Cars break down. Furnaces stop working. Emergencies happen. Sometimes you need a couple thousand dollars in a hurry, but according to a study from Bankrate, only 37 percent of Americans have enough cash on hand to cover a $500 or $1,000 emergency.
Credit cards can be useful when you need cash in a hurry, but with millions of Americans wondering how to avoid credit card debt, reaching for plastic is the last thing many people want to do. How can you come up with cash in a hurry to pay for an emergency without using credit cards? Here are some ideas to get you started.
How to avoid credit card debt
Sell your junk online
Finance blogger Adam Baker was over his head in debt, and couldn’t see a way out. Then he and his wife saw an unconventional path to debt freedom. They could sell their excess “crap” on Craigslist, eBay, and other platforms to turn their stuff into cash.
It worked, and they made over $6,500. Adam’s Man vs. Debt story resonates with so many people because we live in a consumer culture. We buy things, enjoy the thrill for a few minutes, then throw them in the back of the closet where they get dusty.
Look at your storage unit, attic, closet, garage, and drawers. I would be willing to bet that most of you have old electronics, collectibles, and other stuff that you can quickly sell to come up with enough cash to cover an emergency.
Pick up a side gig
Instead of lazing away your evenings in front of Netflix, considering using your spare time to take on some extra work. If earning money is a hobby and motivator for you, find odd jobs and gigs to make more money on the side.
Look to Martin Dasko as an example, who decided to try Uber as a way to earn extra income. He admits that it is far from passive income, but working on busy weekend evenings can lead to a great payoff.
No car? No worries. There are tons of ways you can earn on the side. Everyone has a skill that someone is willing to pay for. Whether you know how to code, use Quickbooks like a boss, or can knit like nobody’s business, everyone can offer a service or product that someone wants. Be creative, think outside the box, and turn your passions into cash.
Use savings, then replenish
Everyone should have an emergency fund—if you don’t, start saving now before crisis hits. It’s possible to start a savings fund even if you are still paying off student loans.
Most finance experts suggest having emergency savings that would cover three to six months of living expenses in the event you lose your job or something big comes up. Emergencies really can happen at any time. Case in point: Once I was driving home from work and my check engine light turned on; a few days later, I was buying a new car. Without emergency savings, I would not have had the down payment I needed.
The best way to save an emergency fund is automatically. If you don’t already have one, open a savings account. Talk to your employer’s HR department to find an option to split your direct deposit, or schedule an automatic transfer from your checking to savings account once a month. Each payday, a little more money will be deposited into your savings account. Even if it’s only $20 per pay period or 1 percent of your income, that balance will add up over time, and you’ll have it when you need it.
Once you pass your savings goal, you can use extra cash in your savings account for additional student loan payments or to start a Roth IRA.
Use a credit card, pay it off
Let’s say you do have enough cash in your savings account to cover the emergency. (Phew!) Does that mean using a credit card to cover the expense is a bad thing? Not necessarily.
As an avid travel hacker, I use my credit card to pay for everything. Each time I make a purchase, I get valuable miles and points that help me travel the world for a fraction of the price most people pay.
Credit cards are not all bad, and they can be used as a tool to help you achieve other goals. However, if you are going to use credit cards, make sure you have enough saved up to pay for the entire expense, in full, every month.
Credit card interest is expensive—typically three or four times higher than student debt. Don’t get stuck in an expensive trap with credit cards. Pay them off in full each month to avoid any interest charges and you can use credit cards worry-free.
Emergencies and unexpected expenses are stressful enough on their own. As you learn how to avoid credit card debt, these tactics for getting spare cash fast can solve your expensive problem without having to swipe your plastic.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|