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9 Ways to Pay for Unplanned Expenses (When You’re Already Broke)

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9 Ways to Pay for Unplanned Expenses (When You're Already Broke)Are you part of the nearly 60% of Americans that don’t have enough money in savings to cover an unplanned $1,000 expense? Whether it’s a broken hot water heater, a necessary car repair, or an unexpected medical expense, we’ve all experienced unplanned expenses and panicked as to how we were going to pay for them.

If you’re already living paycheck to paycheck and have other debts you are paying, these unplanned expenses can put you in financial dire straits. Here are 9 ways to pay for life’s emergencies without ruining your financials.

Unplanned Expenses: 9 Ways to Foot That Bill

If you’re already broke and experience an unexpected expense, it can feel overwhelming. You do have options, though, even if you don’t have the funds to pay the expense.

1. Borrow Money

If you really find yourself desperate, consider borrowing money from family or friends. While this might not be ideal, if you work out a plan to pay them back, with interest, and stick to it, they may be more likely to lend you the money.

2. Payment Plan

You would be surprised at how many places will work out a payment plan with you for either no or very low interest. The IRS will allow you to make payments (that you set) if you owe taxes. Most hospitals or medical providers will also allow you to make payments.

Most places are just happy to get a payment of any kind from you, so they are likely to work with you to identify a reasonable monthly payment that fits into your budget. Don’t be afraid or embarrassed to ask for a payment plan.

3. Cut Spending

Are you up to your ears in high-rate credit card debt? Don't worry; there is a way out! Here are 7 smart tips for getting out of credit card debt fast. Does the thought of checking out your credit score make you want to scream? Credit cards are a great way to lessen that anxiety. Like all good things though, as quick as it can help, it can also destroy if you don't pay on them. Once you pile on the credit card debt, it can be a challenge to get out. Don't let this discourage you. There are a few ways to save yourself from drowning in numbers. Here are a few tips on getting rid of credit card debt and claiming your life back. 1. Stop Using Your Card If you know for a fact that you have terrible spending habits, hide your card from yourself before you sink too far into the pit. You can cut it up, lock it in a safe and lose the code, package it in duct tape and bury it in the backyard, use a wood chipper, the options are endless as long as it is out of your hands. If you're using it to pay your bills then, try and set up a payment plan with your utility company. Or downgrade your house or car. Fitting your bills into your budget will make you less likely to use your credit card and give you a little breathing room for managing credit card debt. 2. Make a List of All Your Debt Studying your enemy is one of the key factors of defeating it. Tis means you should make a list of all the credit card debt you've currently got under your belt. Making a list will help you figure out which one you should prioritize and pay off first. How do you determine this? Check out the standing of all the existing credit card debt you have and their interest rates. 3. Come up with a Strategy Credit cards can do massive damage to your credit score so you want to pay the one with the highest interest off first. After you've paid off that one, go on to the next one. Eventually, you will pay them all off as you go down the line. Make sure you continue making minimum payments on them after so you don't find yourself drowning again. 4. Try to Get a Lower Interest Rate Not all credit card companies will be agreeable about giving you a lower interest rate, but it never hurts to try for the sake of getting lower payments. Sharpen up your negotiation skills by using any kind of leverage you can to get them to work with you. Bringing up how long you've been with them or your good standing up to this point might get them to budge a bit in your favor. If they are completely unagreeable, then transferring your debt to a new, lower-rate card might be an option, or you can take out a personal loan. Personal loans can be a little harder to get, but you'll find that if you can get one to pay off your debt, the interest rate is usually way lower than your credit card one. Eventually, the loan will replace your credit card debt with an installment loan. Believe it or not, this will actually look better on your credit. To find out more on personal loans you can visit this website. 5. Find a Payment Plan If getting a lower interest rate still doesn't work out for you, then it's time to figure out some other options. The easiest thing you can do is either ask for a deferment or a new payment plan. Credit card companies like money, so they will most likely work with you on this so they don't have a non-paying account in their system. 6. Limit that Spending If you limit your spending, you'll have more money to put toward your credit cards each month. Just think: skipping out on that morning coffee could allow you to pay your debt faster and lower your interest rate. If you want to make a little game out of it you can join spending challenges. This could mean going on a 14-day to a year-long spending ban depending on what's best for you. This is recommended if you just don't trust yourself to stay on budget. If you have self-control, then it's just a matter of keeping up with it and throwing these savings into your loan debt. 7. Put Any Extra Income Towards Credit Card Debt Budgeting can only take you so far so on top of putting any extra savings toward your debt. You can take on little odd jobs for extra money. There most likely a ton of options available for you in your area. You've just got to call around or surf the web to seek them out. Consider turning any kind of hobby into a money-making business. For example, if you know you're a great artist, then you can open yourself up to commissions. You might be surprised at how many people may pay. A Guide to Getting Rid of Credit Card Debt Just because you feel like you've dug your own grave, doesn't mean you have to stay that way. There are ways of getting rid of credit card debt. Come up with a foolproof plan to tackle it, try to find a lower interest rate, ask for a new payment plan, or just take on a few extra odd jobs. Put your credit cards back in your control. If you're new to the credit card world, you could make a lot of mistakes that will put you into debt without even realizing it. Visit our blog for a beginner's guide to credit cards

Dramatic changes to your spending habits sound depressing, but they might be necessary to pay for whatever it is that you need. You might even find that going without for a few months teaches you that you don’t really need things like cable, eating out, or organic groceries.

Take a look at your monthly expenses and see where you can cut things out. Do you have memberships you don’t use? Cable that you can get rid of? A cell phone plan that costs you hundreds each month?

Drastic changes to your monthly spending could uncover the cash you need to pay your debt.

4. Apply for a Personal Loan

A personal loan is another way to pay for an unplanned expense. Even if you have poor credit, you might be able to get a loan. Bonsai Finance is a great resource for loans that don’t require a credit check. You’ll often have to pay a higher interest rate, but if you need the money fast, personal loans could be the answer.

5. Use a Credit Card

have more than one credit cardIf you have a credit card with a higher limit or enough available credit, that is a quick way to pay your debt. Of course, you’ll need to consider the interest rate on the card and how long you think it might take you to pay it off.

This might be the last resort if you can’t come up with the cash to pay for your expense now, as you could end up paying double for it if you use a credit card with a high interest rate.

6. Sell Your Stuff

Take a look through your home. How much stuff do you actually use? Do you have clothes, books, appliances, or furniture that you really don’t need or use? Sell it!

It’s easy to sell online using Craigslist, Facebook Marketplace, OfferUp, or ThredUp. There are lots of sites out there where you can sell anything from clothes to furniture.

An extra bonus is that you’ll also be de-cluttering your home while making some cash.

7. Pick up a Side Hustle

10 Ways To Give Your New Side Hustle The Best Shot At Success

There are lots of opportunities out there for a side hustle to make some extra cash. From driving for Uber or Lyft to delivering groceries and take-out food to blogging from your couch, a side hustle will help you pay for those unplanned expenses but also might help you get out of debt too.

Throw any extra income towards debt and don’t spend it frivolously, and you’ll see your debt go down much quicker.

8. Borrow From Retirement Account

If you have a retirement account, you might be able to borrow some of the money and pay it back. Be careful here, though, because you might get socked with high penalties and taxes for taking an early withdrawal. It’s best to talk to a financial professional about doing this to make sure it’s really worth it for you.

9. Use Your Home Equity

If you own your home, you can use your home equity to get a home equity loan or open a home equity line of credit. This basically lets you use the equity you have in your home to secure a loan or line of credit.

The Bottom Line

Don’t let unplanned expenses spell financial ruin for you. Take a deep breath and review your options. There are ways to pay for these expenses. A situation where you have to scramble for money is also a good reminder to consider building up an emergency savings account.

Set aside a little bit of money each paycheck or each month to have for those unexpected costs. Knowing that you have the money to pay for a medical expense or emergency car repair will give you peace of mind.

For more resources on getting out of debt, managing your money, and earning and investing, explore some of our other blog posts. We also offer financial coaching and business coach. Contact us today to see how we can assist you in reaching your financial goals.