If you are going into 2021 on financially shaky ground, you don’t need anyone telling you to shore up your emergency fund. Like many, you may have had to tap into it in the past year, and you might well be running on fumes.
You need practical, actionable advice that you can take, even if you don’t have the cash for a bankruptcy attorney — yes, even going broke costs a pretty penny. Please consider the following eight options if money is tight in the new year.
1. Deferring Student Loans
Despite well-meaning platitudes by some politicians, don’t look to the government for student loan relief anytime soon — at least, without asking for it. While few circumstances qualify for loan forgiveness, you can get a temporary reprieve from overwhelming monthly payments.
You can defer your student loans for many reasons — including short-term economic hardship. If you are among the long-term unemployed, you might consider forbearance. The primary difference is that no interest will accrue in deferment, while the latter option keeps it accumulating.
2. Mortgage Forbearance
If you own your home, count that among your blessings — you have many more options than tenants facing the end of eviction moratoriums thousands in debt. If you lost your job and haven’t found another, consider a mortgage forbearance to stop payments temporarily.
Much like a student loan forbearance, your interest continues to accrue — but at least you get a tax deduction for your pain. Depending on your lender, you’ll either have to pay everything back in one lump sum or tack more payments to the end of your mortgage period. Fortunately, forbearance won’t affect your credit score — it’s a far better temporary measure than not paying and risking foreclosure.
3. Early Withdrawal
Few people like to do it because of the tax penalty, but you can consider taking an early withdrawal to cover emergency expenses if you have a retirement account. While it stings to pay that 10% ding come April 15, it pales in comparison to the hardships that evictions can create. You might struggle to find another suitable rental with a record.
Please remember that you have 60 days to reinvest the money in another qualified account to avoid the penalty. This measure might make an excellent stop-gap if you lost work, have a new job starting in 2021, but just need a little extra to get through the holidays.
4. Investigating Consolidation
Another way to save yourself considerable money is by consolidating your debt. You have several options for doing so. If you make multiple student loan payments monthly, talk to each lender about options they have available.
You might also consolidate credit card debt with a personal loan. Please be advised that some programs offer teaser rates — if you can’t repay the loan in a short time, your monthly payment could dramatically increase. Plus, if you go back to using credit when times remain tight, you probably paid extra fees for nothing.
5. Talking to Family
Maybe you haven’t spoken to your folks since your dad got heated and tossed the sweet potato pie at the wall five Thanksgivings ago. If you haven’t gotten to the “you are no longer my family” stage yet — and perhaps if you have — why not try to make amends?
Take this step only if you genuinely want to reconcile — making nice solely to get cash could backfire and further damage your already strained relationship. Please emotionally gird yourself before making the ask. Even if you aren’t close, it can still sting when blood relatives turn you down in your time of need.
6. Tackling a Temporary Gig
As much as you might dream of success with a solo business, the time to take risks isn’t when you are flat broke. You might have to take a temporary gig — or four — to make ends meet while you seek suitable employment that pays enough to cover your bills. Now is the time to screw your courage to the sticking point and do what you must to survive.
However, keep your eye on the prize and strategize as much as possible. According to research from MIT, it takes $68,808 in income each year to equal a living wage in America. If you exhaust all your energy running from one low-wage job to another, you won’t have the time or attention to detail left over to score a better gig — save some spark for the hunt.
7. Donating Plasma
If you are healthy, you have one way of making at least a little money each month. Blood donation centers desperately need plasma, and many will pay you.
According to the American Red Cross, you should donate no more than 13 times a year, although the FDA permits more frequent draws. Always take precautions to avoid dehydration and lightheadedness by drinking up and eating a hearty meal before donating, especially if you do so more often.
8. Starting a GoFundMe
Please don’t feel like a failure if you have to resort to a GoFundMe to finance unpaid hospital bills or raise money to pay your rent. The company’s CEO confirms that a third of all fundraisers go to medical expenses, so you aren’t alone in asking for help.
If you choose this route, be aware that you are opening yourself to the whims of the internet. There’s no guarantee that you’ll reach your goal — but you certainly won’t if you never ask.
Please Consider These 8 Options If Money Is Tight in the New Year
If money is tight this year, you have no reason to feel embarrassed. Please consider the eight options above to start 2021 on slightly less shaky financial ground.