Q: I’ve had a financial emergency and I don’t know how to pay for it! What are my options?

A: Ideally, you’ll want to have an emergency fund in place. If you don’t, consider these options…

1.) Credit cards

Using one of your SDFCU credit cards is super-convenient. You don’t have to wait for approval, take on another source of debt, or even think about paying it back until later. Plus, when you use an SDFCU credit card, you also earn rewards so you get something back for your money. While SDFCU has low-interest rates, make sure you understand your rate for whatever card you choose or you could end up owing a lot more money than you borrowed.

Also, credit cards make it easy to push off paying what you owe by only requiring a minimum monthly payment. So just make sure when you use it for an emergency you have a plan to pay off the expense. If you don’t already have an emergency credit card, consider opening an SDFCU Credit Card.

2.) 401(k) loans 

Borrowing from your 401(k) should only be a last resort for those who won’t qualify for another loan. 401(k) loans will affect your future in ways other loans will not, so experts only recommend this choice if you are secure in your job and the money will be used for a sound investment.

Also, the payments for the loan will be taken out of your future paychecks, so be sure you can afford to bring home less regular income. 

3.) Friends and family 

For many, borrowing from friends and family is the obvious answer to financial emergencies. But, it can get sticky, fast. Use these guidelines to avoid disaster:

  • Have a clear repayment plan in place, and be sure you can stick to the set timeline.
  • Create a shared contract detailing the loan terms and the repayment plan.
  • Consider having a third party witness the loan and sign the contract.
  • Always try to keep your financial and personal relationship separate.

4.) Personal loans

Personal loans can be granted for nearly any reason, and you’ll usually have the funds in hand quickly. This also comes with the benefit of one lump sum of cash and predictable monthly payments. Unfortunately, most personal loans come with high-interest rates. As a member of SDFCU though, you have access to personal loans with very affordable rates.

If you think a personal loan sounds right for you, you can apply online, call us at 800.296.8882 or just stop by an SDFCU branch location today. We’re always here to help!

Building an emergency fund

Start building your emergency fund today, so you’re never stuck in a tight spot again.

  • Start by opening an SDFCU Custom Savings Account and name it “Emergency Fund.”
  • Create a goal for your fund. Ideally, an emergency fund should be able to cover your living expenses for three to six months.
  • Review your monthly budget to find places to cut back.
  • Determine how long it will take you to reach your goal by allocating the saved money to your emergency fund.
  • Set up automatic monthly transfers from your Basic Checking Account to your Emergency Fund or set up direct deposit for a portion of your paycheck to go into savings.

From here on, you’ll be prepared for anything!

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