How to best handle unexpected expenses

Unexpected bills can knock your budget or savings goals off track. These strategies can help you stay the course when something comes up.

We all have our monthly bills: rent, utilities, insurance, car payment, student loans and more. We all buy groceries and occasionally eat out. These are the normal expenses we have all come to expect and try plan our budgets around.

The unexpected is when the muffler falls off the car or an accident lands you in the emergency room. According to a recent survey, only 39 percent of people would be able to pay a $1,000 unexpected bill from their savings.[1]

Whether you have an unexpected bill you need to pay today or if you’re just starting to plan for the future, consider these strategies.

Work with credit card companies

Americans have an average credit card balance of $6,354, which can result in payments that take large chunks out of your paycheck.[2] The burden of these payments can grow as interest builds, especially if you are behind for a month or two. There are options for working with your credit card lender to reduce your commitment, and many companies will be happy to discuss your options. You can ask them to erase past late fees, or even negotiate a reduced monthly payment that’s more aligned with your paycheck. Some of these options may affect your credit or credit lines, so be sure to research your options.[3]

Sell your stuff

Gone are the days of yard sales for making a quick payday. These days, the entrepreneur can turn to ecommerce websites in order to sell their belongings. You can put last year’s wardrobe up for sale on auction sites, and make money producing your niche art projects on artsy sites. You may even be able to sell some things via the new, hyperlocal community apps, which are replacing the message board at the local grocery store.[4]

Earn extra income

If you work a typical nine-to-five job, you can easily feel exhausted at the end of the day. But your free time at night and on the weekend can be an option for building up additional savings to quickly pay off an unexpected expense. Consider traditional jobs — retail, customer service or the food industry — but also think about taking on smaller projects, such as participating in online marketing research or virtual paid focus groups.[5]

Take on a short-term money loan

Taking on a short-term money loan from a financial institution can help ease the one-time cost of an unexpected expense. Consider small loans — $100 to $1,000 — that you will be able to pay back within your budget. These loans will allow you to spread the costs of an expense over a number of months, instead of forcing you to pay the amount upfront. Review the terms of any loan agreement carefully, especially the fees and interest rates you could be paying – some of which could be significant, depending on the lender.

Re-budget to live below your means

There are some expenses that you cannot avoid — housing, transportation and food — but you can consider cutting back on nonessential spending. The average American spends $2,913 on entertainment each year. While it is important to enjoy yourself every once in a while, cutting back on a few nights out or canceling one of your online video streaming services will show up in your bank account. Same goes for reducing purchases for personal care products and services ($707/year) and apparel ($1,803/year).[1]

Ask for a paycheck advance

Depending on the company rules, you may be able to get paid in advance for work you will be doing in the coming weeks. All companies are different, and you should talk with your boss, manager or a member of human resources about the specific company guidelines.[2]

Make sure you’re prepared for next time

Whatever your unexpected expense, one or more of these strategies will at least help to get it paid off. Consider saving money in a high-yield savings or money market account going forward — having even a small amount saved will help you when it comes to the burden of your next unexpected expense.

Consider a small personal loan to cover cash flow gaps. Find out more here.


[1] “Most Americans don’t have enough savings to cover a $1K emergency,” Bankrate, January 2018.
[2] “State of Credit: 2017,” Experian, January 2018.
[3] “How to negotiate debt with your credit card company,” Credit Karma, December 2017.
[4] “7 Apps and Platforms to Help Build Community in Your City Neighborhood,” Ziptopia, accessed July 2018.
[5] “Are Paid Surveys Legitimate or Scams?,” The Balance Careers, March 2018.
[6] “How Does the Average American Spend Their Paycheck?,” The Motley Fool, April 2018.
[7] “How to Ask Your Boss for an Advance,” The Nest, accessed July 2018.