It is one of the emptiest feelings we experience in life: the possibility of receiving an eviction notice, with no other place to live. The prospect of homelessness creates a sense of desperate urgency. The clock is ticking to the first of the month, and the only way for you to meet your monthly housing obligation is to find a source for emergency cash to pay rent.
After World War II, the housing boom in the United States created a rapidly growing middle class. The American dream consisted of owning a home and with the dream came record home ownership percentages that lasted well into the late 1990s. After a gradual decline in home ownership at the start of the new millennium, the percentage of Americans that owned homes dramatically decreased after the Great Recession of 2007 and 2008.
The housing meltdown triggered what many real estate agents referred to as the “Great Reset,” which consisted of a change from home ownership to renting homes and apartments. With a mass shift in population toward the big cities, renting became the only viable option for a vast majority of Americans. Real estate website Trulia released a report that examined the mass shift from home ownership to renting homes and apartments. Between 2006 (right before the financial meltdown) through 2014, the percentage of renters in the United States climbed from about 36% to a little more than 42%. Every one of the top 50 major metropolitan areas in America experienced an increase in the percentage of renters.
With more renters than ever, it is not surprising to learn many struggle to come up with the necessary funds to pay their lease.
There are several reasons why many renters have to acquire emergency cash to pay rent. A renter might be facing a “third strike, and you’re out” clause written into a rental agreement. The threat of eviction is reason enough to consider donating blood to keep a roof over your head. However, the cause that explains why many renters need extra money can be connected to financial decisions.
Let’s review a few sources for fast rent money, before diving into several personal finance tips that should help you stay on top of paying the monthly housing bill.
Although cashing in on one or more financial investments is not considered the ideal method for raising money, it is certainly a better option than pawning off your possessions that have sentimental value. You should liquidate the investments that generate the least amount of fees and penalties. Certificate of Deposits (CDs) are short-term financial instruments that give you access to enough cash to pay off current rent due and possibly another month or two. Remember that cashing in CDs, stocks, or bonds activate tax penalties. If you need funds to pay rent today, you should consider another source of income other than the liquidation of financial assets.
Whole life insurance policies owned for several years can build up enough equity for policyholders to borrow for a wide variety of reasons. Considered a type of short-term loan, borrowing from a whole life insurance policy does not trigger taxes or tax penalties. However, reducing the cash built up in a whole life insurance policy reduces the amount of a future payout. You can also cash out a whole life insurance policy, but you face tax obligations, as well as lose insurance coverage. If you owe rent in two days, borrowing against a whole life insurance policy is not a feasible option to raise emergency cash in a timely manner. You may be better off borrowing from a whole life insurance policy to pay rent for a few months down the road because you lost your job.
As a much quicker way to gain access to emergency cash, taking out an advance on a credit card balance can be a solid way to pay one month of rent. Credit card companies charge exorbitant interest rates for cash advances, and if you miss just one payment, you can expect to pay high penalty fees as well. An advance on a credit card might be a sound financial strategy if you need rent money tomorrow and you receive your next paycheck in a few days. After the paycheck lands in your checking account, make paying off the credit card advance your number one personal finance priority.
Similar to taking an advance on a credit card balance, a bank overdraft loan gives you access to the cash you do not have in your checking account. Although you cannot write a check to “Cash,” you can use bank overdraft protection to pay short-term obligations. Financial institutions charge high-interest rates on bank overdraft loans, which means this method for acquiring fast cash should be used only for financial emergencies. If you do not pay back a bank overdraft loan promptly, the financial institution can cancel your checking account.
A personal installment loan is one of the best options for obtaining emergency cash to pay rent. Installment loans offer flexible payback terms, as well as more cash than other options for acquiring emergency cash. Bank customers have used this method for decades to address short-term financial crises like paying rent on time.
Many personal finance experts say to use payday loans as a last resort. Nonetheless, a conventional payday loan might be your only option. Payday loan applications typically receive quick approvals because borrowers put paychecks up as collateral. Having cash deposited in your checking account brings a big sigh of relief, but the relief can turn into angst a week later when the high-interest rate payday loan comes due.
If you do not pay off the entire amount of a payday loan, you can expect to fall into a dangerous cycle of taking out one payday loan to pay off the previous payday loan. If you face eviction and you do not have any other resources for cash, then a payday loan might be your only option for emergency cash to pay rent.
The most effective strategy for avoiding costly payday loans and other short-term loans is to address financial issues straight on before your landlord takes action. Avoiding the landlord does not stop the letters and phone calls demanding you uphold your part of a rental agreement.
You have to be proactive by first talking with your landlord and creating a realistic monthly budget. There are additional ways to handle falling behind on rent that include seeking emergency financial help from friends and relatives, as well as generating income from additional sources.
When you fall behind in paying rent, you have to do much more than simply raise the cash to stay current with your landlord. Chances are the emergency cash to pay rent will represent a late payment, which means you must communicate with your landlord to prevent any action that initiates an eviction proceeding.
Landlord and rental property owner Mike Catania says keeping your landlord informed about paying rent goes a long way towards easing tensions. He said that a one-time late payment is not going to be a major issue for most property owners as long as the resident is honest and upfront about the problem, giving as much notice as possible.
Living from paycheck to paycheck creates tremendous stress to ensure every vital living expense is met week to week and month to month. As the largest monthly expense, rent should be the first itemized expense you list in a personal budget. Whether you pay rent on the first of the month, during the middle of the month, or on the last day of the month, it should be the first thing you write down. Every other expense, including car and credit card payments, revolve around what you owe for rent.
By creating a budget, you can see where you should cut expenses to produce more money for the most important payment of the month. You can cut back on entertainment expenses by forgoing movie theaters for more affordable at-home movie downloads. Dining out also consumes a large chunk of a monthly budget. Until you establish more stable personal finances, treating yourself should remain limited to making sure the landlord gets paid promptly every month.
Most landlords value renter stability, which means although you have hit hard financial times, your landlord might be willing to move you into another apartment owned by the same company that costs you less in rent. As a property manager and author of The Loan Guide, Casey Fleming has simple advice for renters going through tough times. He says that you need to be willing to live within your means, whatever those means may be.
Many cases of late rent can be prevented by generating income from other sources than your primary job. For example, you can hold a weekend garage sale to liquidate assets you no longer use. The extra cash not only helps you raise emergency cash for rent one month but also gives you the financial flexibility to at least pay part of next month’s rent.
You might experience a temporary loss of hours at your primary job or even received noticed the company wants to transition you from full-time to part-time employment. Whatever the reason for the loss of income, you need to find another source of income to make ends meet. A second job helps diminish the financial sting of working fewer hours at your primary job. One of the best second jobs is working in a tipped service position at a restaurant. Most restaurants allow servers, bussers, and bartenders to take home cash tips daily, which helps pay for gas and food while keeping the monthly rent payment intact. Taking on an odd job, such as cutting grass or shoveling snow, represents a sometimes effective way to close income gaps.
Finally, do not hesitate to seek assistance. Loss of a job should make you eligible to receive unemployment benefits. Contact credit card companies to request the temporary lowering of your minimum monthly payments. If you owe money on a student loan, apply for a deferment to place a pause on your monthly payments.
Many, many people who were once in your exact situation were able to find a way out. We hope our tips will help you chart a similar course.