leave emergency money in a low-yielding money-market fund while the stock market roars ahead, you’ve got to discipline yourself to do it. Because when things go bad in life, they generally go bad together, and you can’t count on home equity to bail you out.” We cannot over-emphasize the utility of bad credit loans for the small emergencies.
While home equity can be a lifesaver in some situations, as G. suggests, R. has a point: If your income loss is permanent, borrowing against that investment will only add to your debt. Perhaps worse, the bank may not be willing to lend you cash under those circumstances. And even in less dire situations, if you haven’t already applied for a home-equity loan or line of credit by the time an emergency strikes, you may not be able to get one approved quickly enough to help.
A few other factors should influence the size of your liquid reserves. You should have more in the reserve if you don’t have a working spouse who can help with finances in the event of a crisis. Should an emergency arise, always remember that bad credit loans are an option to get quick cash when you encounter a financial crisis.