No matter how good we are at managing our money, it is almost inevitable that we will all come across situations and have financial emergencies that hit us for six. For example, perhaps you are a professional blogger or freelance writer, who relies on their computer to work. Your hard drive crashes and you are unable to work unless the problem is quickly fixed and your data recovered. The process will cost $2,000 – what do you do?
Your first response is probably to panic. The work you have spent many hours polishing is lost, you have a deadline to meet and you don’t know how you’re going to afford the $2,000 repair and recovery fee. But, panicking won’t get you very far. Instead, see if you could use any of the following strategies to solve your emergency without too much stress:
See Which Expenses You Must Pay
When something breaks down, whether it be your trusty Apple Mac, your car or your washing machine, you should bear in mind that you will not necessarily be required to cover all of the costs of repair all of the time. If, your computer is under warranty, for example, then you probably won’t need to pay to have it fixed, providing the issue that caused its failure was not your fault, but you will need probably have to pay for data recovery. This means that you could cut down your repair bill significantly. So, before you panic and before you hand over a handful of cash to get your equipment fixed, check any warranties, contract, etc., that you may have available to you.
Use Your Emergency Fund
If you don’t already have an emergency fund, now is the time to start one. Putting a few dollars aside each month for emergencies soon adds up, and then when the worst happens and you’re facing a huge repair bill, you don’t have to worry because you have your own little nest egg tucked away.
Trim the Fat
Even if you’re on a fairly tight budget, there is a good chance that you can trim some of the fat from your finances, cut out a few treats and free up some extra cash to cover you in an emergency financial crisis.
Ditch a Planned Purchase
If you’ve been saving up for a family holiday, new TV or home renovations, it may be disappointing, but redirecting some or all of this cash to cover your financial emergency is a sensible way to ensure your most important needs are covered. You can always start saving up for that special treat again once your emergency is sorted.
Consider a Personal Loan
If you have a steady job and you know you will be able to keep up with the repayments, taking out unsecured personal loans can be a good way to cover those emergency vets bills or car breakdown costs, get you up and running again and ensure you don’t lose out. Although they’re not always the answer, they can be a godsend when you’re in dire straits. Just remember to only go down this route if you’re confident you can repay, otherwise, you’re not actually solving your current financial crisis as much as putting it on the backburner for a few months, when it will come back to bite you with a vengeance.
Unload Your Investments
If you’ve taken the sensible step of investing in stocks, but you have some options which aren’t really doing all that well, the time when an emergency hits could be the perfect moment to offload them, get some of your cash back. You can rebalance your portfolio and put the money to goods use in dealing with your latest crisis.
By doing this, you may also be able to lower your tax burden., paying less on your investment gains. This is a process known as “tax loss harvesting” and it can be a real lifesaver when you’re struggling to get by and an emergency situation rears its head.
Sell Your Stuff
Most of us have more stuff than we really need and plenty of stuff we never use. Why not put that stuff to good use by selling it on eBay or Craigslist, or even by holding your own yard sale? Not only will you get some extra cash to help you out, but you’ll declutter your home too!
Borrow from a Friend or Relative
If you have close friends or relatives who are doing well, they may be able to help you out with a loan. Most of us don’t like going to friends and family for money, but if your situation is desperate, they may be only too happy to help you. If you do decide to go down this route, as with any loan, you should be sure you can afford the repayments and you should put the deal in writing for the protection of all involved. It really isn’t worth ruining a good relationship over money.
From babysitting and mowing lawns to designing websites and doing accounts – if you have a skill that you can offer online or to people in your local community, start up your own side business and start making money. This may not pay off quite as quickly as some of the other ideas in this post, so it’s only really suitable for mini-emergencies, which can wait a while but it is a great way to earn decent amounts of cash doing things you love.
If you have a garage, spare room or land that you are not currently using, there are lots of websites that you can use to advertise your space to the people who need it, and you can start earning money pretty much straightaway. Renting out your garage and drive space can be particularly lucrative if you live in a city with expensive parking costs because there are always people looking for affordable, safe places to keep their car whilst they’re at work.
So, next time you face a financial emergency, take a deep breath, stay calm and start putting some of these suggestions into action.