Unexpected Places To Find Money If You’re Short On Cash

The extra $600 that the federal government kicks in every week for unemployment checks is scheduled to end July 31.

That could leave a lot of people scrambling for some extra cash.

If you don’t have an emergency fund, losing a job can mean tightening your belt and setting up a monthly budget. If that isn’t enough, here are four ways to get some extra cash. Even if you’re still employed, you may want to use these methods to get some extra money.

Borrow From Your Future Self

Withdrawing money early from your 401(k) retirement plan isn’t a great idea, but borrowing from it is a lot easier thanks to the coronavirus pandemic.

Borrowing from your future self through a retirement plan loan used to carry harsh penalties. But the coronavirus relief package, or CARES Act, allows up to $100,000 to be borrowed without paying a penalty.

You still pay interest on this loan, but it’s money you’re paying back to yourself.

Before the pandemic, 401(k) loans up to $50,000 or 50% of your vested account, whichever is less, could be borrowed. The CARES Act temporarily doubled that to $100,000 or 100% of the amount vested, whichever is less.

The loan term is usually five years but can be longer if buying a home.

A big downside is if you leave your job, you’ll have to repay all of the loan back, usually within 30 days. If not, it counts as a distribution and you’ll pay a penalty.

Join A Credit Union

Joining a credit union can be worthwhile if you’re looking for a personal loan at a better rate than you’d typically find at a bank.

Credit loans are not-for-profit organizations whose main purpose is to serve their members. That means not charging high interest rates while offering loans and other financial services that banks offer.

Deposits in a federal credit union are federally insured up to $250,000.

As a credit union customer and member, you’re a shareholder who gets to share in any profits that the credit union makes. Banks, on the other hand, are for-profit enterprises that pay savings accounts holders some money, but pay most of their money to shareholders of their stock.

Credit union members can often earn higher savings rates and can borrow money at a cheaper rate than at banks.

Some credit unions are only open to certain professions. Teachers and military members, for example, can join credit unions set up just for them. Other credit unions accept members who live in their community, so check to see if one is near you.

Credit Card Cash Advance

This option for getting some cash in your pocket is one of the riskiest and costliest options, and comes with a high downside if you can’t pay it off quickly.

If you’re not using all of the available credit on your credit card, you can borrow money from it through a cash advance. The money can often be withdrawn at an ATM.

The interest rates are high, usually around 25%.

They can also require paying upfront fees, such as $10 or 5% of the amount borrowed, whichever is greater. For any amount more than $200, the 5% rate will be higher.

Interest rate charges accrue immediately. There’s no 30-day grace period that credit cards have for purchases.

All of this can add up to big financial problems if you don’t repay the cash advance soon. Paying 25% interest even for a month is like going to a loan shark. If you’re close to maxing out your credit cards and are often late paying your bills, a cash advance is a lousy idea.

But if you’re in a bind and can repay the advance soon, then a small cash advance for less than a month can make paying your bills possible.

Home Refinance

Mortgage interest rates are low, and refinancing your home loan into a new loan could leave you with a lower monthly mortgage payment.

The extra money could be used to pay bills, put into a savings or emergency fund account, or just have fun with.

Shop around for the lowest fees so you can avoid paying closing costs, or at least pay lower fees.

Another option is to get a home equity loan or a home equity line of credit. Both provide cash based on how much equity you have in your home.

A big downside, however, is that these may be hard to get if you’re unemployed.

Taking equity out of your home is risky if you can’t afford your home loan or if housing prices drop and your home becomes worth less than what you paid for it.

Choose refinancing or home equity loans cautiously. Be sure you plan to live in the home for at least a few more years to make the refinancing costs worthwhile, and that you’re earning enough money to repay a home equity loan or line of credit.