You’ve planned out your entire budget for the month–food, gas, school fees, clothing, etc. Then suddenly, something unexpected happened. Your car broke down and you have to have it fixed ASAP as it’s the only means of transportation for your family. Suddenly, your mind raced into million questions and worries.
Where will you get the money needed to fix your car? What portion of your monthly budget do you need to cut down? Unexpected bills can throw your budget haywire and may even cause stress. How will you be able to manage unexpected bills? Here are some tips on how to be on top of your finances and manage unexpected bills with ease:
Find Out What Expenses You’re Responsible For
When something in your household breaks, you automatically assume that you have to shed money out of your pocket. Before you start to panic, assess the situation first. If you’re renting an apartment or house, and something needs your attention, don’t immediately assume that you’re responsible for the repair and maintenance. Know your rights and your landlord’s responsibilities before taking action.
Some appliances may be covered by insurance. Before you address the emergency, check first if it’s covered by insurance or warranty. You can also take advantage of some credit cards that offer generous coverage as their benefit.
Create an Emergency Fund
The list for unexpected expenses could be endless. Just look anywhere and you can see a potential expense that you did not prepare for. From higher gas and food costs–to sudden unemployment, or sudden illness or accidents, many circumstances can make you financially stressed.
For example, if you’re hurt on the job, you want to be sure you’re doing all you can to ensure you get the workers compensation you deserve. This may include hiring a workers compensation lawyer–to make sure your claim is filed successfully.
Since life has a funny way of throwing unexpected things at us, always be prepared. Create an emergency fund that you can use in times of unexpected bills or expenses. Allocate a portion of your monthly budget toward your emergency funds and don’t use it for purposes other than emergencies.
Forego a Planned Purchase
Have you been saving to buy a new car or go on a vacation? When you don’t have an emergency fund and unexpected bills come up, you can use the funds that you have saved for your planned purchase to cover the unexpected bill.
Taking a vacation is no doubt important; however you won’t be able to fully enjoy it if you’re close to filing for bankruptcy with debts caused by unexpected bills. Your planned purchase or vacation can wait. As soon as you’re cleared from financial debt, you can save the money back and get what your heart desires.
Sell Your Unused Items
Is your closet full of clothing, bags and accessories that you no longer use? If so, instead of having this bulk occupy too much space, unload your closet and sell what you aren’t using anymore.
This strategy is hitting two birds with one stone. First, you will be able to walk into a clean and spacious closet. You won’t be spending your mornings finding things through overcrowded stuff anymore. Second, you will be able to earn some cash. You can use this cash toward your emergency funds.
You can also recycle and reuse old stuff instead of buying new ones. Not only you will save money but you can also give your share of helping mother Earth from wastes and garbage.
Toss Your Investment Losses
Do you have an investment that’s not doing well? Unload your burden by getting rid of these underperforming investments. Aside from having relief from what’s weighing your portfolio down, you’ll be able to minimize your taxes. Trade your investment losses for cash and put it towards your emergency funds.
Take Out a Loan
Taking out a loan is probably one of the fastest and easiest ways to cover an unexpected bill.
Once you have decided to take this course, make sure that you’re very wise about it.
Choose lenders that offer the smallest interest rates and easiest payment plans. You can use a loan calculator to find out how much money you can borrow and how much you need to pay to cover the borrowed amount.
Ask Your Bank for an Overdraft
If you don’t want to take a loan for unexpected bills, another course of action that you can make is by talking to your bank and ask for an overdraft. What does an overdraft mean? It simply means that your bank will allow you to withdraw money from your account even if there are not enough funds in it. Your bank lets you borrow a certain amount of money.
Unlike loan or credit cards, overdraft provides a flexible payment plan. The amount that you can borrow depends on the amount of money that goes into your account on a regular basis, as well as your credit history and general standing with your bank.
Have a Plan
Be prepared for rainy seasons. It’s time to stop the headaches caused by financial crisis. Always be prepared and resourceful when unexpected bills hit you. It’s likely you are going to be faced with an unexpected bill at one point in your life, by following these steps you will be better prepared when the time comes.