Ducking the Financial Crisis Bullet

by James on October 7, 2013 · 6 comments

financial-crisisHi All,

Washington DC is smack dab in the middle of a second week of shutdown. Since Federal spending plays such a huge part of the U.S. economy, and since the shutdown does not appear to be ending anytime soon, there will inevitably be a negative impact on the economy.

What does this mean for you? Well, it’s not good. The abruptness of the shutdown suggests that a lot of companies could have their core business models disrupted. This means less spending, lowered family incomes and reduced economic activity. While the best estimates of the overall impact suggest it’s going to be modest (1), the economic ripple effects are going to have some impact on your pocketbook.

So, if you do get on the wrong side of the shutdown or if your financial circumstances dramatically worsen for some other reason, here are some ways to raise some fast cash

First, access your savings or cash out your assets:

1. Cash out savings
2. Get a second or side job
3. Sell your unneeded stuff (don’t forget about garage sales, craigslist or ebay)
4. Sell your stocks, bond and mutual funds in non-tax advantaged, non-retirement accounts
5. Cash out any unneeded life insurance policies

Second, borrow. In order of cost here are some borrowing options you could consider:

1. Friends or family
2. Workplace retirement accounts
3. Home equity
4. Peer to peer loans
5. Margin loans from a brokerage account
6. Unsecured bank loans
7. Credit cards

Whatever you do, don’t go to a Payday lender – those guys are the sharks in the ocean of personal finance. They’ll charge you a boatload of interest which can be difficult to get away from. Unsecured bank loans and credit cards can also carry hefty interest rates, so you should use these last.

Finally, if you need to work any of these steps because of financial hardship – good luck! A lot of people have gotten laid off over the past few years so you aren’t alone.



{ 6 comments… read them below or add one }

1 Crystal October 8, 2013 at 12:29 am

We haven’t felt the bite yet, but if we do, I hope it lasts less than the 6 months our emergency money plus side hustles would take us…

2 dojo October 8, 2013 at 2:53 am

Those who had their emergency fund set up can now breathe more relaxed. Sure, it’s not easy for them either, but at least they don’t take such a huge blow. For the others, these days are indeed a nightmare. Let’s hope it will all get back to normal and the affected people can recover fast.

3 Simon @ Modest Money October 9, 2013 at 2:31 am

Totally agree with Dojo here…emergency funds and plans (lines of easily accessible credit) are coming out shining during this time for those who have been adversly affected by the shutdown.
I suppose its also a wake up call for the rest of us to start stashing those e-funds away…one never knows.
Payday lenders are like the mafia…they never forget and they’ll get their pound of fresh however dire ones situation is! Best to steer clear off them by miles.

4 James October 9, 2013 at 7:59 pm

Crystal – thanks for the note. Some side hustles can be extremely lucrative. I also think they are great for reducing your reliance on a job.

5 James October 9, 2013 at 8:00 pm

Dojo,

For sure – thanks for the comment. I think everyone in DC is hoping that congress wraps up their negotiations soon.

6 James October 9, 2013 at 8:41 pm

Simon – the only downside to lines of credit is they can be quite expensive.

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