When you’re trying to get out of debt, the last thing you want is a financial setback. Unfortunately, life can throw us a curveball every so often, and this comes with unforeseen expenses. Your car could break down and require expensive repairs, you might throw out your back and need several sessions with a chiropractor, or you could chip a tooth and undergo costly dental work that your insurance doesn’t cover.
These types of emergency expenses are things that you can’t plan for in advance. For that reason, they often cause people to go into debt since they don’t have the cash put aside to pay for these costs and must turn to their credit card.
If you’re trying to get out of debt by the end of 2016, the last thing you need are unexpected expenses derailing your plans. Not only will that add to the challenge of repaying your debt, but it can push you to go further into the red if you can’t adjust your budget to absorb the costs.
So, what can you do to deal with an emergency expense and stay on track with your goal of becoming debt-free by the end of this year? Here are a few suggestions:
Find Ways to Cope with the Cost
If you experience an emergency while you’re in the process of paying off debt, if possible try to delay the expense until you can afford to pay for it with cash. For example, if you have two cars and one of them breaks down, you might be able to stick to one car until you put aside enough money to be able to fix the other car. If you can’t delay the expense, then work on adjusting your budget to find areas where you can cut back for a few months in order to put aside the cash you need.
You might also ask if you can pay for the expense over a longer period of time. For example, if your child needs emergency dental surgery, you might be able to negotiate with the dental office to pay in installments over a 3 to 6-month period, making it easier for you to fit the expense into your budget.
Related read: Money advice: How to make it apply to you
Find More Money
Earlier in the year, I discussed finding a way to earn a little extra cash. This can be done by taking on freelance work, or signing up to drive for Uber or a food delivery service like Foodora. You could also consider selling items you no longer need such as electronics (not using an older model iPhone? You can get plenty of cash for that!), furniture or clothes and handbags. Put them on Craigslist, host a garage sale or take them into a consignment store.
If this isn’t possible, consider asking family or close friends for help. While borrowing from those near and dear to you could have complications, they may be willing to help you out provided you pay them back in time and keep them in the loop should anything delay that repayment.
If you don’t have an emergency fund, it’s advisable to begin saving up for one as soon as you get out of debt. Having that cushion will ensure that you won’t have to be completely reliant on credit cards when you encounter an unexpected expense.
If you already have an emergency fund saved up, this is the time to use it. Furthermore, if it holds a sufficient amount of funds, you might consider using a portion of it to help you get out of debt faster. Some financial experts suggest that people in credit card debt with high interest charges should use all or most of their emergency funds to pay it off. In fact, they suggest always having a low interest credit card on hand or available lines of credit to aid you in case of an emergency.
If you are able to pay off your credit card debt with your emergency fund, you could save a significant amount of money that you would have been otherwise paying in interest. In turn, those savings could be leveraged to rebuild the fund.
Also read: How to save a 6-month emergency fund
Plan Better for Next Time
No matter how you proceed to tackle these unexpected expenses, consider this a wake-up call that will encourage you to plan for any future emergencies. Having a plan or an emergency fund to draw on will save you a lot of stress, ensuring that if something does happen you will be able to cover the cost.
Starting to save while paying off your debt? Check out the best savings accounts today!