Do something different this holiday season. Check out
my list of 34 great gifts you can make yourself!
« Financial Success Comes from Within | Main
| Ask the Readers: How Should We Spend Our Inheritance? »
A Few Ways to Raise Cash Quickly
Thursday, 28th August 2008 (by J.D.)This article is about Choices, Hints and Tips, Money Hacks
If you're new here, you may want to learn what this site is about. I encourage you to subscribe to my RSS feed. Thanks for visiting!
Disclaimer: After some strong feedback from GRS readers (and from my wife), I’ve made the rare move of heavily editing this article after publication. My hope is that the re-write makes it clear that I am not advocating all of these ideas. Yes, payday loans are on the list, but they’re at the bottom of the list. They’re the worst possible option for scaring up cash.
The September issue of Money features an article by Stephen Gandel and Donna Rosato in which they explore the best and worst ways to raise cash quickly. The authors looked at seventeen methods for finding money, and then ranked them from best to worst:
We talked to loan officers, financial planners, tax experts, even dealers in antiques to size up 17 ways you might scare up some greenbacks now. We took into account the short-term costs of each move (such as interest, taxes and penalty fees), the long-term effect on your net worth, the ease and speed of getting your hands on the dough, even the psychological toll. The result: a ranking — from not too bad to really, really bad — of the many ways to beat a cash crunch.
Here’s the order they picked:
- Tap your emergency fund — that’s what it’s for!
- Sell some investments.
- Ask your parents for a gift.
- Cash in a certificate of deposit.
- Cash in your whole life insurance policy.
- Borrow from family or friends. Be very clear on the terms of the loan, and fulfill your part of the agreement.
- Take out a home-equity line of credit. I used a home equity loan to pay off my credit cards ten years ago. This can be an okay move, but be careful about using your home as a source of emergency cash.
- Refinance your mortgage to get cash out.
- Borrow from your 401(k) or 403(b). Some plans allow you to borrow money for the short-term. Beware, however, that there are a variety of conditions.
- Borrow from other investment accounts.
- Borrow from strangers on sites like Prosper or Lending Club.
- Tap into your IRA.
- Do a reverse mortgage.
- Sell some assets. Not just stuff you have lying around, but big things like cars or antiques.
- Take a cash advance on your credit card.
- Liquidate your 401(k) or 403(b). Raiding your retirement account is rarely a good idea.
- Go to a payday lender. If you choose to do this, please beware dangers of the payday loan trap.
Those final few are poor choices and should be considered last-ditch measures. In fact, you might say that the last sixteen methods are some of the best arguments for having an emergency fund. The best way to raise quick cash is not to have to do it at all.
One obvious (and unavoidable) drawback is that most of these suggestions require existing assets, like a home or an investment account. If you’re just starting out, or if you’re struggling to make ends meet, your options for finding quick cash are much more limited.
Postscript: Regardless of whether the re-write helps, I’ll remember the lessons learned here for the future. Thanks for your feedback. I appreciate it.
40 Responses to “A Few Ways to Raise Cash Quickly”
Leave a Reply
Subscribe to comments on this post via RSS feed.
« Financial Success Comes from Within | Main
| Ask the Readers: How Should We Spend Our Inheritance? »
August 28th, 2008 at 1:20 pm
I actually wrote about the cnn article couple of days ago. Frankly I thought they sort of made it like , no biggies take money from your 401K for that flat screen you purchased last year.
http://orange4money.blogspot.com/2008/08/best-and-worst-ways-to-raise-fast-cash.html
August 28th, 2008 at 2:06 pm
One thing that’s sad is people holding onto their homes as long as possible when they really can’t afford it (maybe never really could) and they don’t need that much house, anyway. This should be a first consideration as soon as you realize you might lose the house anyway. Why throw good money after bad?
August 28th, 2008 at 2:08 pm
Wow. Those are some of the worst ideas on raising cash that I have ever read.
Not only is taking money out of a 401(k) early cause for big fines for most banks, a reverse mortgage means you are literally throwing money away, and (what I thought was common knowledge) getting an advanced on a credit card just means you’ll end up paying as much as 12x back.
How about getting another (part time) job? Or what about making money online through surveys (www.your2cents.com)? There are a lot of ways to make money quickly that do not require you to gain even MORE debt.
August 28th, 2008 at 2:09 pm
Whoa, some of these are really out of order. Borrow from your 401k before taking money out of other investment acounts? That’s dumb, since most “other investment accounts” amount to the same thing as “some investments”, which is #2 on the list. Do either or those, and tap into your IRA, before selling your antiques? That’s truly shortsighted.
I propose a new top three:
1. emergency fund
2. use other funds that are earmarked but can be put off for a while - car/holidays/property taxes/braces savings accounts that aren’t yet due
3. sell everything you don’t need, be it cds, stocks, cars, whatever
After that, it looks like borrowing from somewhere is inevitable. I vote Propser first, family second, home third, credit cards later, retirement accounts last, payday lender never.
August 28th, 2008 at 2:14 pm
I found it incredibly ironic that this article showed up on my syndicated feed page with an ad for a payday lender directly below the list that noted payday lenders as the worst possible sources of fast cash.
August 28th, 2008 at 2:21 pm
sell old stuff.. ebay is your friend
i have a buddy of mine that wants to buy an amp from me for his car
i don’t use it anymore so i might as well sell it to him
that’s $200 i didn’t have before in my pocket =D
August 28th, 2008 at 2:29 pm
Woah, #5 is a horrible idea.
August 28th, 2008 at 2:29 pm
Ask your parents for a gift at #3? Never, not for me. A loan, maybe. I’m a grownup with my own money, and so are my parents, it’s not their job to give me money whenever I need it.
August 28th, 2008 at 3:00 pm
Yikes. I hadn’t counted on all the payday loan ads. Several people have e-mailed me with offending URLs. If you notice one, please do feel free to drop a line and I’ll blacklist it. It takes a few hours for Google to block the advertiser, but it’ll happen…
August 28th, 2008 at 3:48 pm
I’m going to agree with everyone who’s criticizing the list. Some of these are good options if you have them, but others I wouldn’t consider unless I was desperate.
I second the recommendation for eBay or any other selling of excess stuff.
August 28th, 2008 at 4:12 pm
Wow… this list is seriously messed up.
Selling assets should be up WAY higher than it is… and asking parents for gifts? What are you, 15?
I can’t believe that cashing out a life insurance policy is that far above selling your car.
How ridiculous.
August 28th, 2008 at 4:34 pm
Hm. I feel like I’ve done a poor job recapitulating the authors’ advice. I still think the list is pretty good. I agree that the suggestions toward the bottom are highly undesirable, but the methods at the top are, indeed, the best sources of emergency cash.
Some other thoughts…
RE: Getting a job
I agree that this is an excellent way to earn extra cash, but it’s not a quick way to do it. In fact, you’re probably looking at two weeks before you see your first paycheck. Still, except in emergency situations, this should be a top choice.
RE: Selling assets
The assets the authors mean are things like art and cars and etc. They don’t cover stuff like your DVD collection or spare furniture. Maybe that’s an oversight.
Basically, I think this list is good. Many of you don’t, though, so I’m willing to admit I could be wrong!
(Also, maybe the problem is my title. What if I’d called it “Best and Worst Ways to Raise Quick Cash”?)
August 28th, 2008 at 4:47 pm
I look at the list as all the items I need to have in place in case I need to get cash quick. Thanks for the to do list.
-Tabs
August 28th, 2008 at 5:15 pm
I’m in the process of doing #5 now, what a coincidence. It’s a good idea if it has significant cash value, and you have no heirs. What on earth do I need it for? (Oh I know what you are going to say and before you say it, the cremation is prepaid, and I don’t want anything else.)
August 28th, 2008 at 5:21 pm
We just don’t live in the same world, do we?
August 28th, 2008 at 5:39 pm
That is a horrible, horrible list and anyone with basic math skills would agree.
#5 is bordering on retarded.
#7 and #8 are brilliant. Let’s risk losing our house to get some quick cash! Idiots.
#9 the fees and penalties and interest rates will put you in a deeper hole than you started with.
#12 Tapping your IRA is never a good idea.
#13 A reverse mortgage, once again, risking your home for some cash isn’t a good idea.
If you get to this point, sell your home.
#14 should be #3 after use your emergency fund and GET A JOB.
If you get to #15 and below, you have a bigger problem than being short on cash.
Once again, the way to attack it:
1) Emergency Fund
2) Get a second job, even if it’s for a week. Mow some lawns, deliver some pizzas, stock shelves somewhere. 100% of this check goes to your problem and nothing else.
3) Sell items you don’t need or could downsize. Sell the $10,000 SUV and buy a $3000 clunker and you have $7000 real quick.
4) Rent a room in your house. Talk about an easy $400-800 depending on where you live. The renter could also split the expenses with you, lowering your monthly bills.
I appreciate the post, it brings up a good discussion, but it further points out the leverage vs debt free argument and mind set.
- Undertrader
August 28th, 2008 at 5:40 pm
I think some of the commenters miss the point. This is about raising cash within days, so getting a second job is not an option. Even with EBay it takes at least 10 days until the money comes in.
And whole life insurance policies are rarely a good deal, so maybe that’s why the authors think it’s a good idea to cash them in.
And selling your car as a short term solution will make you lose a lot of money instantly, so borrowing against your 401(k) is certainly better, for example. Tapping into your 401(k) is the second last resort in this list, so I don’t know why so many people criticize this.
August 28th, 2008 at 6:01 pm
“Borrow from family or friends. Be very clear on the terms of the loan, and fulfill your part of the agreement.” I`ll try another option ….
August 28th, 2008 at 6:22 pm
What horrible advice! Payday loans, owing family, borrow on retirement accts, HELOC’s/mortgages. How about find a second job, sell all the junk you bought on credit, grow up, do a budget, and stop hemorrhaging cash.
August 28th, 2008 at 6:57 pm
Depending on the season and your possessions:
Walk door to door (or leave flyers) and offer to wash windows, mow yards, edge sidewalks, powerwash walls, rake leaves, clean gutters, detail cars, walk dogs, clean up messes etc.
Sometimes I reflect on the fact that I now live in one of those big houses where I once went door to door with a rake.
August 28th, 2008 at 7:06 pm
I’d probably put ‘get a loan from family’ before ‘get a gift from family’, but I’d sure as hell tap that if I was, say, looking for an instant flight home for a funeral/trying to get my kid airlifted out of his backpacking trip/something else URGENT. This presupposes that your parents/family are doing okay themselves, but mine are. It assumes that you’re not a deadbeat and won’t destroy your relationships over the loan/gift, but what is it suppposed to say? Don’t borrow from family because if you don’t pay it back they’ll hate you?
Again, this list is about needing quick money. In many places, ‘get a second job’ or ‘find a roommate’ is not the sort of thing that’s going to happen in the next few days.
August 28th, 2008 at 7:06 pm
I wouldn’t say that I hate this post, but I have always wondered who these lists help. There is no magic way to suddenly create cash. You either have liquid assets on hand or you don’t. If you do, you don’t need to wonder about how to raise cash in a hurry. If you don’t - well, then you don’t and you are stuck with some of the undesirable options.
RDS
http://financialvalues.blogspot.com/
August 28th, 2008 at 7:30 pm
There are some second jobs that are good sources of quick income once you start them … the ones where you are tipped like waiters, delivery folks, and such. You can take those tips home the very first day and every day after. In those cases, the paycheck itself is the lesser amount of income so it’s not a huge deal that you don’t get it right away.
One thing that could be added to the list is savings bonds. Definitely old school, but this list reminded me that my son has a savings bond given to him at birth that has now matured that he could cash in to apply to a vehicle loan. Have any savings bonds stashed away? Check them out.
I don’t like this post because as others have said and you have pretty much agreed, it smacks of desperation and offers some pretty poor options. A lot of these choices could put you on a downslide you could not easily recover from. The payday loan? Yikes. Some folks get into that pattern and never get out of it. And how is a reverse mortgage quick cash? Quick? Is any mortgage quick?
I don’t even think you should leave this post on your site. I think it’s dangerous.
August 28th, 2008 at 7:42 pm
OH MY GOSH TAKE THIS OFF YOUR SITE!!!! This goes against everything you write about! NONE of this can bring GOOD! Please…take it down…
August 28th, 2008 at 8:04 pm
Remember when you were a kid and you’d do anything to make money? Well let your friends and neighbors know you’ll work for cash - wash cars, mow lawns, rake leaves, babysit, powerspray driveways/homes, anything you feel comfortable doing. Think of it as a second job. Most friends understand when times are hard and would help you out.
August 28th, 2008 at 8:29 pm
Boy, howdy! Okay, I put this piece through a re-write. All comments after this one are based on the revised version. I appreciate your feedback. I’m not ready to pull this — I don’t think the article I’m summarizing offers bad advice — but I’ll keep your comments in mind for the future!
August 28th, 2008 at 9:19 pm
The rewrite still makes me hyperventilate.
Okay, here’s what the understanding is, right? I need money right now. The need is so urgent that getting a job (which takes time) doesn’t apply. Ditto advertising for, screening, and accepting a boarder. So, in this pickle what would I do if I didn’t have an emergency fund?
In this order:
1. Hock all my jewelry, Indian rugs, silverware, crystal, and guns. Head for the best pawn shop in the city.
2. Yard sale all the junk in the house & garage. Start the yard sale on this Friday morning and run it all day Friday & Saturday.
3. Sell the washer & dryer on Craig’s list.
4. Sell my car.
5. Borrow on margin against nonretirement fund investments (but this assumes I have an emergency fund, which we’re told I don’t).
6. Hit up a friend for a loan, or try to borrow money on one of those person-to-person websites.
7. Borrow (in moderation!) against the equity in my house.
8. Apply for food stamps and rent relief.
With any luck, a combination of these strategies would generate enough to tide me over while I look for a job. Take a job, any job, and work at it while looking for better-paying work.
Only in extreme desperation would I borrow from a payday lender, borrow against or liquidate a tax-deferred retirement instrument, or borrow very much against the house. And I think you have to be of a certain age to get a reverse mortgage; most are full of pitfalls — you’d probably be better off selling the house, if you can. If your straits are that bad, walking away from the mortgage might be a better choice than sinking yourself deeper into real estate debt.
August 28th, 2008 at 9:35 pm
What I’m really curious about now is if Money magazine is going to get a flood of reader letters about their article. It’s a big six-page production! I don’t think they will, though, because they’re much more thorough. Mine was only an attempt to summarize, and I think this is a case where the summary just doesn’t do the content justice. (Which is one of the things I learned!)
August 28th, 2008 at 10:47 pm
I’m surprised at how many really poor ideas are listed here! Cashing in a life insurance policy might be extreme, especially if you can borrow against it in some cases? Payday loans almost seem like a joke that they tacked onto the end to see if anyone was paying attention. I agree with the previous poster… depending on what you need, eBay can be your best friend when it comes to selling stuff for cash.
Jerry
August 29th, 2008 at 1:27 am
Well, I’ve only seen the rewrite, but I think this is a pretty good list.
At the end of the day, if you haven’t got any assets or money and you really need it for an immediate emergency then you’re probably going to have to go to a payday lender as a last resort. This is particularly true if you haven’t got a job (so can’t get conventional loans), and friends and family can’t lend it to you.
Because the 18th option is going to be something like theft, which is illegal and so will cause more problems than it’s worth.
And I think these are great reasons to have an emergency fund.
August 29th, 2008 at 1:41 am
Interesting reactions, I didn’t expect this kind of backlash. Perhaps it’s because I read the Money article first, so I got the full version. I actually thought the list was valuable, there are things here I hadn’t thought of before. These days I have an emergency fund, but there have been times in the past when I didn’t have that to fall back on. Also I don’t understand all the people that are unhappy with cancelling a whole life insurance policy, I did and I am happy with the choice. Granted it was replaced with a term policy, costs less, provides more and doesn’t terminate until 70. At that point if I need life insurance, I haven’t done a good job of saving for retirement. It’s not a source of quick cash however, it takes time for the paperwork to come through. Just in case anyone wants to complain about my decision, the balance on the policy was put into an IRA, waiting for the day I retire, the money was not spent.
August 29th, 2008 at 7:42 am
Ask your parents for a gift and ask friends and family for a loan- well, in today’s society, I guess some “kids” keep doing that. As an earlier poster said “Grow up”. Unless this is the Sopranos and they are going to do really nasty things to you in the next 15 minutes unless the money is there today- how did you not know you need money? Use the emergency fund, sell the investments, try to sell the big stuff(why is selling antiques bad- if you are in financial trouble-asking Mommy for money is better than selling your own stuff???), sell the little stuff(yard sale), get the quick second job(adults do work at Starbucks,Mcdonald’s, the local diner- places looking for help fast). I am going to read the article and then write to the authors-if i feel the same after I read it.
August 29th, 2008 at 10:05 am
Hmmm… it seems that some of the readers here are fortunate enough to never have been in a truly desperate situation.
When I was 10 and my brother was 4 my mother and us had to run away. I will spare the details as they are grisly. There was literally no other option but to get in the car and get as far away as possible as fast as possible.
I believe that is the sort of “need money RIGHT NOW” situation they are talking about. Hopefully most people will never find themselves in circumstances where they have to do anything like that, but if you are, having a clue as to what your options are and in what order you should take them is far from a bad thing.
August 29th, 2008 at 11:10 am
I think the problem, JD, is that this is probably not directed towards most of your readership, who have never been in really hard times.
I reference a few commenters who got it - like the one who had to run away, the one who mentioned airlifting out a kid, etc. Think about it, people, when you need money RIGHT NOW, do you really have time to go through your house and price things for a yard sale?!
I read the original and this re-write (and the Money article). I don’t think the original was so bad. I think you just got some knee-jerk reactions from people who didn’t bother to click the links.
For that matter, I actually think it’s good to see people react like this - it means people recognize that payday loans are NOT easy money!
August 29th, 2008 at 2:16 pm
7. Take out a home-equity line of credit.
8. Refinance your mortgage to get cash out.
9. Borrow from your 401(k) or 403(b).
None of these appear to be super fast ways to come up with cash. Sorry you died waiting for the airlift, I was at the bank filling out mortgage paperwork.
Now #14 on the other hand should be #2 or 3 on the list in my opinion. Honestly who can recommend borrowing against the house or your retirement account before this?
14. Sell some assets. Not just stuff you have lying around, but big things like cars or antiques.
August 29th, 2008 at 8:50 pm
I think 5 shouldn’t be an option at all, not because it’s a bad Idea, but because you shouldn’t have whole life to begin with. Its a terrible product in my opinion and a waste of assets. Term life is a much better product if you do the math.
(I say this as a former Life insurance peddler)
August 30th, 2008 at 1:32 pm
O.K., I just couldn’t resist replying to this with my own blog post. No offense, really, but …oh, just read it.
http://frugalwench.blogspot.com/2008/08/realistic-ways-to-get-cash-fast-for.html
August 30th, 2008 at 4:10 pm
I’m pretty amazed at the APR you Americans can obtain, even when you’re someone with bad credit.
Here in Brazil banks and other credit institutions form a cartel from which the government itself heavily profits. A Brazilians pays anything from 27% APR *if* he has amazingly good credit and some expensive good, such as a car, to make it secure (sorry, I’m not sure that’s the word), to 450% (that’s not a typo) APR in a credit card if your credit is merely okay. A typical personal loan goes for 120% APR in average.
Big corporations can borrow money directly from USA and thus take advantage of the much saner APR available there. Individuals, obviously, don’t have access to this. Since I myself am locked into that “typical 120% APR” madness, what makes it almost impossible for me to free myself from debt, I’ve been looking around for a way to do it, but so far no luck. Sites such as Proper are USA-only, while US banks require SSN and physical presence to open an account, no mention getting a credit line.
Is there something one of you could suggest for someone in a situation such as mine? If I could convert my 120% APR even into the “high” 25% you have over there, that by itself would already provide such an improvement that I’d, for the first time in a decade, feel able to breath freely again.
Something, anything, is welcome! And if then JD could write an article for those international readers of this blog such as myself who live under a situation similar to this one, that would be great!
Thank you!
August 31st, 2008 at 6:19 pm
Here’s another one:
Go to an employment agency that hires day laborers. You might end up doing really crummy work for minimum wage, or you might sit around the office like a dummy for hours waiting without success for an assignment.
September 29th, 2008 at 8:04 pm
The advice on using payday loans is right. Reputable payday lenders want customers to use payday advances wisely. The service’s goal is to be a solution for those who need low-dollar, short-term credit. A payday loan may not be the best choice in every situation.
Payday advances are small, unsecured, short-term loans, usually due on the borrower’s next payday. The average loan is $300 and the typical fee is $15 per $100 borrowed.
Compare the fees of consumers’ short-term credit options: $100 payday advance = $15 fee; overdraft protection = $29; late fee on a credit card bill = $37; $100 off-shore internet payday loan = $25 fee; bounced check and NSF/ Merchant fee = $55. * *Source: http://www.cfsa.net/cost_comparison.html