Let’s face it, while we all understand the importance of emergency funds, many of us simply find it financially hard to maintain one. So what can you do when an unexpected expense arises and payday is nowhere in sight?
Consider these three options to pull you through a financial crisis.
Trim your budget
If you can trim some expenses from your monthly budget, then it may be possible for you to fill the gap created by a financial emergency. Think about cutting out unessential expenses like your cable bill or some other subscription you might have.
You can also hold off on eating out and prepare meals at home, instead. If you had budgeted money to get your hair done or to get a manicure or pedicure, consider forgoing them this month or at least until you have cleared this current expense.
If you regularly use a home cleaning service, then rolling up your sleeves and taking on some of the chores yourself could also save you a few bucks. After you have taken care of this immediate expense, you can add the eliminated items back onto your budget.
Borrow from family or friends
The urgency of an expense often makes borrowing the only viable solution. In that case, turning to family and friends can be the cheapest option since they’ll usually charge very low or no interest. Ensure you repay promptly, however, to avoid strained relationships.
Keep in mind, too, that it’s quite likely your loved ones are dealing with the same financial hardships as you and are unable to help. Alternatively, even if they are in a position to help you, you may feel very embarrassed at having to ask.
Plus, family and friends, usually, have no qualms about impressing upon you the importance of maintaining an emergency fund. It’s a safe bet that’s not what you want to hear when you have a burning expense, you’re strapped for cash and your rainy day savings are non-existent.
Take out a short-term personal loan
A short-term personal loan from a large financial institution will typically take days or weeks to process. The amount you need to borrow may also be below the minimum they lend.
If you need a relatively small amount of cash quickly, then a payday loan could be the answer. Your repayment options will be either by a post-dated personal check or by giving the lender authorization to electronically withdraw the funds from your account.
Another short term loan to look at is asking your boss for a salary advance. Don’t forget, however, that your next salary check will be short by at least the amount you borrow (interest might be applied). If the arrangement is for you to repay over time, be prepared to work with a tight budget for the next few months.
Aside from the three we’ve looked at, there are other options available to you (such as selling a few items of value you own or working a part-time gig). Once this expense is cleared, give that emergency fund some serious consideration for the next time an unexpected expense pops up.