
Current times are hard. The unemployment rate is higher than it has ever been. People are being displaced and finding it difficult to make ends meet. Not only are we suffering financially, but we are suffering emotionally and spiritually as well. Unfortunately, this is our current reality.
When it comes to paying our bills with a limited income, it can be difficult to find a way to do just this. Sometimes it’s a toss up between paying the electricity bill and paying the rent/mortgage. It sucks and the stress of a financial burden really stacks up quickly.
It can be easy to take advantage of some “fast money” opportunities when your livelihood is at stake. However, most of these “opportunities” are very deceiving and can actually help you dig a bigger hole for yourself. Below are 5 things you should never do when you’re desperate for money.
1. Pay Day Loans
Run, I repeat, run as fast as you can away from these. A pay day loan is essentially exactly that. It is a small, temporary loan designed for you to repay on your next pay day. Here are obvious reasons why these may be a bad idea.
- They are a temporary band-aid for your current financial situation. Most pay day loans range from $100 to $500. Once you receive the money, you are expected to repay it (including interest & fees) by your next payday. Basically all you are doing is pushing your current, financially-strained week out another week. It doesn’t solve the problem, it just delays it.
- They will cost you. The finance charge for most pay day loans range from $10 to $30 per $100 borrowed. That equates to almost an annual APR of 400%! Not only will a pay day loan not help you in the long run, but you will have to pay above and beyond just to get it.
2. Car Title Loans
A car title loan is a loan you can place against the title of your vehicle. These can range from $1000 and upwards of $20,000 in some instances, depending on the valuation of your vehicle. Even though this type of loan allows you to receive a good amount of money, you will have added costs and risks.
- You will have a new monthly payment added to your expenses. Car title loans require you to make monthly payments towards your loan. The monthly amount is determined on the amount you borrow and your interest rate. Most APR’s for car title loans are at least 300%!
- You may still owe money on your loan, even if you make all of your monthly payments on time. Some car title loans will establish your monthly payment based on interest alone. This means that you would have to pay more than your monthly payment in order for your principal amount to be reduced over time.
- You are risking your transportation. Yes, car title loan companies can repossess your vehicle if you fail to make a payment. If your vehicle is the only transportation you have to and from work, then this can really put you in a bind if you fail to make a payment on your loan and your vehicle is repossessed.

3. Cashing Out Your 401K
It’s your money and it’s just sitting there. So, why not use it? Cashing out your 401K is not a smart financial move unless the situation is truly an emergency (foreclosure, eviction, etc.) Here are some reasons why you should avoid doing this at all cost.
- The main reason is taxes. Any money you withdraw from your 401K is subject to tax. However, if you make this withdrawal before age 59 1/2, Uncle Sam will tax you an additional 10%. Let’s say you withdraw $20,000…that means you will pay an additional $2,000 in tax on top of the standard tax. It’s not worth it.
- You’re putting your retirement in jeopardy. 401K is meant to help build a financial nest egg for you and your family once you retire. Dipping into it now is only decreasing the amount you will have available for the future.
4. Disregarding Interest Rates
Obtaining a personal loan may be the financial solution you are considering. However, you should not take out a personal loan without considering the interest rate and what it will cost you in the long run.
I am not saying that taking out a personal loan is bad. What I am saying is that you need to consider a few things prior to taking out a personal loan. Sometimes this is the only immediate solution to your financial dilemma. However, you need to ensure you are making an informative decision when selecting a loan. Here are some things to keep in mind:
- What is the interest rate? Knowing how much this loan is going to ultimately cost you can sometimes be the deciding factor on whether or not it is worth it.
- What are the terms? Listen, you don’t want to be paying a high-interest loan back for the next 10 years. Make sure you understand the terms and what your financial commitment is.

5. Doing Absolutely Nothing
Some will argue that doing nothing when you are desperate for money will ensure that you do not get further and further into a bind. However, doing absolutely nothing is just that…nothing. This means nothing changes. The current financial burden you are experiencing isn’t going to change. The stress you are going thru isn’t going to change. Doing nothing makes sure nothing changes, positively or negatively. I found this in the New Yorker and thought it was an interesting perspective.
So, what should you do? This depends solely on the amount of money you need and how soon you need it. If you are just looking to bring in a few extra hundreds dollars a month so pay a couple bills here and there, you can add some passive streams of income. They are fairly easy to implement and some require virtually zero effort from you. Here are some passive streams of income you can start using today to help generate extra income.
What if you need a large amount of money immediately? Here are some ideas on how I would approach this situation:
- Ask family or friends for a loan. I know some people don’t like the idea of borrowing money from friends or family, but when you are in an emergent financial situation, this may be the best solution. Borrowing money from friends or family is generally interest free and repayment time is dependent on what you both come to terms with.
- Selling items that you no longer use can help you get the money you need. I am talking about more than just old clothes and shoes. Think bigger. Is there a bike in your garage that you haven’t used in years? Is there an old Playstation or Xbox that’s taking up storage space? Do you have designer purses that you don’t use? High ticket items can generate fast income for you when sold on platforms such as Facebook Marketplace or Craigslist.
Put an End to the Desperation
We all run into financial hardships from time to time. It is important to plan for the future right now in order to prevent or lessen the impact of these types of hardships. Here are some things to think about implementing to secure your financial future:
- Pay off debt. Being debt-free is a blessing in itself and is totally attainable even if you’re flat broke. You can learn exactly how to pay off debt when you have little to no money.
- Learn how to save money. A successful savings plan is more than just a piggy bank. Learn how to become a savvy saver in just 5 simple steps.
- Start a budget. Figure out what you have coming in and what you have going out. Sometimes sitting down and seeing it all written out can be a huge wake up call. For example, when I started my very first budget, I was able to see that I was unnecessarily spending $165 a month. That was a huge savings for me!
I know how stressful it can be when it comes to money. I think now, more than ever, more people are facing financial hardships and do not know where to turn. My hope is that this information is able to help someone arrive at a solution to help them during this difficult time.

