How to Handle Unexpected Expenses

Life is funny: One day you’ll feel as if you cannot be stopped, the next day your car will break down and you’ll be slapped with a $500 bill that you didn’t account for in your budget. It’s safe to say that life throws you curveballs. Since unexpected expenses can devastate the unprepared, it’s in your best interest to learn how to handle your business when you are in this situation. Read on to learn how to handle unexpected expenses when you encounter them.

Breathe Easy

Before we begin, it’s important to remind yourself to relax and breathe easy during the time when you are worried about covering an unexpected cost. Here’s the truth: over the course of human history there has likely been MILLIONS of people who have been in a worse situation than you but have found a way to make it work. Adding unnecessary stress to any situation can only make the situation worse.

Make a Budget

The best way to handle unexpected costs is to consciously prepare for unexpected costs. What I’m saying is you should save money from every paycheck you receive and put it away into an emergency fund. Your emergency fund is designed to protect you from…wait for it…emergencies. Your goal should be to save up 3-6 months’ worth of paychecks in order to ensure if you do encounter an emergency, you’ll be able to handle it. Emergencies are only an emergency for the unprepared. Use a budget to make sure you are financially prepared for any emergency that you encounter.

Determine if You Really Have to Pay the Expense

Too often people jump to conclusions without fully completing their homework. When it comes to dealing with an unexpected expense, I encourage you to do your due diligence and determine if you are on the hook to pay all of the expenses. I’m going to demonstrate several situations so you can see what I mean.

Let’s say your kitchen sink broke in your apartment; chances are the owner is on the hook to replace the sink. Let’s say your car broke down. Check the warranty to see if you are covered. Let’s say that you have been hired for a job and have moving expenses. Check with your company to see if they can pay for you to move. Or let’s say you encounter unexpected medical expenses, in which case you should do your research and see if you are covered by insurance.

Half the battle of dealing with unexpected expenses is seeing if you really have to pay the expense. Do your homework and you just might surprise yourself.

Transfer Your Savings

Perhaps you have been saving for vacation and you have been slapped with an unexpected expense. In this situation I would encourage you to transfer your savings from your vacation fund and use the money to cover the unexpected expense. This can a bummer at times but at least you can cover your bills without having to go into debt.

Sell What You Can

Hey entrepreneurs, if you are ever in a pinch keep in mind that you can sell the clutter around your home for extra cash. Websites such as EBay and Craigslist make it easy for you to conduct business and chances are you own more than a few items you can live without.

Borrow Money

Worst case scenario, if you truly do not have the funds to cover an unexpected expense reach out to a trusted family member or friend and ask to borrow money. Make a plan that shows how you can repay them and learn to budget so you are never in this situation again.