[November 07, 2018] |
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Tips for Managing Unexpected Expenses on a Tight Budget
No matter how strict or frugal, unexpected expenses can send many people
into a financial tailspin. A Federal Reserve study reveals that 40
percent of adults would not be able to cover a $400 setback - an
alarming statistic given the high cost of common emergencies such as car
trouble, home repairs and medical care.
"Ideally, you want to build an emergency fund in a liquid savings
account to cover such expenses so your daily life isn't impacted much.
However, we know that's not always possible throughout all life phases
and challenges," said Mike Sullivan, a personal finance consultant with
Take Charge America, a
national nonprofit credit counseling and debt management counseling
agency. "When you don't have cash on hand, you need to hunker down
and get creative."
Sullivan offers seven tips for handling unexpected expenses:
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Assess the Expense: Not all unexpected expenses are created
equal. For example, repairing the car that gets you to and from work
ranks higher than paying for airfare and accommodations for your
college roommate's bachelor party. If the expense is truly urgent,
it's worth cutting other spending to come up with the funds.
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Join the Gig Economy: Earn fast cash by working for Lyft,
Postmates o Uber Eats, among many other "gig" services, that can be
completed on your own time using your own resources.
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Sell Your Stuff: Most of us have extra clothing, electronics,
sports equipment, furniture and other gear that are no longer in use.
Take time to photograph and list your items on Facebook (News - Alert), Craigslist,
Ebay and OfferUp. Earning $50 for a bicycle or $75 for a coffee table
will make a dent in your expenses - and create more room in your home.
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Be a Miser: Do you spend money eating out, shopping or
traveling? What about high-priced cable, subscriptions and
memberships? Cut back non-essential spending in favor of a frugal
existence until you get past this financial hurdle.
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Pay Medical Debt Over Time: Medical costs are a major source of
unexpected expenses. Fortunately, most healthcare organizations will
work with you on a payment plan - and without charging interest. You
just need to ask, and explain your financial situation.
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Tap Your Home Equity: If you must borrow money in order to
cover the expense, consider a home equity loan. This type of loan is
better than tapping retirement accounts, running up credit cards or
taking out a cash advance. Once the expense has been paid, pinch
pennies to pay off the loan as soon as possible and limit any future
financial impact.
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Consider Credit Counseling: If you've been hit with unexpected
expenses or are struggling with other debt, consider credit counseling
from a nonprofit agency that can help you develop a workable budget
and potentially negotiate debt and repayment terms with your creditors.
For more information about credit counseling and to receive a free debt
review and financial assessment, visit cc.takechargeamerica.org.
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a nonprofit agency
offering financial education and counseling services including credit
counseling, debt management, student loan counseling, housing counseling
and bankruptcy counseling. It has helped more than 1.6 million consumers
nationwide manage their personal finances and debts. To learn more,
visit www.takechargeamerica.org
or call (888) 822-9193.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181107005541/en/
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