How To Deal With Big Unexpected Costs

Jun 3, 2021 | Lifestyle | 0 comments

There are some expenses that we can budget for from month to month. However, there are other expenses that are harder to plan for. Such unexpected costs can do a lot of harm to our finances – especially if they’re big unexpected costs. A few examples of such expenses could include:

  • Car repairs
  • Home repairs
  • Theft
  • Fines
  • Increases in bills
  • Funeral costs of loved ones
  • Medical emergencies

Finding the best way of paying for these costs can help to limit the damage. Below are just a few ways to deal with big unexpected costs.

1. Use savings or equity

If you’ve got some savings kept aside, you could use these savings to pay for any emergency costs. This could prevent you having to borrow money. If these savings are for a specific goal (such as your first house or your retirement), you’ll have to weigh up whether it’s worth dipping into them.

Equity may also be an option. If you own a home, you may be able to look into an equity release to pay for any emergency costs. Just be wary that you’ll have to pay this back when/if you sell your home.

2. Ask to pay in installments

Depending on who the expense is owed to, you may be able to pay in instalments rather than paying the whole amount upfront. Many car repair centres and home repair companies offer such schemes. Unlike a loan, there is usually no interest on these instalments.

3. Borrow wisely

Borrowing money isn’t ideal due to the added interest fees you’ll pay, but could be necessary if it’s an emergency and you have no other options. Make sure to spend time shopping around for loans. You may be able to find specialist lenders that offer low-interest loans to help with certain disasters like unforeseen medical costs or funeral costs

Borrowing from family members could be another option. In these cases, you most likely won’t have to pay interest and you may have greater flexibility as to when you pay them back (within reason).

4. Get help from local charities

If you’ve been the victim of a crime, a fire, a natural disaster or illness, you may find that there is a charity out there willing to help you raise funds for reparations. You could even consider starting a crowdfunding campaign on social media. If you’ve got a noble cause, people will donate to it. 

5. Sell your clutter

You may be able to sell some of your unwanted possessions to pay for unexpected costs. Many of us have valuable items in our home gathering dust that could be converted into cash. You may be able to sell these online or you could try selling them to a local second-hand store.

6. Know your legal rights

There may be times when you can contest an unexpected cost such as a fine or a rising bill. A criminal defense attorney may be able to help you reduce a large fine. If you’ve been overcharged for a bill, you may similarly be able to get legal help.

In other cases, you may be able to access benefits or grants. Alternatively, you may be covered by insurance or a warranty.

7. Take protective measures against future unexpected costs

Some unexpected costs can be protected against by taking certain measures. For instance, you may be able to take out home insurance to protect you against a potential flood, or you may be able to invest money into flood-proofing your home. Putting aside some emergency savings could be an alternative option for funding unexpected costs.

best,

– a contributed post

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