Financial Emergencies: Planning For Life’s Unexpected Turns

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You’ve planned for many things in life, from college to that dream car, but unexpected expenses are still a reality. An expensive medical bill, for example, can demand thousands of dollars from just one family. It’s time to take control of your finances by planning for those emergencies. Try a few of these tricks in order to stay as debt free as possible.

Financial Emergencies: Planning For Life's Unexpected Turns

Save Up a Percentage

The best way to plan for financial emergencies is through personal saving. As each paycheck enters your bank account, allocate 15 to 20 percent of it to savings. Don’t even think about the amount being placed into savings afterward. Allow it to gain interest as it remains there over time.

This percentage per paycheck and the accrued interest gives you a small, nest egg. When an emergency arises, pull funds from the savings. You have no worries about affording the emergency because this nest egg continually grows with each check. If you notice that you have more money in your checking account than in savings, allocate even more funds. Let your money work for you as it gains interest instead of being spent on frivolous items.

Pull From Your Equity

If you own a home, consider an equity loan. The value of your home becomes a funding mechanism when you need emergency cash. Take out the necessary funds, and pay back the amount with your monthly mortgage. You’re simply taking advantage of the positive equity in the property. The interest rates are often competitive with other loans so that you have a fair deal as you pay back the money. You’ll need a few weeks time to fund the loan, however, so start this process as soon as possible.

Consider a Personal Loan

When you don’t have enough funds from your personal accounts, turn to a personal loan. Many lenders, including Loan Connect, have loans at various interest rates and amounts. Calculate the funds that you need to borrow. Try to be conservative about your borrowing so that you only ask for what’s absolutely necessary. Apply for the loan with every required document.

Pay your loan every month so that it never has a late fee. Ideally, pay a little bit more than the minimum amount each month so that you can pay it off faster. These simple tricks help you in an emergency while reducing your overall costs on the loan.

Borrowing from friends and family is a common choice, but it’s not regarded as the best plan. Money exchanged between loved ones can create tense situations. Avoid this scenario whenever possible because their love and compassion is more important than money. Employ other financial routes to keep yourself afloat in an uncertain world.

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