Need Cash? Where to Find It Fast.

A dozen timely ideas on how to pay unexpected bills and weather tough times.

By Mary Beth Franklin, Senior Editor

Stacy Rapacon, Reporter

From Kiplinger's Personal Finance magazine, December 2008

Suddenly, the traditional wisdom of putting aside cash for an emergency seems more important than ever. With economic storm clouds brewing, it makes sense to have three to six months' worth of living expenses -- even more if you can manage it -- tucked away in a safe place. In the meantime, read on to discover more ways than you probably ever imagined to turn your hard assets into cold cash if you need to.

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1. Sell investments
The whole point of establishing an emergency fund is to avoid selling stocks and mutual funds in a down market. But if you must sell, you can raise some cash and lower your tax bill at the same time. Sell losers in your nonretirement accounts by year-end and you can use your losses to cash in an equal amount of investment gains tax-free. Then, you can use your losses to offset up to $3,000 of ordinary income and carry over excess losses into future years.

2. Take out a margin loan
What if you have investments that you don't want to part with? You can borrow up to half the value of your taxable investment account. But this could be a risky strategy in today's volatile market, warns William Jordan, head of Sentinel Capital Management, in Laguna Hills, Cal. A decline in your portfolio may boost your loan-to-account-balance ratio above the 50% limit. If you can't satisfy your broker's demand to deposit more money to boost your account balance, you may be forced to sell even more assets to cover the margin call.

3. Tap your home equity
Of course, the best time to apply for a home-equity line of credit is before you need it so you can hold it in reserve. And many homeowners with existing home-equity lines of credit have seen them reduced or frozen, reflecting declining home values, says Keith Gumbinger, vice-president of HSH Associates, which analyzes consumer-lending trends.

But you may still be able to establish a credit line -- as long as you have more than 20% equity in your home, steady income and a credit score of about 720 or higher, says Gumbinger. Your best source for a loan may be a local bank, a savings and loan, or a credit union that wasn't affected by the subprime-mortgage fiasco.

4. Research government aid
New homeowner Robert Wheeler escaped the wrath of Hurricane Ike when he evacuated Kingwood, Tex., near Houston, in September, but his house didn't. When he returned, he wasn't prepared to cover the $3,000 deductible on his homeowners insurance to deal with the fallen trees that destroyed his garage and damaged his house. "I had only about $500 set aside for emergencies," Wheeler says. "And a lot of contractors won't take credit cards. They want cash upfront."

Ineligible for a home loan or line of credit due to increased equity requirements, Wheeler, 28, was thrilled to learn he could apply for a low-interest loan from the Small Business Administration. Despite the name, you don't have to own a business to qualify. Homeowners and renters in declared disaster areas are eligible for loans of up to $200,000 to repair or replace damaged real estate and personal property. In some cases, interest rates are less than 3%. For details, go to www.sba.gov and click on "disaster assistance." To investigate other government aid, go to www.usa.gov and select "benefits and grants."

5. Boost your take-home pay
If you received a tax refund last year and your financial situation hasn't changed substantially, too much tax is being withheld from your paycheck. Try our easy-to-use calculator to figure the correct number of allowances you can claim to boost your take-home pay. You may also want to readjust your withholding allowances if you got married, had a child or bought a home this year. If you qualify for some of this year's new tax breaks, such as the $7,500 tax credit for first-time home buyers or the $500 property-tax deduction ($1,000 for joint filers) for homeowners who don't itemize, get a jump on lower taxes now by filing a new Form W-4 with your employer.

6. Cash convenience checks
You know those blank checks credit-card companies send you in the mail? Instead of chucking them, consider cashing them. But be careful, says Gerri Detweiler, credit adviser for Credit.com. "If you slip up and miss a payment, even by a day, you could see your interest rate skyrocket," she says.

Be sure to read the fine print and watch out for fees, which recently were as high as 4% of the transferred balance. That's $200 you'd have to pay upfront to cash $5,000. When you get a sheet of checks in the mail, carefully review the terms on each check. One might offer a 0% annual percentage rate for six months, while another may carry a 6.99% rate until the balance is paid off. The higher-rate offers are becoming more common, says Detweiler.

Still, if you're careful and you know you can pay back the loan before the promotional offer expires, credit-card checks can be a good deal. "Make a photocopy of the offer and keep it with the bills so you have a record of what you were promised," Detweiler adds.

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