Have you ever been strapped for cash? Perhaps you took a payday loan, sold a long-term asset or even made an early withdrawal from your 401(k). And chances are, you’ve later regretted it.
This is the situation the City of Chicago finds itself in — and the cost may have been billions.
Privatizing public infrastructure is a growing trend among cash-strapped cities that need fast revenue. Back during the 2008 financial crisis, Chicago was broke and needed to raise money. Rather than make the unpopular move of raising property taxes, then-mayor Richard M. Daley chose to privatize public assets.
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“If we didn’t have money for a long-term debt, you’re talking about a serious economic crisis then for Chicago,” Daley said at the time, according to NBC 5 Chicago.
So, Chicago City Council struck a deal to lease the city’s 36,000 parking meters to investment consortium Chicago Parking Meters LLC, a group of global investors led by Morgan Stanley.
The investors paid nearly $1.157 billion to receive the revenue from the meters for 75 years — and the city must reimburse them whenever the parking meters are taken offline, such as for festivals or construction.
A lesson in ‘worst practices’
The deal was essentially rubber-stamped 40-5 in favor by the council, which had only a few days to review it before voting — turning out to be what the Better Government Association later called “a lesson in ‘worst practices.’”
Soon after, a report issued by the then-inspector general found the city was paid at least $974 million less than it could have made from operating the parking meters itself over the term of the deal. While an analysis done by 32nd Ward Alderperson Scott Waguespack — who voted against the deal — found the deal could have been worth $5 to $10 billion, reported NBC 5.
Now, a 2024 audit by accounting firm KPMG has found that, with another 58 years still left in the agreement, the private investors have already recouped their initial investment. In 2023, the meters generated a record $160.9 billion in income, bringing the total income from the start of the deal to $1.97 billion.
“It’s just one of those deals that I would beg people never to replicate anywhere in the United States,” Waguespack told NBC 5.
Still, many Americans can relate to the situation that faced Mayor Daley. When we’re desperate for funds, we can make rash decisions that negatively affect our long-term financial health.
Almost 4 in 10 (37%) U.S. adults would not be able to cover a $400 emergency expense with cash savings, according to the Economic Well-Being of US Households in 2024 report from the Federal Reserve Board of Governors. And while many of these people say they could cover the expense some other way, such as using a credit card, borrowing from family or friends or selling something, 13% would not be able to pay the expense by any means.
About 58% of Americans are “living paycheck to paycheck and experienced a cash emergency in the past 12 months,” according to The 2025 Cash Poor Report from peer-to-peer lending platform SoLo Funds.
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Be careful how you raise funds
These “cash-poor” Americans may not be who you think they are. Forty percent have a full-time job and one in seven cash-poor households earn more than $75,000 per year. The top unexpected expenses, according to the report, are auto repairs, medical bills and utility bills — common expenses that can happen to any of us.
To cover these expenses, some may turn to short-term financing options that could end up costing them more money in the long term. For instance, buy now pay later (BNPL) services come with an average borrowing cost of 23%, according to The 2025 Cash Poor Report, which can increase substantially if the borrower incurs repeat late fees.
Another option is a payday loan, which is one of the most expensive ways to borrow. The industry average cost of borrowing for payday loans is 35%, according to the report, but origination fees, late fees and processing fees can push this as high as 49% of the principal borrowed. Increased borrowing and missed payments can also affect your credit score, which in turn can limit your future ability to borrow.
People might also look to sell long-term assets such as stocks, bonds or mutual funds, but this too can have long-term financial costs. If you’re 30 years from retirement and sell $10,000 of an asset today that’s earning 7% per year, then you’ll have about $76,000 less when you retire due to the loss in compounding interest.
Plus, research has shown that time out of the stock market can be costly — and missing the best days in the market can be devastating to your long-term returns. And, if you make an early withdrawal from a tax-deferred account such as a 401(k), you’ll also pay a 10% tax penalty.
To avoid high-cost borrowing in an emergency or cashing out long-term investments during a downturn, start by building an emergency fund that could cover unexpected expenses. A rule of thumb is to have three to six months’ income in an accessible account, such as a high-yield savings account.
While desperate times may call for desperate measures, it’s worth consulting with a financial advisor (or a free counseling service) to discuss your options before getting saddled with debt or selling long-term assets.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
