Guest post by Alanna Ritchie
Unexpected emergencies are an inevitable, tragic and often expensive part of life. The recent flooding in Colorado destroyed more than 1,800 homes and caused property losses of nearly $2 billion statewide. What would you do if your home had been affected?
For expenses that you do not want to put on a credit card and cannot be covered by selling personal items or borrowing from the bank, you may be able benefit from investments you've already made.
Do you have CDs?
Cashing in a CD before it matures means paying an early withdrawal penalty, but if interest rates are low at the time, you may not lose much of your investment and you will have cash in hand.
Do you have bonds and stocks?
Bonds and stocks are investments you may have to part with in order to handle your current situation. Bonds may be sold with minimal tax consequences. Selling stocks also can provide access to cash, and even if you are getting less than you originally paid, you can claim a tax deduction for those losses.
Can you borrow from your life insurance policy?
If you have had your life insurance policy for a few years, you may be able to borrow up to 95 percent of the policy's cash value at a low interest rate. You can either begin repaying the money – which is essentially a loan to yourself—once you get back on your feet, or take the loss and rely on other assets to provide for your heirs.
Do you have an annuity?
Similar to a life insurance policy, you can access money saved for the future in an annuity to help you in an emergency situation. Although you will face a surrender charge and fees, some people may choose to take money from an annuity, rather than taking out new loans.
Depending on the type of annuity you have, how long you have had it and the amount of money you have already put into it, you may find that selling a portion of the annuity can cover your present needs.
Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.