It’s one of the worst possible situations in personal finance – the bills are due and you’re short on cash this month. You’re probably scared, frustrated, and running out of options. What do you do? Here are a few solutions (other than totally skipping the payments) to get you through this bill cycle, and some ways to prevent this going forward to put you on the right financial track.
The first thing you can do, and probably the easiest and most cost effective, is ask your family for help. In many circumstances, you’re family will help you either with extra money or a loan. However, it is important that you respect the sanctity of family and don’t take advantage.
Your family always wants to support and make sure you’re okay. As such, they will probably lend you the money. In order to seem like you’re not mooching and taking advantage of them, you need to make sure that you setup payment terms and follow through on your commitment. This will ensure that you don’t breed bad blood in your family.
If going to your family isn’t feasible, or you’re just not comfortable doing it, you could always go to a lender to borrow money. You can get same day cash loans from a payday lender who will lend you money for several weeks until your next paycheck. It is important to remember that payday loans are designed to be short term, and interest and fees can add up quickly if you don’t repay them on time.
If a payday loan isn’t quite for you, you can also consider a pawn loan. A pawn loan is where you put up an item of value as collateral for the loan. If you don’t repay the loan, the lender will simply sell the item you collateralized in exchange for the debt. This is a more secure way to borrow, but if you don’t think you can repay the loan, you could end up not getting your item back.
To let the cat out of the bag…I personally utilized a number pawn loans when I was struggling with money. The interest rates were horrendous but they served as a quick band-aid (not a solution) to give me gas money when my credit cards were maxed out.
If you have more time to spare, you could check your local banks and credit unions, or borrow from peer-to-peer lending sites like LendingClub.
The biggest take-away from this experience should be how to prevent it going forward. The first thing you should do is construct a budget to address you cash flow shortfall. Maybe it is only temporary because of something unexpected, or maybe you have a structural issue with your budget. Whatever the case, laying it out on a budget template is the first step.
Once you’ve laid it all out, you need to address where you can cut and start building an emergency fund from. Having adequate savings on hand can prevent this from happening because you will always have your reserve you can dip into in the future. Once you get your cash flow in line, start saving so that you can prevent cash shortfalls from putting you in a situation where you have to borrow to make ends meet. It’s uncomfortable, scary, and you don’t need to put yourself in this situation.
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The articles are written by personal finance enthusiasts (not certified professionals) based on their personal experience. What works for them may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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