Everyone faces financial emergencies at one time or another. If you haven’t had to face one yet, or if you have and were totally blindsided, why not learn a few effective tactics for facing the next money emergency that comes along? The bottom line for parents is there are smart and not-so-smart ways for dealing with unexpected events. If you take defensive action and start planning today, it’s possible to minimize the pain of an unexpected expense. There are unplanned financial incidents that anyone can knock an otherwise conscientious parent for a loop. Here’s a quick roundup of the most common and how you can prevent or deal head-on with each one.
Loss of Job
Losing a job is perhaps the most devastating of all personal challenges. Not only do you face an unknown number of weeks without a paycheck, you have to work full-time finding a new job. The only way to get through such stressful times is to cut spending to the bare minimum, rely on whatever you’ve managed to save, and, as a last resort, dip into retirement accounts to survive. Job loss is the main reason people set up emergency funds, so don’t wait for the bad news. Start putting between five and ten percent of each paycheck aside. Use a payroll savings plan so those all-important dollars go straight to the stash and you don’t have ready access to them until a rainy day comes along.
Emergency Dental Work
Fortunately, most dentists are willing to work with patients and arrange reasonable repayment programs. If you don’t have any savings or an emergency fund, it’s smart to pay at least a couple hundred dollars down to show good faith and minimize future interest. An ideal method is to use ThinkSaveRetire.com to find the best payday loan online. The advantage of this tactic is that you can get the money fast, the application process takes about two minutes, and you likely won’t need the entire amount for a dental down payment. That means you can stash some of the extra cash into an emergency fund. Often, payday loans are the perfect solution for an unpleasant surprise.
This is a situation that can really wreak havoc with your finances. Suppose an immediate relative passes away and you absolutely must attend the funeral services in a distant city. Air tickets are not cheap, and on short notice it’s difficult to get early-bird discounts. There are two ways to deal with this very unpleasant reality. In addition to the grief factor, you’re in need of funds for air fare. Go online and find the cheapest ticket option. Call the airline and ask about special rates for emergency travel. Most of the major carriers offer discounts of up to 50 percent for passengers who are attending funerals. Use savings, an emergency fund, or a payday loan to cover the now-lower ticket price. Avoid using credit cards. If the destination is so far away that even a discounted air ticket is still a burden, call your family and see if someone can help you with the cost.
Surprisingly High Tax Bills
The IRS has a knack for foisting surprises on people. If you’re hit with a tax bill that’s twice as high as you thought it would be, or even higher, there’s a lot you can do. Call the IRS hotline number printed on your bill asap. The federal taxing authorities are usually willing to help you set up a payment arrangement. If you have a couple hundred dollars to put down, do so. It will prevent excessive interest and lower the total bill. If you owe more than $10,000, see if you can get an OIC agreement. That’s an offer in compromise and is a way to settle for around half of what you owe. Contact an EA (enrolled agent) to help you. EA fees are reasonable and you stand to save a huge amount of money if the OIC is successful.
The death of a loved one can deliver an emotional shock to your life. Unfortunately, you could also be stuck with a huge funeral bill. Avoid using credit cards. See if you can access any IRA or 401k funds with a hardship waiver to avoid the penalty. Or, use savings or a payday loan to get at least part of the funeral expenses paid asap.
Car Repairs That Can’t Wait
Some vehicle repairs can be put on hold, while others can’t in order to keep up with maintenance. If you need a water pump, carburetor, transmission, or other pricey kind of car repairs and don’t have the money, ask the mechanic about a payment plan. Some will refuse you outright, but others will work with you as long as you pay at least half of the cost right away. That means turning to your old friends: savings accounts, payday loans, and family members.
Home repairs are one of the most common reasons people find themselves on the short end of the money stick. The good news is that you can often get reasonable repayment terms from contractors. Here’s where working the telephone can save the day. When you’re getting price quotes from local repair services, ask about price and financing. You might have to opt for a slightly higher total cost in order to get a reasonable repayment package. Avoid putting any of the expense on plastic.
We love our pets, but when they get ill and need treatment, our finances can suffer. Unless you have pet insurance, ask your vet about payment arrangements. Most veterinarians are willing to negotiate repayment terms with clients. Avoid using high-interest cards to pay unless the doctor is unwilling to set up a plan.
The only good news about unexpected medical expenses is that most healthcare providers offer multiple types of repayment plans, some at very low rates of interest. They would rather have you pay them back within two or three years than see you default on the bill or file bankruptcy. So, speak with providers as soon as possible if you suspect that an upcoming medical fee will be excessive.