Dear New Frugal You,
Help! We've been hit by a couple of big unexpected bills. They've wiped out our savings and maxed our credit cards. We need to raise some quick cash. Do you have any ideas that could help us bring some cash into the house quickly?
You're not alone. Most of us have faced a cash crunch at one time or another. So let's discuss some ways that you can solve your cash crisis. Some are likely familiar, but some you may not have thought of.
An obvious answer is to sell some stuff. With Craigslist and eBay it's easier than ever to get some real cash, quickly, for items of value. We're not talking garage sale stuff here -- although that can sell well, too, if packaged in groups. Things like dolls from your collection or that old '50s-style lamp could bring in more than you think.
Look around your home with an eye to finding saleable items. Pay special attention to the corners of closets and in the garage and attic. After all, that's where you tend to stick things that you don't use anymore.
If your cash problem is temporary you might consider a pawnshop. The modern shop has changed dramatically in the past few years. Yes, they still loan money on "hocked" items, but you'll find that most are very well-run businesses. They know what your item is worth and what they can lend on it. They'll also clearly tell you what the loan will cost you in interest and charges.
Keep in mind that your item secures the loan. Don't pawn items that you can't afford to lose if you're unsure about repaying your loan. Jewelry and electronics are often your best items, but it can't hurt to ask about anything that you're not using regularly.
Another place to look for quick cash is in deposits you have made and unclaimed funds. Often when you move into a new house or apartment you'll be asked for a deposit to get your utilities connected. Although they don't publicize it, many will return your deposit after a year or two of regular on-time payments. A couple of quick phone calls to your utility companies could be productive.
Finding unclaimed funds is a bit more of a long shot. In our fast-paced world it's not uncommon for people to forget utility deposits, abandon small retirement accounts or have inheritances that they don't even know about.
States generally require that after a specified time, unclaimed funds be turned over to them for safekeeping. They also have a listing that you can search to see if any of that money belongs to you. You can do a search for unclaimed property; check any state that you've lived in.
You've probably already thought of this one, but it might be time to get a temporary second job. It's a tough job market, and you may not earn as much as you'd like, but any dollar that you can apply to your debt will lower the balance. Another opportunity is to create your own source of self-employed income. If you're good with home repairs, perhaps you could earn some extra cash by helping less adept neighbors with their "honey-do" lists. Think of any skill that you have (baking, sewing, lawn care, carpentry, etc.) and consider how you could use it to make money. If it's something you like, you'll even enjoy the work.
If you think that you can dig out by next spring, you may want to increase the number of dependents that you claim at work. That will reduce the amount withheld from your paycheck. You'll still owe the same in taxes, so be prepared to write a bigger check next April, but you will have created a short-term cash flow. Your HR representative will be able to provide you with details.
Finally -- and it is probably a last resort -- consider borrowing from friends or relatives. Make sure you write out a loan agreement promissory note. Include how much was borrowed, what the interest rate will be, how often payments are to be made and what happens if the payments aren't made on time.
I hope your cash crunch will be short-lived and you'll have your finances in better shape soon.