SALT LAKE CITY, Utah — In a report released last year, the Federal Reserve found 40 percent of Americans lack enough savings to cover an unexpected $400 bill.

This year, the partial government shutdown showed how desperate some federal employees were to raise cash to pay bills. Federal workers appealed for help on the crowdfunding website GoFundMe; they went to food banks, and some tried to cover their expenses with either part-time jobs, or freelance work.

There are a number of ways to raise emergency cash, but financial planners said some are better than others.

Payday Loans

Daniel Love shares his experience with payday lenders.

Daniel Love, 27, found himself with a budget that just didn’t work.

“My rent is $960, my car payment is $125, my gasoline bill runs between $50 and $60,” said Love.

His expenses often outpaced his monthly income of $1,800. He turned to payday lenders to make up the shortfall, but he couldn’t afford to pay them off right away. The interest quickly ballooned.

“Four hundred percent, holy crap,” said Love.

Rolling over the loans kept pushing up his balances, until he owed nearly $2,000. He eventually turned to a credit counselor to help him consolidate his debt and pay off the loans.

Love said he won’t turn to payday loans again.

“Because once you get into that cycle, once they get their meat hooks into you, it’s very hard to break that cycle,” Love said. Leia mais →