What’s Your Backup Plan for an Unexpected, Large Expense?
If you were hit with a big financial emergency, what is your backup plan for taking care of it? Do you have a sufficient emergency fund or will you have to turn to loved ones for help? Do you have relatives who could help you if you asked?
Bankrate has released a new report that says only 38% of Americans could cover an unexpected $500 repair bill or a $1000 emergency room visit with the money available in their bank account. The report also found that 26% would have to reduce spending in other areas of their budget to cover the expense, 16% would borrow from friends or family, 12% would have to use a credit card and 8% were filed under “other.” Would you fall under the “other” category or do you have an emergency fund in place?
Establish an emergency fund
An emergency fund is a pool of money that you set aside just for these kinds of unforeseen situations. Financial experts often advise consumers to have enough money in the fund to cover at least three to six months of expenses. Even having just one month’s expenses socked away will protect you from those surprises that can pop up and blow a hole in your budget.
Get rid of the debt that is sinking your budget
If you are living paycheck to paycheck like an increasing number of your fellow Americans, it might be because you are dealing with a lot of debt. Living with a large amount of debt hanging over your head can cause a lot of worry and stress. If you could eliminate a lot of that debt, you would be in a better position to save more money towards your emergency cushion and even towards your retirement.
Unexpected expenses will come up, so why not be prepared?
Life is expensive. You never know when a major car repair bill will come up, one of your kids requires an emergency room visit, or you or your spouse loses their job. You might be someone who keeps careful track of spending, but you can’t predict the future. Paying down your debt and establishing an emergency fund are two responsible steps you can take towards greater financial stability.
When you feel like you are working to pay your credit card bills or when your medical debt becomes overwhelming, it might be time to sit down with a Chicago DebtStoppers bankruptcy attorney for a no-obligation debt analysis. You will find out what your options are when it comes to dealing with your debt once and for all. You deserve to live a less stressful life. Resolving old debt will allow you to make a fresh start and start preparing for a brighter financial future.
If you have questions about bankruptcy, contact DebtStoppers to schedule your free, personal debt evaluation with one of our experienced bankruptcy attorneys today. Call us today at 312-913-0630.