Sometimes you just need more money—we all do sooner or later.
It could happen because you’re hit with a flood of very large and unexpected expenses. Medical bills, legal fees and major home repairs are some of the expenses that come to mind.
It can also come as a result of an income disruption.
The loss of a job, or of certain employment related income sources, such as bonuses, overtime or commissions. You may also decide to leave a steady job to start your own business and that will require money, not only for business investment but also for living expenses for the first few months.
At a time when credit is so available, there can be a temptation to tap credit lines to cover the losses. You might do that with the assumption that you’ll be able to pay them all back when your expenses have passed or when your income goes back to normal levels. But we should never assume that.
One of the problems with tapping credit to cover living expenses is that once you get comfortable doing it—or other options fail to develop—you run the risk of maxing out your credit lines. That’s easier to do than you might think.
Once you max out your credit lines, you’ll have a new set of problems to deal with.