Are You Ready to Handle an Unexpected Expense in the New Year?

If the holiday hustle and bustle took your budget for a joyride, your finances might not have enough gas in them to cover an unexpected expense. But there are ways to handle these unanticipated costs, even if you’re low on savings or have bad credit.

You have many options, but which one you choose depends on whether your unexpected expense arrives now or later. Keep scrolling to see how this distinction changes the way you handle your next financial emergency.

If Your Unexpected Expense Has Already Arrived

If you’re reading this with a bill in your hands, and the due date is creeping closer each day, your focus is on damage control. 

Put it on Credit

When confronted with an expense upfront, most people will reach for the plastic in their wallets. But this may not be an option if you’re still paying off holiday expenses. 

Take out a Direct Installment Loan

Borrowing a direct installment loan is another option when you don’t have space on your credit card. They provide you with the funds you need before you have to pay them back over multiple, fixed payments. 

How much they cost depends on a few factors, including your location, credit score, and direct lender. Online direct lenders may offer different rates and terms depending on local lending regulations and your borrowing history. Borrowers with high scores tend to have more luck at getting approved for low rates, while borrowers with bad scores may face higher rates of rejection. However, with some lenders, your borrowing history may only affect your loan amount versus the rates of and term of the loan.

If you have bad credit, some online direct lenders provide installment loans for bad credit. However, they may come with higher rates, so always compare installment loans before you lock-in to one. 

If an Unexpected Expense Hasn’t Arrived Yet

Just because you haven’t had to deal with an unexpected expense yet doesn’t mean one isn’t lurking around the corner. You might get sick enough to see a doctor, your engine light might come on, or you may need to call a plumber to fix a late-night leak. 

While there’s no guarantee you’ll face these exact bills or repairs, there’s a good chance you’ll encounter something you haven’t thought to budget for by name. Here’s how you can be ready for anything that comes your way.

Save Money

Although you may not know what will go wrong in the future, you can prepare for it by saving in an emergency fund. An emergency fund is your safety net when you don’t have enough cash on hand to pay for a plumber’s visit. 

Try setting aside a little bit of cash from each paycheck in an account that you can easily access. Over time, keep saving until your fund can cover up to six months of living expenses.

Invest in Insurance

Insurance can help you afford life’s biggest expenses — think a car accident, chronic health concerns, or a house fire. Shop around to compare policies that cover these incidents. The average insurance policy will cover a large portion of repairs and bills following an emergency, but you will have to pay a monthly premium to be covered.

Remember This for Next Year

Facing an unexpected expense when you don’t have a lot of money to spare is tough. Remember how hard it is when the holidays roll around again next year. Try to limit spending and keep to a budget. More importantly, tweak your budget throughout the year. Saving a little bit of each paycheck can help you prepare for an unexpected expense. 


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