Q. If I have an emergency that my rainy day fund is not enough, what are the other options to consider?
A. While conservatively you should save at least 6 months' expenses for your emergency fund. If you need more, here are 5 options you could consider:
1. Cash out a CD
Don't worry about the penalty, there are nothing, especially in today's low interest rate environment.
2. Sell some stocks
Especially if you have some losers, this will help you offset some capital gain taxes which is at least 15%,
3. Take out a 401(k) loan
You can borrow up to half of your vested amount, up to $50,000, although you do have to pay yourself back with interest. However, this is not good for people who are losing jobs because you will be required to pay back the entire borrowed amount within 60 days or you will face income tax and 10% penalty.
4. Tap HELOC
Home Equity Line Of Credit is a good source of emergency fund, because you only pay for the amount you actually use. If you don't use, you have no cost.
5. Borrow from LendingClub
Rates there are not as high as the credit card companies' rates, but the process could take sometime.
A. While conservatively you should save at least 6 months' expenses for your emergency fund. If you need more, here are 5 options you could consider:
1. Cash out a CD
Don't worry about the penalty, there are nothing, especially in today's low interest rate environment.
2. Sell some stocks
Especially if you have some losers, this will help you offset some capital gain taxes which is at least 15%,
3. Take out a 401(k) loan
You can borrow up to half of your vested amount, up to $50,000, although you do have to pay yourself back with interest. However, this is not good for people who are losing jobs because you will be required to pay back the entire borrowed amount within 60 days or you will face income tax and 10% penalty.
4. Tap HELOC
Home Equity Line Of Credit is a good source of emergency fund, because you only pay for the amount you actually use. If you don't use, you have no cost.
5. Borrow from LendingClub
Rates there are not as high as the credit card companies' rates, but the process could take sometime.
RSS Feed
