Where to Find Emergency Cash Guidelines for Tapping Assets without Paying Too Much In Penalties

In a financial or medical emergency, family crisis, or a natural disaster, it can be challenging and costly to get the money you need to cope. Cashing in assets in a 401 (k), bank certificates of deposit, stocks, bonds, or an insurance policy comes at a price — in the form of taxes, penalties, or lost investment opportunities.

The editors of CRMA show how to put a strategy in place before a crisis hits. It might include some of the following steps:

• Cash in CDs first. If you need to get cash out of a CD before its maturity date, you’ll probably pay an early-withdrawal penalty, which can vary widely among financial institutions. Many banks charge about six months’ interest for taking your money out of a one-year CD early. But with interest rates as low as 3.6 percent, a 1.8 percent penalty is pretty low. That’s particularly true if you’ve held the CD for a half-year or more.
• Sell bonds, then stocks. Bonds are among the simplest and least-expensive investments to part with because you shouldn’t have much in the way of capital gains or losses to worry about. As a result, the tax consequences of the sale are usually minimal. Stock sales are a bit more complex, but you can derive some tax benefits from selling stocks while you raise the cash to meet your needs. For example, if you’re holding shares that are worth less than you paid for them, you can sell them and claim a tax deduction for your losses.
• Look to your life-insurance policy. If you have an insurance policy that includes a savings or investment component, its cash value grows with each premium you pay. After a few years, most insurers will allow you to borrow up to 95 percent of the policy’s cash value at reasonable interest rates. Because you are borrowing against your own policy, the loan needn’t be paid back, although if the interest isn’t covered, the insurer will take it out of the money left in your account.

WEB-BASED SHOPPING TOOLS FOR HOLIDAY BARGAINS

Buying gifts on the Internet has its advantages: You can quickly comparison shop for anything, any time of day, without leaving home. CRMA looked at some helpful tools on the Web sites of the 100 largest retailers:

RSS Feeds- RSS, or Really Simple Syndication, allows retailers to send Web pages with news about sales and promotions directly to your PC. Wal-Mart, for example, has multiple feeds, including price rollbacks, clearance, and upcoming music and video release dates. To use feeds, you need an RSS reader. Microsoft’s Internet Explorer browser has one built in. So do personal home pages like My Yahoo, My AOL, and iGoogle. They can be found at Best Buy, Circuit City, CompUSA, Overstock.com, RadioShack, Sears, and Target.

Widgets- These are store icons that you place on your computer desktop or embed on your personal Web page. Click on them to access the stores’ specials. You can download a widget from the retailer’s Web site, and some widgets can be installed on your iGoogle or Yahoo home page. They can be found at Charlotte Russe and Sears.

Cell phone sale alerts- If you’re always on the go, you can have text messages about sales sent to your cell phone. Or you can shop online with a Web-enabled cell phone by signing up at the retailer Web site. Century 21 Department Store, Sears, and Urban Outfitters offer cell-phone alerts. Amazon.com and Overstock.com let you shop by Web phone. And while you’re shopping in one store, FruCall.com lets you check prices at many others before you buy.

ENJOY A VACATION ON THE CHEAP BY HOME SWAPPING 

The slumping U.S. dollar and rising gas prices may have put a crimp in your travel plans. But according to CRMA’s editors, you can cut out the hotel bill by swapping homes with a family that lives where you want to go. You don’t necessarily have to own a home in a resort town or in the heart of a big city to successfully swap, either.

The right match makes all the difference. Start with the basics: Does the home meet your needs? Is it in the right area? Read listings on online home-exchange services including Digsville, HomeExchange, and Intervac in detail and look for house dos and don’ts, including pets, children, and smoking. To create a listing, write a description of your home, area, and lifestyle and include photos. Before agreeing to a swap, ask for referrals and read member comments.  Firm up plans by e-mail and phone calls. The only costs are exchange membership fees and perhaps a housecleaning service for before and/or after the swap.

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Consumer Reports Money Adviser is a monthly newsletter that answers tough money questions and provides expert financial advice. Its proven information and successful strategies make any financial decision an easy one. Each month, CRMA provides feature articles and helpful investment, savings, and spending advice that will prepare consumers for anything life may bring them.