Maybe it’s just us, but it seems like this time of year is a magnet for bad luck. The dryer died last year and this year a sensor in the truck decided to go out. Some years are better than others but it never fails. If something is going to break and need replacing. It’s going to happen close to Christmas or a birthday or some other event that’s already stretching our budget a bit thin. Dealing with unexpected costs is just a hard bit of truth when it comes to being an adult. Would have been nice if someone had warned us about this while we were kids and dreaming of having ‘our own money’ right?
Having to deal with unexpected costs can be very stressful, especially during the holidays. But! there are ways to help mitigate some of the strain. Some of these methods are better than others. But! When you’re in a real bind the fact of the matter is is that you have to do what you have to do!
Dealing with Unexpected Costs as a Family on a Budget
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Categorize the Problem
When it comes to dealing with unexpected costs I feel like I have learned quite a few hard-won lessons after having children. I love my kids – but they inevitably get sick, hit a growth spurt or break something at the worst possible times!
One of the best methods of dealing with unexpected costs that I have found it to prioritize them. Is the problem something that I have to fix right away or can I get by without it for a little while if absolutely necessary? I like to place these problems in one of three categories. I then use these categories to help me figure out the best way to deal with that issue.
- Priority 1 – This category is for items that we really cannot live without. It also includes issues that would create a safety hazard if not dealt with right away. These tend to be the worst sort of unexpected costs. They usually end up being some of the most expensive ones too! This can also include unexpected medical costs such as needing to see an eye doctor or vet bills. Anything that you really can’t put off goes into this category.
- Priority 2 – These are items that should be dealt with as soon as possible. Problems that are likely to get worse (and end up costing you more in the long term) or that can only be limped along for a very short period of time go into this category. Things like broken glasses or a leaking tire tend to go into this category.
- Priority 3 – Items that get thrown into this category are things that make my life easier but I can go without for at least a little while. When the dishwasher broke it got put into this category – sure it sucked to wash the dishes by hand for a long time but I could do it.
Once I have the issue prioritized I can focus on exactly how I plan on dealing with it. The options tend to be different for each category but by writing it down on a list and having a preplanned way to deal with it really helps lessen the stress. Maybe not the financial burden but definitely the ‘what are we going to do?!!?’ stress of it all.
Dealing with Unexpected Costs, Priority 1
As I mentioned above, these are the worst of the worst when it comes to unexpected costs. These are the problems I dread the most but they are a fact of life when you factor in property, children, and animals! Obviously, the best course of action here is to have a healthy emergency savings account. If you have a savings account that can absorb the cost of an emergency then that’s amazing and it will certainly take away a lot of your stress!
Let’s face it though, sometimes that savings just isn’t available. Maybe your budget just hasn’t allowed for extra savings or maybe you already used it up and haven’t replenished it yet. Whatever the case there are other options available.
It might be time to take a hard look at your assets. Depending on how quickly you need the money and what you have available you might be able to sell one item to save a more important one. Odds are you have something laying around that’s worth a bit of value. That jewelry you inherited but rarely wear or the vintage coffee table that looks really nice but takes up way to much room! It might be time to say good-bye.
If you have a collection of smaller items and the time to do it even a yard sale can go along ways to helping out. Decluttering your house might be a nice silver lining to look at while you deal with your emergency.
Consider a Collateral Loan
If you really just can’t bear to sell something then you might consider looking into a collateral loan. Unlike payday loans which often have exceedingly high-interest rates, it’s possible to find collateral loans with much lower ones. Companies such as Chapes-JPL, located in Atlanta Georgia can offer rates as low as 3%.
Collateral loans tend to be secured short-term loans that use items (typically Jewelry) as collateral. Most of the time you receive about 65-75% of your items value with a 30 day repayment period. Loans can be extended if you need to however and Chapes-JPL will work with you to structure your payments and loan period to best suit your financial needs. While you are repaying your loan your items are stored in secure bank vaults, keeping them safe until you can reclaim them.
Use A Credit Card
Using a credit card to deal with unexpected expenses is an old trick that most of us know quite well. It’s okay if you know you are able to pay the expense off quickly or if you have a card with low-interest rates. Credit cards can get you into trouble and you might end up paying more then the original item was worth!
Still, when push comes to shove sometimes you just don’t have a choice. If that happens then your best bet is to do what you have to do. Then create a budget for repaying it as fast as you can. Come to think of it, this would also apply to repay the collateral loans listed above.
Dealing with Unexpected Costs, Priority 2
Priority 2 unexpected expenses are a pain but somewhat less stressful. These items can normally be limped along and give you a bit more time to prepare before you fix them. Just don’t let them sit too long or they might blossom into priority 1’s on you!
Split the cost between Paychecks
When you have a little bit of time to get something fixed this can sometimes help ease the burden. Rather than trying to pay for it all at once see if you can save half of it from one paycheck and the second half from another. As long as the item isn’t really expensive this can be very helpful. If you can limp it along through three paychecks then it’s even easier.
Search for Sales or no interest payment plans
When you have a bit of time to shop around you can usually find a better deal. Get numerous quotes if you have to call out professionals. Search for sales or even used items if possible. If you have to buy something on credit try to find a place which offers payment plans with no interest time periods and then do your absolute best to pay it off.
Dealing with Unexpected Costs, Priority 3
Priority three expenses are by far an away the easiest when it comes to being a financial burden. They might be the most bothersome for you timewise, however! These items are normally things that make our lives easier and living without them for a while can be challenging! Living without my dishwasher for nearly a year was a real pain in the butt. Still, a dishwasher was a luxury I could live without for a little while. Even forever if it came right down to it! Thankfully that wasn’t the case!
Save for it Slowly
When it comes to priority 3 items you have the benefit of time. If you can only afford to put $10 a paycheck away towards this item then that’s okay! You’ll get there eventually. I found it easiest to set money aside in labeled envelopes for these sort of projects. Since the money wasn’t in the bank it wouldn’t be spent on frivolous items like coffee and eating out. A separate savings account could also work if your bank offers them without a high start-up cost.
Earn the Money with a Side-Gig
I have managed to purchase several expensive items using money earned through side-gigs. Some are more enjoyable than others but there is nothing quite like making your life easier to motivate you! If you’re crafty and already have the supplies consider hitting up local craft sales or even opening an online shop.
If you want to earn from the comfort of your own home then there are ways to do that too! Survey sites might be tedious but they do pay and some places like Swagbucks will give you cash back for purchases you are already making along with money from surveys and watching videos.
Dealing with Unexpected Costs – The Truth
We all know that we should have an emergency fund. Everyone has read the articles telling you to save X amount of months worth of living expenses and this really is truly the best course of action to take. In a perfect world, we would all have a safety net tucked away. But, this isn’t a perfect world. Life happens and sometimes it’s not pretty! When things happen unexpectedly it can be stressful and nerve-wracking. Especially when you have a family who relies on you. Having a plan in place – even if it’s not the absolute best option, is better then flailing in stress and uncertainty.