Financial emergencies – no one likes them, but everyone experiences them at some point. The broken boiler, the plumbing leak, the exploding car engine – if you are anything like our household, you probably experience one of these issues every year at least.
And when money is tight, these events can be a gut wrenching experience. You try to make every cent of income count, work hard to save a few bucks every once in awhile, but there is always something that crops up that sets you all the way back to square one.
Of course, head to any financial advice blog and they will all tell you that you should be planning for emergencies, building up a fund for such occasions, and developing better foresight than Nostradamus. The reality for the vast majority of us struggling to make ends meet is that this is nearly impossible.
So the big question for today is, how do you deal with these household financial crises that seem to crop up when you can least afford them? I’ve pulled together some ideas from across the web so take a look and see what you think – I hope they will help some of you out.
Some emergency fund is better than none
Forget about what you might have read about building up six months worth of wages for your emergency fund. The vast majority of families I know would struggle to put aside six days worth! That said, even a small amount of money set aside at the end of each month can help. It makes paying for these terrible financial emergencies a lot easier and leaves you with more of the income you typically use to pay for the basics. If you literally have no money to save, think about cutting back in certain areas. Perhaps you could go to a cheaper grocery store and bank the difference in price. Or maybe you could pull an extra shift at work if possible, and put your extra earnings into the savings pot.
Some household emergencies require immediate action, of course. When your little one hurts themselves, you aren’t going to wait around for a week to bring them to a hospital, and there are other situations like a gas leak where it is essential that you get help straight away. But there are other emergencies that you might think you can sleep on – damp in the walls, for example, or a boiler making noises reminiscent of a dying goat. My advice would be to act as fast as possible. Call out the plumber, the gas company, or whoever you need, because the longer you leave it, the more its going to cost to repair.
Yes, you should always act fast to prevent the problem becoming worse – and more expensive. But you still need to act sensibly, too. When panic stations are in full swing, it’s easy to go into situations blind, and hiring the wrong person for the repair job can lead to even more issues. It can be difficult to think clearly when emotions are running high, of course, but a wrong decision about getting things fixed cold come back to haunt you in the not too distant future. Try and think rationally about the situation, ask for repair quotes, and speak to friends and family about repair recommendations – never take on the first person you find that is willing to do the job.
Know your finances
If you don’t have a large emergency fund, make sure you always know your current financial situation – at all times. You will need to prioritize your money, usually in an order like this: food, shelter, getting to work, utilities and then debts. If you do have an expensive crisis on your hands, contact your creditors and explain what’s happened, then do the same for your utility companies. The vast majority should be lenient with you as long as you don’t turn it into a habit. A short-term loan might help, of course, but you should raise cash in advance loans only if you can guarantee you can pay it back at the earliest opportunity. Severe financial emergencies in the home can often lead to debts spiraling out of control, and no one wants that to happen.
Ask for help
Instead of getting into more debt, it’s a more sensible idea to swallow your pride and ask for help. Family, friends – even neighbors – might be willing to help you out in any way they possibly can. As a single mom, I can tell you that people can be incredibly kind, and as difficult as it can be to ask for help, there is no shame in it. After all, if a desperate neighbor asked you for the same help, would you hold it against them? Unexpected expenses are exactly that – unexpected. And even with the best will in the world, it is impossible to prepare for everything.
Check your insurance
Once you have got on top of the initial problem, it’s worth checking your insurance plans to see if you are covered. It would be nice to be able to do this right at the very start of the process, but we all know that insurance companies are pretty tight when it comes to paying out, so always fix the issue first of possible. Look into warranties, too – if your oven breaks down, for example, it might be within a guarantee period and open for free repair. That said, Murphy’s Law suggests a piece of equipment will only break down a day or two after any guarantees expire!
Sell some stuff
Finally, selling possessions because you have to isn’t the most pleasant experience you can have, but it can help plug up your finances. All of us have things in our home that we rarely use, and as a rule, anything that hasn’t been touched for six months is probably not worth keeping. However, selling your things is not a quick fix – it can take days or weeks to get rid of things, even on sites like eBay and Craigslist.