Even in the best of times, there can be plenty of situations where you need cash now. With the pandemic wreaking havoc on our economy, those who could use cash immediately has grown immensely. Even with the government stimulus payments this spring, many people are still struggling to meet daily expenses. They aren’t sure where to turn. Far too many are tempted to just invade their retirement accounts as the easy source of cash now. (Congress even tried to ease the pain through the CARES Act to allow certain types of retirement plans to be tapped) Before you act, however, this is a perfect time to speak to your financial advisor. If you don’t have a financial advisory, this could be the right impetus you need to find one!
This week, the Wall Street Journal had a list of 10 ways you can get cash now and which one you should tap first.
Where to Go For Cash
Ms. Winokur Munk’s article included some advice from a financial advisor, which is likely the path you should choose as well. The 10 sources of cash they list:
- Borrow from family
- Short-term savings
- 529 Plans
- Retirement accounts
- Life-insurance policies
- Home-equity line of credit
- Credit card
- Margin loans
- Social Security
At first blush, I will say that after years of dealing with terrible pay-day loan lenders, I was glad to see that they weren’t even an option on the list. Far too many of my clients have been forced to turn to them over the years. It never turns out well, and they are often forced to work with my office to finally get those lenders to stop harassing them.
It seems that the order of the list is pretty spot-on as well. Borrowing from your family doesn’t have tax implications for you. If you choose this route, you should make sure that you get the terms of your loan in writing. Not in writing? You could be in for a lot of headaches if there is any dispute over getting repaid.
As you get further down the list, you should hopefully see the need for a financial advisor. Before you tap into retirement accounts, annuities, or life insurance policies, it’s a good idea to talk to a professional advisor. There can be significant tax consequences for each.
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Before you tap into your assets, make sure you speak to a professional. Especially if it’s on the list above, a financial advisor or an accountant can help you make the right choice. If you’re thinking of borrowing money and need a contract drawn up or, if you’re already ahead of the curve and have put something together yourselves and just want an attorney to review it, call my office to set up a virtual Legal Strategy Session and we can review the best options for you – (877) AMAYERS.