10 sources of emergency cash, ranked from best to worst

By Christine Benz of Morningstar If unanticipated expenses exceed your crisis fund here s a look at where to go next Your own emergency fund short-term securities Crisis funds should be held outside of tax-sheltered wrappers and include highly liquid investments like bank savings accounts money domain accounts and so on Low-risk assets in taxable account Next look at other taxable holdings investments in brokerage accounts outside the confines of tax-sheltered vehicles When identifying realizable securities that you could sell to raise funds focus on liquidity tax consequences and any commissions you ll owe Roth IRA contributions It s never great to tap your retirement assets unless you absolutely need to but the Roth IRA offers more flexibility and has fewer strings attached than other tax-sheltered retirement vehicles Specifically you can withdraw any Roth IRA contributions at any time without incurring penalties or tax but you ll have fewer retirement funds working for you Life insurance cash values Cash values that have built up in your whole life insurance or variable universal life insurance plan can be another decent source of crisis cash You can withdraw money outright and have it deducted from your program s face value Another possibility is to borrow from the cash value of your life insurance You ll owe interest on the loan and these rates can be reasonable but aren t dependably low k loan A k loan is better than a hardship withdrawal because the interest you pay will get paid back into your account On the downside borrowing from your k plan short shrifts your retirement savings Not only will you have less money working for you in the realm but having to pay the loan back with interest also means you re less likely to be able to make new contributions Home equity line of credit If you must take out a loan a home equity line of credit is one of the better options Interest rates on HELOCs are usually reasonable relative to other forms of credit particularly if you maintain a good credit rating have a fair amount of equity in your home and aren t taking out a huge loan But if you re not a perfect borrower you could be sought to pay a high interest rate or be denied the line of credit altogether Hardship withdrawals Unlike a k loan which requires that you pay the money back funds you take out of a k via a hardship withdrawal cannot be paid back Related Articles Homebuying options remain slim for middle-income earners Petitioned on Reddit How to stop obsessing about money The truth about these common banking myths How to cut spending without cutting out small businesses Facing tariffs should shoppers seek Made in USA goods Moreover you ll owe taxes on any untaxed dollars you pull out of the account You ll also owe an additional penalty unless you re age or older or your situation meets one of several exceptions Reverse mortgage A reverse mortgage allows older homeowners to receive a pool of assets that represents equity in their homes The homeowners don t have to repay the loan as long as they re in their homes but when they do leave the borrowed amount plus interest is deducted from the home s value Reverse mortgage rates can vary widely so shop around and read the fine print Margin loans A margin account allows you to borrow against the value of the securities in your brokerage account This option would be the majority attractive for those who have assets but don t want to sell them because that would mean unloading them at a bad time and or incurring tax consequences If you expect to be able to repay the money hurriedly a margin loan could work On the downside interest rates aren t unfailingly attractive They re also risky because the securities in your account are your collateral Credit cards This is usually not a great idea For majority people credit cards are the single easiest way to wreck your financial standing Not only are rates high but credit card companies have every incentive to keep you paying for as long as workable Thus minimum payments don t make a dent in your loan s principal This article was provided to The Associated Press by Morningstar For more personal finance content go to https www morningstar com personal-finance Christine Benz is the director of personal finance and retirement planning at Morningstar