With the events surrounding the coronavirus pandemic, there’s always the possibility that we can be thrown into hard economic realities. If you are a worker in the restaurant or hospitality industry, you may have already have seen this take place.
And for many of us, anyone could fall into financial pitfalls. You can lose your job, get a surprise medical bill, discover home problems, or even suffer car breakdowns.
So how do we prepare for unexpected expenses as they arise? There might be some practical ways to prepare and weather unexpected financial events.
Emergency Fund Savings
A great way to prepare for unexpected expenses is to create an emergency fund account. Most individuals do not have an emergency fund. And with bills and unexpected expenses, it’s no surprise that a number of people do not have one.
However, there are some ways to make this effortless without the hassle.
For individuals who often forget about saving, setting up an automatic investment plan where your money automatically transfers on a periodic basis can be less stressful. This not only saves time, but it allows you to forget what’s being sacrificed.
Consider starting out with small contributions. This way the ding in your payroll won’t seem as painful or noticeable. If you’re comfortable with adding more, take the step to gradually increase your savings.
There are plenty of savings or checking accounts available without banking fees. Do an online search and make sure that there aren’t balance restrictions or fees.
Some of the more unexpected expenses involve accidents and things falling apart. In fact, many households don’t prepare for random events that cause your finances to slip. If you don’t have additional money set aside, you might find yourself in a financial hole.
Planning for this could help you avoid accidents and unexpected surprises. Think about what can be done to stop the things can snowball into a disaster. Start a prevention plan.
Medical Expenses could have one of the most devastating impacts on your finances. In fact, recent developments and research have found that as high as 58% of bankruptcy cases are caused by medical bills.
Start by asking yourself if you could prevent a future medical expense. For example, if you continue to have an unhealthy lifestyle, would that cause more issues to take place in the future? Eating unhealthy foods can cause heart disease, obesity, and high blood pressure. That often leads to visits to the doctor or the hospital, and the cost of the medical treatment to stack up.
Living a healthier life could prevent the causes of diseases and conditions, which can ultimately help you save money over time. A change in diet or activities can go a long way.
Pet emergencies could also contribute to unforeseen medical expenses. You might find yourself having a cat or dog with a condition or an accident related issue. To mitigate the financial impact, you can restrict unsupervised outdoor activities or change the diet. Check with your Veterinary doctor to find a healthy solution for your pet. (Check out this article on planning for Pet Emergency Expenses)
We’ve all been there when something goes wrong with the car. But many don’t know that simple tasks like changing your oil or changing car fluids can help with the car longevity.
Or, if you don’t change your spark plugs on a consistent basis, the car engine can fail and lead to expensive repair costs. The same applies to routine car engine oil changes. By consistently maintaining your car, you can help prevent long term wear and degradation.
Major Home Repairs
If you own a home, chances are is that you had an event that caused you to spend a significant amount of money to repair the home issue. From leaking roofs to the furnace and air conditioning failures, your once admired home could suddenly be a financial nightmare.
Preventing these events won’t always be easy. By scheduling routine check ups with your mechanic and do-it-yourself style upkeeps, you might find yourself paying less for the long run.
Request Outside Help
You may be surprised that there are 3rd parties and organizations that help with bills or rent payments. Consider contacting your mortgage company or billing company to see if there are alternative plans to help you lower your expenses. Even utility companies can offer financial plans to assist you in difficult times.
The Cares Act also provides some valuable information and assistance for families needing help. Check out their website as it provides a wealth of information if you’re impacted by the virus or not. Alternatively, 3rd party organizations and even your former employer can provide assistance.
Hospitals and medical facilities can offer financial assistance. In fact, you might find instructions on the bill on how to apply for this option. In some cases, the requirements do not require that you are insured.
The medical system may offer plans that can spread out your payment over time. This option may be helpful if you know you can pay the installments over a period especially if you don’t have the means to pay it in lump sum.
Bills may go to a collection agency if it’s not paid off on time. If this happens, it’s likely the collector add higher interest to the bill. Try to negotiate with the collector and see if they can lower your rates or payments.
Pet owners also have options for high medical bills. Check out our article Surefire Way To Save and Plan For Vet Bills and Expenses.
Home Repair Emergencies
If you don’t have a home repair emergency fund, there are other options. Depending on if you’re low income or a veteran, there are options for you and your family can take to avoid a home disaster.
In emergency situations, you may want to think about a home equity line of credit. Taking a home equity means that you’re borrowing from the equity of the house. Mortgage companies offer an array of home equity lines of credit that might fulfill your needs. Contact your current mortgage company or others to see if you can qualify. It’s important to remember that taking equity from your own home is taking on more debt.
For low income earners, there are some programs to offer assistance or loans for emergency repairs. USA.gov may be a good place to start looking at your options. Keep in mind that most of these programs are based on loans and you might want to consider that you will be going into debt.
There’s no doubt all of us have, at some point, had some kind of unexpected expense. By planning, saving, and even seeking help, you can navigate around issues that will impact your life and your finances.