Filed under: Borrowing, Debt, Retire
Late on rent? Loan shark breathing down your neck? Can’t fill your vehicle with gas to get to work on Monday? Assuming all available funds and traditional sources of credit are tapped out, here are 25 (legal) ways to raise cash in a few days. We list them in order from least to most desperate.
If you need quick cash, your retirement savings can look like a great place to find the lump sum you need, but tread carefully. There are many rules and if you don’t qualify for an eligible withdrawal you’ll have to pay a 10% penalty plus taxes on the money at your current income tax rate.
So suppose you need about $10,000 and are in the 25% tax bracket: in order to get that net amount you would need to withdraw $15,500. Of that amount 10% ($1,550) would go toward paying the penalty and 25% ($3,875) would go toward taxes, which totals $5.425. From that $15,500, you would be able to use $10,075. Let’s state you think you’ll have enough to repay that money in a couple of years. Forget about it. You can’t replace retirement funds you withdraw. You’ve lost the savings opportunity forever.
Now let’s suppose you kept the money in the account and invested it for 20 years at a return rate of 8%. That $15,500 would be worth about $75,000. You must consider whether it Is really worth it to you to lose that savings opportunity or do you want to find another solution for getting the funds together.
Continue reading Raising cash in a hurry #8: Raid your IRA
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