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Money 911? 4 Plastic-Free Steps to Covering an Unexpected Expense

Even with the best laid plans, there’s often no way to foresee all the ways a money emergency can occur. One day it’s your roof leaking during a rainstorm; the next day it’s the tooth you accidentally chipped. Rarely, we feel prepared for an unexpected expense.

These types of expenses seem to happen at the worst times, and they rarely come cheap. And before you know it, your budget is several thousand dollars out of whack and you’re reaching for your credit card.

But if the thought of racking up big balances makes you cringe, take heart. Follow our flow chart below to see how you can tackle financial emergencies without having to swipe your card.

Tap your emergency Fund

These are the savings you keep earmarked for an emergency – and not your dream vacation or a new pair of shoes.

On average, you should aim to have somewhere between six and nine months’ worth of your take-home pay stashed away, depending on the size of your household and how predictable-or not-your paycheck is.

Trim something from your budget

The next way to free up funds is to comb through your budget and find where you can temporarily cut back.

Take a look at your fixed costs (e.g., utilities and other costs that don’t change much each month) and your flexible spending (e.g., work lunches and other variable expenses).

Bring in Some Income

Been thinking of picking up freelance work or putting in overtime at the office?

Or perhaps it’s time for a spring cleaning, so you can finally turn that clutter in your closet into cash. Your cash-flow situation is as good a reason as any to finally kick those plans into full gear.

Look for a low-interest personal loan

Still need to come up with a substantial amount of cash? At this point, you may need to look into a personal loan, which often offers a lower annual percentage rate (APR) than credit cards, particularly if you have good credit.

Before you sign on any dotted lines, however, it’s important that you shop around to ensure you’re getting the best loan terms possible. You can apply for personal loans through banks, credit unions, and peer-to-peer lending sites, through which you’re borrowing directly from other people who are investing in your loan.

unexpected expense infographic

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