If you are like me, and almost every other person I know, you live paycheck to paycheck.  I can’t wait until payday when I can finally go grocery shopping or fill up with gas.  So, what happens when a major expense arises – one you didn’t anticipate?

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Plan for the unexpected

Ideally you should be saving some money each month for just such a situation.  It doesn’t have to be much, but you need to set aside whatever you can afford – $20, $50, $100, etc.  I have an automatic transfer set up with my bank to transfer $50 into our savings account every two weeks on my husband’s payday.  This has helped us countless times.  Yeah, it’s only $100 a month, but if we don’t tap into one month, the next month we’ve saved up $200, and it can add up quickly.

We also have a $50 automatic transfer into a Roth IRA account.  I didn’t know this until recently, but I can withdraw my contributions at any time – just not the interest.  Luckily, it hasn’t come to that, but it’s one of those in-case-of-emergency things to have in my back pocket.

If you didn’t plan

Inevitably there will be something that comes up that you either you didn’t plan for or your emergency fund just doesn’t cover.  Since I cut up all my credit cards I don’t have them to fall back to, but there are some other options.

1.  Use a store credit card.  If you need a new dishwasher or clothes dryer, etc., most big department stores offer interest free credit cards if you pay the balance off in a given time period.  Okay, so it’s still an evil credit card, but it’s interest-free (if you pay it off on time so make sure you do!), so this is one time to take advantage of the convenience credit cards can offer.

2.  Work out a payment plan with the company.  Since I’ve always relied on credit cards, I didn’t even know this was an option until recently.  A friend of mine had some overdue medical bills so she called up the hospital and worked out a payment plan that worked for her.  I’ve heard that vets do this, too, as well as some auto mechanics.  It never hurts to ask the person or company you are dealing with before you break out the plastic.

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3.  Peer-to-peer lending.  This is a relatively recent financial tool – one that I haven’t tried, but I’ve heard good things about.  Lending Club is the most popular.  How it works is that you apply for a loan through them and then potential lenders (Lending Club investors) can fund your loan.  The interest you pay goes to an individual investor and not a big corporate bank.  That’s music to my ears!

Act Now!

As soon as you read this post I want you to set up that automatic transfer from your checking or savings account.  Set it up to transfer on payday when you know you have the money.  There are no excuses and believe me when I tell you it will get you out of many binds.

Comment: What are some unexpected expenses that you’ve had to deal with?  How did you cope?

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