Emergencies happen – especially in your finances. That’s why it’s so important to have your emergency fund on hand. Check out this awesome article from Jessica Kane on some of the most common emergencies. You can read more about her at the end of the post.
Financial experts advise that an individual have enough money to pay for several months worth of expenses if a financial emergency strikes. In addition, it may be worthwhile to have a credit card or other funding source handy if such a situation occurs. This is because an unexpected expense can occur at any time whether you are ready for it or not.
1. You Lose Your Job
On Monday, you walk into work ready to face another week at the office. On Tuesday, you are let go and left to wonder how you will pay your bills. Whether it is through corporate downsizing, because your boss doesn’t like you or because you did something to violate company policy, a job termination is something that you rarely see coming.
2. You Suffer an Illness or Injury
A car accident or a hard hit while playing a pickup football game could cause serious injury that requires surgery or long-term care. An unexpected diagnosis of a serious illness while at a routine checkup could result in a hospital bill of thousands of dollars or more even if you have insurance.
3. Your Car Needs Major Repairs
Even a newer car needs maintenance to keep it running to its full potential. A new set of brake rotors, pads and shoes could easily cost $600 or more while even the most basic economy tires could run you $500 for a set of four. If you need a new engine or transmission, that will cost upwards of $3,000 or more and may not be covered under your car’s warranty. Older cars could be written off as a total loss by the insurance company, which means that you fix the damage yourself or look for a new car in your price range.
Check out these 5 easy at-home car repairs you can do yourself to save some money.
4. A Loan Payment Increases Unexpectedly
If you have an adjustable rate mortgage, your loan payment will depend on the current interest rates. In the event that rates go up, your payment could go up as well. Student loan borrowers who are on income-based repayment plans could see their payments go up significantly if they don’t submit required paperwork on time.
5. Frozen Account or Reduced Credit Line
Without warning, your bank could freeze your account for insufficient funds or if a debt collector wins a judgement to collect on a past due debt. The IRS could seize your bank account to collect back taxes or garnish wages before they make it into your account. In some cases, credit card companies will reduce a borrower’s credit limit, which could make it impossible to make a major purchase or charge a major expense such as an upcoming tax payment.
A financial emergency can wreak havoc on your life. One moment, you are financially stable or secure while the next you find yourself scrambling to stay afloat. However, you can help yourself by preparing ahead of time to ensure that you can weather such a financial storm and minimize the damage an unpredictable situation can cause.
About the Author:
Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for Checkworks.com, a leading supplier of personal and business checks.