Overview
Surprises are an inevitable part of life. The only thing we can be certain of, is that we will be hit with unexpected events, which includes unexpected expenses. Whether you run into an urgent car repair, an unanticipated medical bill, or simply run out of funds for important purchases, there may be potential strategies to help you cover the cost. However, some of the strategies may come with additional risks. Therefore, choose your method wisely and only after proper consideration.
Crediteck offers one potential option. You could apply for a personal loan online via Crediteck to help you close a gap in cashflow. We don’t check credit scores or credit reports during the online application process.
Below, let’s consider five different ways to deal with unexpected expenses. Choose the method that best corresponds to your situation at this time.
Method #1: Review Your Budget and Reduce Your Spending
Before you take any drastic measures, consider reviewing your budget and lowering your spending. Minimize unnecessary/frivolous spending for a period of time, from a few weeks to a few months, in order potentially to free up resources to pay off more pressing expenses. While cutting out small expenses like a daily coffee or a lunch at a chain restaurant may only provide a modest amount of savings, reducing larger expenses may be more helpful e.g. opting for more affordable housing, more affordable car insurance, or a cheaper phone plan.
If you find that there is no amount of tweaking the budget that will allow you to deal with the unexpected expenses, you may need to implement more daring strategies.
Method #2: Use a Credit Card Strategically
Check your available credit card limit. Avoid maxing out your credit card and only use the amount you need to cover your immediate expenses. Ideally, you would choose a credit card with a low interest rate or a 0% initial APR offer. If the credit card offers a cashback option, that may benefit you as well.
Pay off the credit card steadily and strategically. You can choose a debt repayment strategy that suits your preferences, such as the avalanche method or the snowball method, outlined below:
- Avalanche method: Pay off the debt with the highest interest rate first, followed by smaller debts.
- Snowball method: Pay off the smallest debt first, followed by larger debts.
Chip away at the balance until it is fully paid off, including any applicable interest or fees. The key thing is to maintain a consistent and disciplined approach over the long term, rather than acting on impulse or veering off track.
Method #3: Draw from Your Emergency Fund, if Any
According to one survey, almost half (49%) of Canadians have no savings for an emergency. According to the same survey, more than half of Canadians live paycheque to paycheque. This means a high number of Canadians are not able to save any money on a regular basis – all of their income gets eaten up by monthly expenses, and the room to cover unexpected expenses ranges from minimal to nonexistent.
That’s why it’s important to start an emergency fund as soon as possible. If you can set aside even a small amount of money per month – even $10 – it would gradually accumulate. Aim to have at least three to six months’ worth of expenses saved up. That may seem unrealistic at the moment, but little steps add up quickly over the long term.
If you currently have an emergency fund, you are one of the lucky ones and can draw upon it to cover budget shocks without resorting to borrowing money or using a credit card. This is the preferred option for dealing with sudden expenses, given that borrowing can be costly.
Method #4: Ask Family or Friends for Help
While it is never ideal to ask family or friends for money, they may be willing to offer interest-free or low-interest loans. In most cases, lenders are not going to offer interest-free loans or, depending on your credit history or borrower profile, low-interest ones. Therefore, it may be significantly easier to pay off a loan from a family member or a friend. It may be awkward to ask those you know for help, but sometimes, life requires it. Make sure you pay back the loan in a timely fashion and express your gratitude to maintain a healthy and good relationship.
Method #5: Apply for a Personal Loan via Crediteck
If all the other options seem untenable, you might want to apply for a personal loan via Crediteck. Personal loans are repaid over a series of installments, including any applicable interest and fees. The amount you get approved for may depend on a variety of relevant factors. If you have trouble repaying your loan, reach out to the customer service team. It’s best to maintain an open line of communication with your lender, as your lender may be willing to work with you and defer payments if needed. If you don’t ask, you will never know.
Final Thoughts
Everyone confronts unexpected expenses from time to time. Some have more of a financial cushion to deal with the inevitable shocks than others, which is why it’s important to start building an emergency fund as soon as possible. Having an emergency fund is a must in today’s volatile economy. If you need a quick loan, apply via Crediteck. We don’t check your credit score or credit report during the online application process. Even individuals with low credit scores may qualify for personal loans!
