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Helpful Tips for Handling an Unexpected Expense
Approximately 30% of Americans stated they (or someone in their family) experienced at least one major, unexpected expense in the past year. Unfortunately, many people in these situations face significant financial hardships due to this single (or multiple) unexpected expense(s).
Regardless of the financial issue is caused by medical expenses, an emergency home repair, job loss, or something else, the change that occurs is often extremely stressful. As a result, you are faced with having to pay the bills and keep food on the table. The good news is there are some viable solutions to consider.
Facing unexpected expenses
Take a Look at the Situation
When you become aware of your financial hardship, you need to think about the situation you are in. If you panic, you’re only going to make the situation you are facing worse. While a small amount of panicking is understood, it’s important to stay calm and look at the situation objectively.
Try to figure out what caused this situation. While you need to find a solution, you also need to know what caused the problem. Was it that you suddenly lost your source of income? Are your expenses more than what you are paid? Was there a natural disaster? Knowing the cause of the problem is the best way to ensure the desired outcome is achieved.
Prioritize What You are Spending On
In financial emergencies, money becomes tight – quickly. As a result, you need to create a plan to prioritize what you spend, which is essential to get through the emergency. Be sure you spend on the most important things first, including food, shelter, utilities, transportation, etc.
If you have debt, make sure to pay your secured debt, including your mortgage and car payments before you pay your unsecured debt, like your credit cards. You can even use your home or car to help with the financial emergency. For example, you can take out a title loan on a leased car to help you through the hardship.
Contact Your Existing Lender
It doesn’t matter what type of financial issue you are facing, one related to medical bills, your mortgage payments, or even credit cards, you need to contact your lender immediately. Remember, your lenders are going to be willing to work with you. They would rather get some money, instead of none, even if that means extending your terms or lowering your interest rate.
A common mistake that some people make is to wait until they are extremely delinquent before contacting a lender. By contacting your lender sooner, rather than later, they are going to work with you. When you are aware that things are becoming financially rough, call your creditor immediately – before you start missing payments.
Contact your creditor immediately
Find Extra Money
It’s best to have an emergency fund with money to cover the cost of unexpected expenses. Unfortunately, this isn’t something everyone has in place.
You can opt to use your existing credit cards or even get a loan; however, this could only result in your situation getting even worse. Another option is to borrow money but be careful about the interest rates you are charged, don’t accept just any loan because you are in a desperate situation.
It may also be a good idea to check with family and friends. No one wants to ask for money; however, a little help from people you know may be all you need to get through this tough situation.
Avoid Future Financial Problems
If you want to ensure you don’t face the same situation in the future, you have to make sure you build an emergency fund. This is going to help ensure you get solid financial footing and that if future issues arise, you can handle it without having to experience any serious problems.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.