No matter how carefully you manage your expense and try to plan ahead, unexpected expenses happen. Maybe you suddenly need money for a new HVAC system for your home or a major car repair; or you may have need unexpected medical procedure, or to travel out of town due to a family emergency. Things in life don’t always go as planned and the fallout can be costly! Her are a few tips to help you prepare for and bounce back from unavoidable, unexpected expenses.
Plan Ahead with a Rainy Day Savings Fund
Ever heard of the old saying, “pay yourself first?” Well, there’s quite a bit of wisdom in that. Make a habit of setting aside a small portion of your earnings whenever you get paid toward a separate “rainy day” fund that’s just for emergencies. Commit to setting aside any amount you can afford – whether it’s 20-percent or five dollars of your weekly pay. As long as you’re consistent it will all add up more quickly than you might expect.
The term, “rainy day” fund may be somewhat old fashion, but the concept is as relevant today as ever. Preparing ahead and having the money you need for financial emergencies puts you in a much better position to handle a crisis with minimal disruption.
Borrow Money from Friends or Family
If you find yourself facing an unexpected expense with now emergency fund stashed away, you may be able to call upon family and friends for help. It’s important to keep in mind that most folks don’t like being put in the position of loaning money to loved ones. Money issues can obliterate relationships.
If you need to borrow money from a loved one, it’s best to approach them with a plan in place for when and how you plan to pay them back. This lets the person know that you value the relationship enough to plan out possible repayment terms. Be completely honest about how and when you will repay the money you borrow. If someone lends you money, they likely believe you are sincere when you commit to paying it back. Depending on the amount you borrow, you might even consider drafting a contract agreement detailing the terms of the loan for the protection of both parties.
Borrowing money from friends and family is a highly-sensitive situation for all parties involved. Some people have strict rules against loaning money to loved ones in an effort to avoid fracturing relationships. If you ask someone to borrow money and they say no, respect their decision without question. Thank them for their consideration, and consider another option.
Keep a Credit Card for Emergencies
You may consider getting and keeping a credit card for emergencies only. When you’re short on cash, and an unexpected expense pops up, you can use your credit card to defray the costs. A credit card for emergencies means you don’t have to spend every bit of your cash on your expense. Pay with the credit card and pay the balance as quickly as you’re able. Another plus: making timely payments toward the balance of your purchase helps boost your credit score!
Apply for a Loan
When all else fails, the only option left to you may be to apply for a loan. Applying for a personal loan though your bank or some other financial institution has become more complicated than in the past. Among the list of prerequisites borrowers must meet include a target credit score and income, and stable employment (employment for a specified amount of time). Approvals can be few and far between and can take days or weeks to finalize, depending on the institution.
A less complicated and faster alternative is to apply for a title loan. You can qualify for a loan of up to $10,000 if you own your car free and clear. You don’t even need perfect credit to qualify. You can have the money you need in as little as 30 minutes and you get to keep driving your car. There are lots of title loans out there, but the safest option is to go through a reputable company, like TitleMax.
Kelley Luther is a freelance writer who loves writing about money tips and budget advice for millennials. She lives with fellow freelance writer and husband, Mark, and their two Border terrier “children”, Ted and Tim.