How to Handle an Unexpected Bill Without Savings
An unexpected bill is rarely a welcome thing in your budget, but it can be hard to handle if you don't have savings. Sadly, fewer people have a safety net of emergency funds today than they did before the coronavirus pandemic. Nearly 46 million Americans have wiped out their emergency savings since last March, according to a poll by SurveyMonkey and CNBC.
This can be an alarming financial situation to be in, but there's a light at the end of the tunnel. If you're worried about how you can afford an unexpected repair, bill, or treatment, check out this guide below. Here are some ways to handle an expense without savings.
Talk to Your Bank, Creditor, or Service Provider
Although financial troubles make most people clam up, you'll want to talk to your creditor about your bill.
Firstly, you'll want to confirm that the balance owing is correct. A billing error could artificially inflate your water bill or doctor's invoice. Talk to their billing department and go through your bill line-by-line to make sure there isn't anything unusual on the invoice.
Secondly, you'll be able to transition this into a conversation about how they can help you. Most creditors understand how hard the past year has been on everyone's wallets, so they may already have a plan in place. You may be able to opt into a financing plan that gives you more time to come up with the money and avoid late penalties.
Research Your Borrowing Options
Borrowing money may make sense for your finances when it comes to a singular bill. Online direct lenders offer convenient personal loans just for these kinds of emergencies - unexpected, non-recurring bills that you can't ignore.
However, online direct lenders are a pretty diverse group of financial institutions that cater to a broad group of consumers. Direct payday lenders, for example, are an option if you don't have good credit and can't get funds through mainstream banks. Some payday loans direct lenders only require you to fill out basic banking info in their applications, so they don't even check your credit.
While this may seem like a fantastic opportunity for someone with bad credit, no-credit-check loans are a red flag. It suggests those direct payday lenders aren't interested in your ability to repay what they lend you.
Not all direct payday lenders are the same, however, and they aren't the only option if you have bad credit. For more information on payday loans, visit MoneyKey and see how they compare to installment loans for bad credit.
Make the Minimum Payment
Normally, when it comes to paying your line of credit or credit card, you want to attack as much of your balance owing as possible. This keeps your line of credit limit open for future purchases, and it may help manage how much interest you accrue.
However, in an emergency, you have the option to make the minimum payment. This is a small, flat fee or percentage of your balance that keeps your account in good standing. By paying less on your line of credit, you may have more money to direct toward other bills.
While there are ways to handle an unexpected expense when you don't have savings, an emergency fund will always be the best way to cover these kinds of bills. Once you figure out how to deal with your emergency right now, focus on using your budget to squirrel away cash for a rainy day. Any money you manage to stock up means you'll be better prepared for the next surprise bill.