You never think a financial emergency will happen to you. Until it does. Maybe you have to rush to the clinic and your doctor serves up a big bill. Or perhaps your furnace croaks just before the first frost of the season. Then what?
If you aren’t sure what your next step should be, here are five ways you may get out of a financial emergency
1. Tap into Your Emergency Fund
There’s a reason why saving for a rainy day is a common rule of thumb. By socking away a little of each paycheck, you’ll slowly gather a small fortune over time.
Broadly speaking, your emergency fund should have enough in it to cover a full year’s worth of your normal expenses. This is a foundation of a robust fund that stands up to larger emergencies, such as health scares, layoffs, and recessions.
2. Tighten Your Budget
Is your emergency fund still in its infancy? If you haven’t prioritized savings in the lead up to your emergency, you may find your savings fall short of what you need.
Now’s the time to sit down with your finances and draw up a budget. This spending plan helps you allocate your cash, so you can ensure you have enough of it to go around.
Don’t panic if you realize you’re spread pretty thin. Start by targeting discretionary spending, or the unnecessary fun things in your budget. Pocket the cash you save here to use on your emergency expense.
3. Get an Installment Loan
Cutting out expenses only works if you have a lot of discretionary spending to hack away at. If you already run a tight ship, you may only have a few expenses that you can reasonably cut, and it may not provide enough cash for your needs.
When budgeting won’t work, an installment loan may act as a stopgap for emergency funds. The installment loans from a lender like MoneyKey are designed specifically to help with unexpected emergency expenses, like auto repairs and medical bills. They offer a quick application process that lets you know if you qualify within minutes.
4. Negotiate Your Bills
If funding isn’t a possibility, consider going straight to your creditors. Some cell phone carriers, utility providers, and lenders may have progressive financing plans in place for exceptional cases.
If you can prove you’re facing unprecedented challenges, they may delay your bill with a more relaxed payment scheduled.
You won’t know until you call, so find their phone number and rehearse your speech. Being prepared helps you advocate for yourself successfully.
5. Ask for a Raise
Has it been a while since you last saw a raise? It may be time to talk to your boss. They may be sympathetic to your problem, especially if you’ve been working for them for a long time.
But don’t take their compassion for granted. Show up to the meeting with proof as to why you deserve a raise. Show them how you’ve taken on new roles or exceeded in current ones, as well as other ways you’ve excelled. Barring this, talk to them about advancement programs that may help you get a higher-paying position within the company.
You can’t always predict if a financial emergency is in your future. Rather than waiting for the other shoe to drop before you respond, prepare your finances for a disaster. Start budgeting so that you can build an emergency fund and remember these other tips when that shoe finally drops.