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Have plan ready for quick cash if disaster hits Avoid dipping into retirement funds


When disaster strikes, it pays to have a financial plan already in place should you need quick cash.

Trouble can come in many forms, including a major illness or sudden unemployment.

If possible, avoid dipping into retirement funds, selling securities or cashing out life insurance policies, said Ted Diaz and Gary Damen, financial planners with IDS Financial Services Inc., in Minneapolis.

The wrong move could compound the disaster by wrecking your plans to retire, send a child to college or buy a home.

Consider these alternatives:

* An ill-timed sale of stocks or bonds can generate investment losses and tax problems. Instead, turn your assets into cash by borrowing against them. That goes for cars, jewelry and investment properties.

* Your best bet may be to borrow from a family member or friend. But if the loan is greater than $10,000, the lender must charge a reasonable amount of interest, according to federal tax laws.

* Check with your employee credit union. Because credit unions are non-profit, they often make loans at below-market interest rates.

* As a last resort, get a cash advance from your credit cards, especially if you think you can pay off the bill in time to avoid excessive interest charges.

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