Expect the Unexpected – How to Deal with Unexpected Expenses

Expect the Unexpected – How to Deal with Unexpected Expenses

We all have to deal with unexpected expenses that can pop-up at the worst possible time. Life is unpredictable, and you never know when your washer or dryer will stop working suddenly, or when your car will have so many problems at once that an honest repair shop will advise that it’s not worth fixing. When this happens, it is important to remember that these things happen to everyone. It is also helpful to remember that there are ways to take control of even the most unexpected expenses before they even arise. Here are two awesome ways to do just that.

1. Get a home warranty

A home warranty can help offset unexpected costs by making your actual expenses more predictable. You pay a monthly fee for the warranty itself, and when a household appliance or system breaks, you know exactly how much you’ll have to pay to fix it before it even breaks.  These policies vary in what is covered. Some plans cover systems only, and other plans will cover things like washers and dryers, stoves, ovens, refrigerators, dishwashers, and even built-in microwaves. Some will replace the appliance for free if it cannot be repaired, and these plans pay for themselves rather quickly for many homeowners. System plans generally only cover things like plumbing problems, but they can be a real life saver when you’re confronted with burst pipes and other plumbing horrors. These plans must be purchased before a problem occurs, though. Knowing that the unexpected is inevitable, it makes sense to get one if you haven’t already.

Remember, however, that these home warranty companies are there to turn a profit!  Over the long-run, you will be better off saving up for an emergency fun.  But, if you are not disciplined at saving, a home warranty could be the way to go.

2. Refinance your auto loan

Auto loans generally give you two to five years to repay them, depending on the financing terms you chose when you applied for the loan. Sometimes it makes sense to refinance to get lower monthly payments, or to be able to purchase a second vehicle unexpectedly if your old one cannot be repaired. This is also a good way to get finances in check again after dealing with unexpected expenses that have thrown a budget off track. When this happens, looking at a auto loan refinance usually makes good sense. It can mean agreeing to new terms that are more manageable or that are more favorable to the borrower. For many people, life situations can change drastically during the two to five years it takes to pay off a car loan. A refinance can free up money in your budget, or it can help you get out of debt faster.  This is especially true in the low interest environment we find ourselves in today.

Because interest rates vary over time, a car loan that was taken out three years ago may have come with a higher fixed interest rate than a car loan would today. Perhaps interest rates in general are lower now, or maybe your credit score has improved significantly since you bought your car. A refinance can put extra money in your pocket over time so that you can build up an emergency fund to help deal with expenses that couldn’t be planned for in advance.

Expect the Unexpected – How to Deal with Unexpected Expenses – Final Thoughts

We all have to deal with the unexpected from time to time, and our finances can take a serious hit when that happens. Planning for these things in advance is not always possible, but being prepared for when they arise is achievable. It’s a great feeling to have proactively taken steps to prepare, such as knowing the fixed costs that will be associated with any given home repair, or understanding that the car loan can be refinanced in order to meet new and changing needs or goals. Because we all deal with unexpected costs, it doesn’t have to be all that surprising when they pop up.

Check out these other great MoneyAhoy posts:

When Getting a Home Warranty Makes Sense The 3 Tips To Deal With A Toxic Workplace How to Keep Your Expenses Down While Heating and Cooling Your Home in the Fall Five Retirement Expenses That Will Cost You Big Time