Covering Unexpected Expenses Without an Emergency Fund

During times of financial uncertainty, the thought of facing unexpected expenses such as a home or car repair can understandably cause added anxiety. Having an adequate emergency fund to use as a buffer in these situations may not be possible for everyone. In fact, about 40 percent of Americans currently have less than $400 in their bank account to cover a financial emergency.  

If you encounter an unexpected expense and don’t have an emergency fund to rely on, don’t worry. While it may take some work, there are alternate options you can explore. We’ve compiled a list of five ways to help cover an unexpected expense without an emergency fund. 

1) Adjust Your Budget

When you find yourself strapped for cash, one of the fastest actions you can take is to adjust your budget. Review your statements and identify areas where you could reduce your spending. Immediately seek out and cut back on nonessentials such as eating out, shopping, entertainment, etc. 

Once you’ve reduced nonessential spending, start to explore additional ways to lower your recurring monthly expenses. For example:

  • Cancel or pause ongoing subscriptions such as gym memberships or streaming services. 
  • Contact your creditors and providers to see what options are available to temporarily defer or reduce your monthly payments during times of financial hardship. 
  • Shop around for different home and auto insurance providers—or negotiate with current providers—to see if you can lower your rates. 

2) Use a Credit Card 

Using a credit card to cover an unexpected expense can be a quick and convenient resource if you have the credit available. While opting to use a credit card may work in a pinch, it’s important to prepare for the impact of carrying a larger balance on your future budget and credit score — especially if you are already struggling with credit card debt. 

To make the best use of a credit card in a situation like this, seek out one that offers a low-interest or no-interest promotional period. Having a set deadline for when your interest rate will increase can be motivation to pay off the balance before the interest starts to accrue. 

3) Sell Personal Items 

One option to help you quickly generate funds is to sell your unused or gently used personal items. Look around your house to see which items are laying around that you may no longer need or use. Depending on the amount of your unexpected expense, selling items such as clothing, electronics, or household goods can be an excellent outlet for earning extra cash. 

If you find yourself needing a significant amount of money, you may consider selling bigger-ticket items such as a car, boat, or motorcycle. The process of selling these items may take longer, but you’ll end up with a greater influx of cash at the end of it.  

While it’s never easy to part with your valuables, keep reminding yourself that the situation is temporary. Remember, you can always repurchase those items at a later date when your finances have stabilized.

4) Ask Family and Friends for Help

While it can be an awkward conversation to have, asking a financially stable family member or close friend to help with your unexpected expense can be an ideal option. If your loved ones are willing to help, you’ll avoid having to deal with a credit check or other rigorous credit application process which may not have turned out in your favor.

Before deciding to reach out, keep in mind that money matters between family and friends can get tricky if you’re not careful. If the person you ask does offer to help, be sure to openly discuss all financial aspects of the agreement, including a repayment schedule and any added interest. The goal is to have complete transparency so that you’re both on the same page and comfortable with the terms. This can help eliminate any miscommunication and keep your relationship healthy.  

5) Apply for a Personal Loan

Sometimes, your unexpected expense can cost more than you originally anticipated. If you find yourself needing more money than you can scrounge up with these tips, a personal loan can be a great option.  

The main advantage of using a personal loan is that it provides you with quick access to the funds you need during a financial emergency with a typically lower interest rate than most credit cards. Plus, you’ll know your repayment schedule upfront, so you won’t have to worry about figuring out how much your loan will end up costing or the timeline of when you’ll have it paid off. Having that peace of mind can make dealing with the stress of an unexpected expense much easier to handle. 

At Credit Direct we understand that life can sometimes be complicated. That is why we created our online personal loan application to be a simple and straightforward process. If you find yourself stressing about how to pay for an unexpected expense, contact us today. Five minutes is all it takes to complete an application and review your potential offers.

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