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A cash crisis isn’t necessarily avoidable, but it helps to be prepared
The average American family is deep in debt and largely unprepared for a financial disaster. You never know when a loss of job, sudden illness or natural disaster may occur, so it helps to have some sort of idea as to how to prepare for the day when you will face a cash crunch. Here are a few more tips regarding what you can do to prepare for a financial emergency.
We have previously pointed out that a home equity loan or line of credit is a good idea. It helps to establish that line of credit before you need it. The cost is minimal and if you lose your job you won’t be able to obtain one. Get it ahead of time before you need it.
- Something else to do ahead of time is to make sure your health and life insurance needs are met. It’s easier to take care of these things before you need them than to try to catch up when it’s too late.
- Avoid payday loans and other short-term predatory lending solutions. Payday loans or cash advance loans are set up to cater to people with financial emergencies but they are actually among the worst solutions to any problem. The interest rates are huge; sometimes running as much as 600% per year! The loan payments are due every two weeks and the interest continues to accrue at an astronomical rate if you don’t pay on time. Payday loan stores exist only to prey on those who are in dire financial need, but they make a bad situation worse. Avoid them at all costs.
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