Friday, July 19, 2024

4 Reliable Ways to Pay Off an Emergency Expense

As a working professional, homeowner, or someone who has a fair share of responsibilities, expenses are unavoidable. Sometimes, these unforeseen expenses pop up because of events like medical issues, family emergencies, or sudden price hikes. Alternatively, you may face unplanned renovation costs when fixing your home or additional costs for planning a wedding. There will be times where debts arise, and you face a time crunch to pay them, wondering where the money will come from.

More than half of Americans live paycheck to paycheck, unprepared for unexpected expenses. However, there are many ways to get fast money to help you pay off an emergency expense, whether it’s through a loan, a special fund, or doing much-needed financial restructuring.

Getting a Car Title Loan

One of the best and quickest ways to pay off an emergency expense is to secure a car title loan. Also known as a pink slip loan, a car title loan allows people looking for quick financial support the chance to secure money without needing to go through credit checks and extensive investigations.

As long as you’re 18 years or older, can show your insurance, proof of residency, and other documentation, you can get pre-approved for a car title loan. Plus, you should not have any money owing on the vehicle, meaning it’s fully paid off. Unlike a traditional bank loan, which requires applicants to wait several business days before approvals, lenders approve applications for car title loans almost instantly, as long as the basic requirements are met.  Lenders will subsequently put a lien on the vehicle to secure the loan. Borrowers can use the loan to cover their emergency debts and, as long as they have some form of income coming in monthly (job income or insurance benefits), they can pay back the loan. Once the loan is paid off, the lien is removed from the vehicle.

The car title loan uses the equity of the car and the car’s title as collateral. As long as you pay the loan, you can use your vehicle at any time. Essentially, borrowers are borrowing money against the market value of their cars. People approved for car title loans can borrow what the car is worth, giving them a significant financial boost. It’s a better option than a payday loan that requires credit checks, is costlier, and takes longer to gain approval.

Establishing an Emergency Fund or an HSA

This is more of a preventative measure than anything else, but it’s a useful measure nonetheless. It’s recommended that households have at least six months of expenses secured in an emergency fund, putting aside at least $1,000 in cash that can be used immediately when sudden expenses emerge.

Anyone in a financial bind can also check with their health provider to qualify for a health savings account (HSA). The funds you put in your HSA roll over each year, ensuring you don’t lose unspent funds. Additionally, contributions to an HSA are tax-deductible, and withdrawals for medical expenses aren’t taxed.

Using an emergency fund ensures you can quickly pay any bills or home expenses while the HSA covers you when you’re facing mounting medical costs.

Develop More Discretionary Spending Habits

It’s easier to have money for unexpected expenses once you budget for the things you need and cut out the less important financial commitments.

It’s important to assess or re-assess your budget to determine how much money you’re spending on non-essential items. Things like streaming services, gym memberships, expensive smartphone plans, or restaurant trips are among the less important expenses you can cut, so you save money for emergency expenses. Also, you can find ways to reduce money on your key expenses like grocery bills or phone bills. If those bills can be lowered, the money saved can go towards covering emergency expenses. More people are budgeting now than ever thanks to the current global situation, and developing financial discipline will help save money for scenarios when needed most.

Pause Contributions to Your Retirement Account 

It’s always good to plan for your financial future, and there are few better ways to do that than having retirement savings put aside. However, if you have immediate needs due to emergency expenses and need money right away, then it may be a good time to pause your contributions to the retirement account.

You can always get back to putting money in the account at some point. But, you must secure a solid financial foundation before you can properly plan for retirement. You can even withdraw the principal you’ve contributed to your retirement account without paying the penalty if you have a Roth IRA. Focus on settling your financial obligations now, so your financial future looks brighter.

Each of these methods ensures you have a formidable strategy to count on when facing mounting financial pressures, giving you the money you need without the wait.

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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