Wednesday, September 14, 2022

How To Pay For Unexpected Family Expenses

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There are many costs involved when running a family household. While some costs can be scheduled and easily budgeted for, others can come as a surprise. Examples include:

  • Medical bills

  • Vet bills

  • Car repairs

  • Appliance repairs

  • Home repairs

These unexpected costs can catch out many families. However, there are ways of still financially planning for these expenses, as well as various ways of getting financial assistance. Below are just several tips on how to pay for unexpected family expenses.

Have you got any savings?

It’s worth always keeping aside some savings that you can dip into if an emergency arises. Such savings should be accessible at any time and should be regularly topped up.

Where is the best place to store savings? Ideally in a savings account. Such accounts will keep your cash secure and allow you to collect interest. 

There are many different types of savings accounts that you can look into. Some such as HSAs are designed to be used purely for medical expenses, but have the advantage of allowing you to contribute tax-free earnings paid directly by your employer. 

The more you can contribute to your savings the better. That said, even if you’re only able to contribute $10 per week, that’s better than nothing - it will help you reduce the cost of unexpected expenses. 

Can you pay in installments?

Many hospitals, vet clinics, car repair centers and even some handyman services offer installment plans. This allows you to pay large expenses in multiple installments over a period of a few months, which is much more affordable than having to pay it all in one go. These installments may not have interest, making them potentially better than a loan. 

Not everywhere will advertise these installment plans, so you may have to ask. Make sure that you can afford the installments offered.  

Should you borrow money?

Using a credit card or taking out a loan is of course another option. However, you should be careful of relying on these borrowing methods too frequently, as you could accumulate a lot of debt. Taking out new loans or lines of credit also requires you to have a good enough credit score, which some people may not have. 

If you do decide to take out a loan, take your time to shop around. If you’re supporting a family with a low income, it may be worth looking into credit unions and loans targeted at low income households - these may have better interest rates. In extreme cases where you need lots of money, there may also be options like refinancing your home, equity releases or even accessing your 401k early.

Can you sell items you don’t need?

A lot of people have unused and unwanted possessions in their home that are of value. Instead of letting these items gather dust in your home, consider putting them up for sale to get yourself some cash. This could be money to put towards a vet bill or a car repair. 

Some of the items that can be worth selling include old gadgets, unplayed musical instruments, unused sports/exercise equipment, old books, kids toys and clothes that are still in good condition. 

Are you insured?

It’s possible to take out insurance to help pay for certain costs that may arise. Some people avoid insurance because they don’t like the idea of paying for something that may never happen. However, if disaster does strike, you won’t have to pay a huge lump sum - making the small monthly fee worthwhile.

Just what types of insurance are actually worthwhile? You can take out insurance for all kinds of potential disasters but it’s best to consider the ones that are likely to be most costly and serious. Health insurance is something everyone should have in place - family health insurance schemes are a great way to save costs. Homeowners insurance is also worth having to protect you against disasters like burglary, fire and natural disaster. 

Make sure to shop around for insurance rates to get the best deal. Be wary that the risk of you making a claim can affect your insurance rates and that sometimes its better to take out insurance early. For example, a pet insurance scheme could be much cheaper for a puppy than an older dog because there’s less risk of a puppy needing to frequently go to the vet - some insurance schemes will allow you to pay a fixed rate for the duration of the dog’s life, which could save you a lot of money later down the line. 

Are you eligible for legal compensation?

If a disaster occur which is directly the fault of someone else, you may be able to file a lawsuit. If you win your case, you’ll be rewarded with financial compensation, which could help you pay for recovery costs.

For example, if you injure yourself in a car accident that was another driver’s fault and you need medical treatment, it could be worth hiring car accident lawyers to file a lawsuit against the driver so that you can use the compensation to pay for treatment. The money could even be used to pay for any car repairs if your car was also damaged.

Legal battles are not always simple and you may sometimes have to wait a while to receive compensation. That said, even if you have to take out a loan in the meantime, a successful lawsuit could help you to pay off this loan. 

Can others help you raise funds?

In some cases, you may be able to launch a crowdfunding campaign. Many people do this for expensive medical treatment - family and friends and even strangers may see this as a noble cause and donate money to you.

There are also charities that can help in certain situations. For example, some of these charities may be able to help you pay for medical bills. 

Are you able to freeze other payments?

It’s possible that you may be able to take the money used to pay your bills and apply it to unexpected expenses without getting into arrears. For example, some lenders may be willing to freeze debt payments for a month or two - it just means that your repayment period will be extended by another month or two. All you have to do is ring them up. 

You’re more likely to be successful if you warn creditors far enough in advance and if it’s a worthy family emergency. If you are already in arrears, creditors may also be less sympathetic. Take this into account before you contact your creditors.

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