Life is uncertain. Unfortunate events such as medical emergency, job loss, computer / car breakdown, natural / man-made disaster, etc. can happen to anyone, anytime, anywhere.
Therefore, it is strongly recommended that one should keep aside 'decent' amount of money, in easily accessible instruments, for such emergencies. Else, your emergency fund is useless.
However, if you are unfortunately struck with a calamity and don't have any emergency corpus ready, don't despair. You still have multiple options to raise money... quickly.
1. Credit cards
Nowadays, you can make many payments through credit cards. So this becomes a quick and convenient option. The only problem with using credit cards is the exorbitant interest costs (as high as 30-50%), should you fail to clear your bill before the due date. Cash withdrawals on credit card too attract very high interest rates; right from the day you withdraw. So caution is advised. Use your credit card only if you are sure to raise money from alternate sources before the bill becomes due and avoid the high charges.
2. Loan against securities
It is always cheaper (and convenient too) to borrow money against your long term investments such as shares, mutual funds, insurance policies, gold, etc. So if you have any such investments, use them to borrow cash. As these loans are backed by a security, the interest rates are quite reasonable.
3. Sell some assets
You could also possibly sell some of your assets, if you feel the interest cost is high. But be careful. In the anxiety to raise money, don’t make a distress sale in a hurry. A good asset once sold, may be very difficult to buyback.
4. Personal loans
However, if you don’t have any securities to offer for mortgage or selling it outright, then you have no option but to go for the more expensive Personal Loans. Being quite expensive vis-à-vis other options (apart from the credit card), personal loans should be availed only as a last resort. By the way, you have to be a credit-worthy borrower for the bank to lend you money without any security, just based on your repaying capacity.
5. Advance against salary
If your company has a policy of extending advance against salary, you could consider this option too. But make sure that the lower salary amount that you will receive in the coming month(s), should not affect your critical payments such as electricity bills, children's school fees, grocery bills, EMIs, etc.
6. Friend/Relatives
You could also borrow from your friends and relatives. This may be a good option as in this case you could get money at a very reasonable rate of interest (maybe even interest-free) and without any cumbersome procedure or paperwork. Further, you could also possibly get a lot more flexibility in repaying the loan.
Given this variety, it would be prudent if you could think calmly and analyze as to which options would give you the money – quickly & cheaply. If you act in a hurry, you may only be adding to your misery. If need be, don't hesitate to seek expert guidance.
Therefore, it is strongly recommended that one should keep aside 'decent' amount of money, in easily accessible instruments, for such emergencies. Else, your emergency fund is useless.
However, if you are unfortunately struck with a calamity and don't have any emergency corpus ready, don't despair. You still have multiple options to raise money... quickly.
1. Credit cards
Nowadays, you can make many payments through credit cards. So this becomes a quick and convenient option. The only problem with using credit cards is the exorbitant interest costs (as high as 30-50%), should you fail to clear your bill before the due date. Cash withdrawals on credit card too attract very high interest rates; right from the day you withdraw. So caution is advised. Use your credit card only if you are sure to raise money from alternate sources before the bill becomes due and avoid the high charges.
2. Loan against securities
It is always cheaper (and convenient too) to borrow money against your long term investments such as shares, mutual funds, insurance policies, gold, etc. So if you have any such investments, use them to borrow cash. As these loans are backed by a security, the interest rates are quite reasonable.
3. Sell some assets
You could also possibly sell some of your assets, if you feel the interest cost is high. But be careful. In the anxiety to raise money, don’t make a distress sale in a hurry. A good asset once sold, may be very difficult to buyback.
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| You don't have to beg for money during crisis situations. |
4. Personal loans
However, if you don’t have any securities to offer for mortgage or selling it outright, then you have no option but to go for the more expensive Personal Loans. Being quite expensive vis-à-vis other options (apart from the credit card), personal loans should be availed only as a last resort. By the way, you have to be a credit-worthy borrower for the bank to lend you money without any security, just based on your repaying capacity.
5. Advance against salary
If your company has a policy of extending advance against salary, you could consider this option too. But make sure that the lower salary amount that you will receive in the coming month(s), should not affect your critical payments such as electricity bills, children's school fees, grocery bills, EMIs, etc.
6. Friend/Relatives
You could also borrow from your friends and relatives. This may be a good option as in this case you could get money at a very reasonable rate of interest (maybe even interest-free) and without any cumbersome procedure or paperwork. Further, you could also possibly get a lot more flexibility in repaying the loan.
Given this variety, it would be prudent if you could think calmly and analyze as to which options would give you the money – quickly & cheaply. If you act in a hurry, you may only be adding to your misery. If need be, don't hesitate to seek expert guidance.
