Have you ever faced an unexpected bill or major expense that sent your financial sanity reeling? Most people encounter unplanned costs at one time or another, but few are adequately prepared.
The good news is that if you begin today, there are dozens of effective ways to meet a surprise obligation head-on without having to take out a second mortgage, sell your car, or work two full-time jobs.
It’s important to remember that some methods are better than others. As you examine the following tactics, aim to use the top-ranked strategies whenever possible.
Options like personal loans, borrowing from family members, and taking on a temporary part-time job are far superior to pawning valuables, selling belongings online, or resorting to credit cards. From best to worst, here are several approaches people take to pay for emergency expenses.
6 Ways You Can Cover Emergency Expenses
1. Personal Loans
Personal loans are often the ideal way to cover immediate expenses associated with a medical or another type of emergency bill. When savings and retirement accounts are not the answer, applying for a personal loan is a quick and easy process for working adults.
Before you apply, make a detailed listing of what you need the money for and precisely how much you need. Lenders often ask why you’re borrowing and offer you a range of amounts. It helps to be able to explain in a few words what the financial emergency is and what amount you need to resolve it.
2. Borrow from Family or Friends
Borrowing from family and personal acquaintances has its pluses and minuses. There are things to consider before you go this route. First, you need to disclose sensitive financial information about yourself, which many people don’t want to do. Second, if you are slow in paying the money back, you risk damaging a long-term relationship with someone you care about.
3. Get a Temporary, Micro Job
In some cases, you can earn money from your hobbies to help out. If you have the time to take on extra work temporarily, consider getting a micro job of some kind. If that won’t cut it money-wise, opt for a 20-hours-per-week position to cover expenses for a while.
The problem with this tactic is that many people just don’t have the spare time, especially if they’re raising families or have other obligations.
4. Take a Trip to the Pawn Shop
Pawnshops offer a poor value for people in need of quick cash. However, if you have several valuable items that can fetch a decent amount of money instantly, pawning can be a viable technique. The catch is that most don’t have enough items to bring in a significant sum of money. Additionally, if you are unable to redeem the goods on time, you’ll lose them forever.
5. Use Online and Garage Sales
The garage sale tactic is about equal to pawning in the general scheme of things. Plus, online and garage sales don’t offer quick access to large sums of funds. Offering something online can mean months of waiting for a willing buyer to come along.
6. Credit Cards
The worst method for covering emergency bills is putting them on plastic. Interest rates can be sky-high, and you put your credit rating at risk by upping your usage percentage. But, if you are very responsible with money and have a lot of room on a low-interest card, this method can be much more viable.
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