One certainty in life is that nothing is certain, especially when it comes to your finances. Even if you are financially stable and manage your accounts well, you may come across an unexpected expense that disrupts your life leaves you feeling stressed and overwhelmed.
Some unexpected expenses that may come up include:
- A trip to the emergency room
- A sudden job loss
- Car issues out of the blue
- Home damage that needs quick repair
There are many quick funding solutions to these types of problems, but first you must evaluate the situation at hand.
Determine How Bad the Situation Is
No matter what issue may need tackling, you must keep a clear head and determine how much money you need. Take inventory of any savings you have, but do not empty your savings account completely. Make sure you leave at least three months of expenses in your emergency fund to take care of necessities.
If your savings are not enough, or you do not have any, consider acquiring additional financial support through other means. Calculate how much money you need to handle the unexpected emergency, whether it’s for everyday purchases due to a job loss or a vehicle repair. If you decide to obtain a loan, do not acquire more than you feasibly need to get by.
Funding Options for Unexpected Expenses
One of the benefits of acquiring additional funds is that the options are numerous. There are plenty of lenders and loan types to choose from, and their requirements are all different.
- Payday Loans: Payday loans are generally quick and easy loans to acquire. These loans provide eligible borrowers with a few hundred dollars to handle unexpected expenses. The downside is that they must be repaid within 2 weeks–by the borrowers next payday.
- Credit Cards: Credit cards are a type of loan, believe it or not! If you already have a credit card with sufficient available funds, you could use it to supplement a costly expense. But if you have high rates or not enough available funds, this may not be an option.
- Title Loans: A title loan is a secure loan, meaning that collateral is required in the form of a car title. Because of the collateral, borrowers may be able to acquire better terms and the qualification requirements may be easier. A lot of title loan lenders even offer same day funding. The interest rates vary, so make sure to compare lenders before making a final financial decision.
- Personal Loans: Personal loans may be secure or unsecure. Unsecure personal loans may be harder to acquire unless you have good credit since the lender doesn’t have the additional security of collateral. These loans may be worth hundreds or thousands, but the approval process may take days or a week at most.
Plan for Future Unexpected Expenses and Calamities
The best way to handle a future unexpected expense or calamity is to be prepared. Once your current predicament is handled and your finances are stable once again, rebuild your emergency fund or start one!
A good budgeting rule to follow is the 50/20/30 rule. Any necessary expenses you make in a month (groceries, mortgage, rent, etc.) should take up no more than 50% of your monthly income. The money you spend on carefree expenses–eating out, shopping, or entertainment–should not go over 30% of your budget. And finally, try to save at least 20% of your monthly income.
By budgeting and keeping track of expenses, you can be better prepared to handle any future unexpected expenses.