Emergency expenses

Dealing With The Unexpected

Financial emergencies happen. even to the best of us. An emergency expense is different from an expense that you simply did not plan for. It is something unexpected that you could not have possibly expected. Here are a few of the most common financial emergencies, how to prevent them and how to deal with them.

Emergency Expenses

Below are some of the bigger emergency expenses out there. Luckily, there is a solution for everything and no matter what your problem, you should be able to find an answer.

Even better, all of the situations below are entirely preventable. You can usually prevent the emergency entirely or have means in place to deal with them if they were to happen.

Let’s get started.

1) Emergency Medical Care

A medical injury could mean falling down a flight of stairs and breaking an arm or it could mean getting the flu and having to pay for medical care and loss of work. Some of these emergencies are preventable while others are not. In either case, they can be planned for.

Preventing A Medical Emergency 

The best way to prevent a medical emergency is to not have one in the first place. This means taking care of yourself. Try to eat right and get in some exercise at least 3 to 4 days a week. Make sure that you include strength training in your exercise program.

Strength training is not just for bodybuilders, it has benefits for everyone. More important than building muscle, it helps you maintain muscle, which is something you lose as you get older. In addition, weight training places a strain on bones which is actually a good thing. It encourages your bones to stay strong which will help you prevent breaks. Finally, although there are more benefits, strength training will help stimulate your immune system helping you to fight off those airborne bugs.

Immunizations are also very important in minimizing your risk of illness. Every one of us should get a flu shot each year, for example. Most insurers pay the full price for a full shot because they know how important it is. Get one each year for your sake and for everyone else’s.

While you are thinking about illness, a bit of hygiene can work wonders to prevent it. Wash your hands often, that is obvious but you should also carry hand sanitizer with you, especially during cold season. Use it every time you pump gas, go through a public building, use a shopping cart or even just shake someones hand.

Dealing With A Medical Emergency

Of course, not everything in life can be prevented or avoided. You will get sick and you might get hurt from time to time. That is just life.

This is why you should have insurance. Plans are not cheap but they are worth every penny, not only for what they can do but for the peace of mind that they provide.

The average plan for an individual comes in at around $477 and goes up sharply for families. A major expense and one that is easy for a budget seeker to rationalize cutting. After all, what could you do with an extra $500 a month. Once that health plan bails you out the first time though, you will never do without again.

If you are young, single and fairly healthy, you could seek a catastrophe plan instead. For less than half the price of a full plan, you would get one with majorly high deductibles. The purpose of the plan would be to save  you money while still paying for a major catastrophic illness or injury. If you go this route, you will be out thousands if you have to use it, so have some money saved.

But what if you have an emergency but no health insurance? You do have options. First, try to go to a cheaper primary care physician instead of an emergency room. Many advertise the fact that they accept less money with cash. Dealing with insurance companies is a headache and takes time. Many doctor offices will cut their cash customers a break.

If you do rack up a bill, work out a payment plan. Medical care providers would much rather be paid something than risk you defaulting on the entire amount.

2) Automotive Breakdowns

Unless you are living in some sort of fantasy bubble, you have probably  had some sort of automotive emergency. Nothing worse than getting the car all loaded up just to find that it won’t start.

Oh wait, it can get worse, there is always the broken down on the side of the highway emergency. Luckily, these things can be prevented and dealt with.

Preventing Automotive Breakdowns

With vehicles, maintenance is the name of the game. You need to follow your manufacturers suggested guidelines to keep your vehicle running.

For most, this means regular oil changes. True, you should change your engine oil as recommended. This used to be once every 3 months or three thousand miles. Nowadays, our cars are cleaner and can go much longer between changes. There are still a few hardcore individuals sticking to the every 3 month rule though and this is okay.

There is much more to maintaining your vehicle than just oil changes however. There is transmission fluid, transmission filters, differential fluid, fan belts, brake pads, air cleaners and much more. All kinds of systems are on your car and they are just waiting to break down if you do not take care of them.

Besides the maintenance, how you drive can affect your car. If you are a red light rocket racer, expect for things to break down more often. The harder you work your vehicle, the harder you are on all of its components. That is why salesman always say used cars were driven by little old ladies. Slow and steady will make everything last so much longer.

That slow and steady pace has another benefit, it keeps you safe and accident free. You are far more likely to get into an accident if you speed or drive recklessly. In fact, speeding accounted for 26% of all vehicle fatalities.

Dealing With Automotive Breakdowns

Whether your car was in an accident or broken down, you need to deal with it. If you were in an accident, hopefully you have fill coverage insurance to pay for it. Even if you are a safe driver, you can not count on every other out there being insured. Full coverage would pay for your vehicle to be repaired even if the other driver has no insurance or is underinsured.

So, what about the inevitable mechanical breakdown. Some people choose to take out extended warranties but these are generally not worth the money. You would be better off taking the money that you would spend on an extended warranty and placing it into an emergency savings account.

If you need to get your car fixed and do not have an emergency savings account, you have one thing going for you, your vehicle itself. Most shops will have some sort of financing programs because they are not that risky for them. If you default, they can take your vehicle.

If you go this route, be sure to find a good mechanic. Ask for referrals from friends and family. If you want to save money, a trusted mechanic not affiliated with a dealership will be your best bet.

Finally, before proceeding with your repair, weigh the advantage or disadvantage of repairing it. If your car is worth $5000 and it would cost $3000 to fix it, it might not be worth it. Consider the value of your vehicle as a trade in on a new car that would come with a factory warranty.

3) Emergency Home Repairs

Nobody ever told us home ownership would be so tough. Things break and they can do so at any second, at the worst possible time. The air conditioner goes out in the middle of July or the water heater breaks and floods the house at 2AM.

Preventing Home Repairs

Just like with a car, homes need preventative maintenance. Every year you need to do several things. Have an HVAC company some and inspect your air conditioning and heating system. Examine the anode rod in your water to prevent rust. Check the condition of paint and caulk around your home. Lot’s of little things that need to be done at least once a year to prevent more costly repairs.

Just like with vehicles, extended warranties are also available to take care of sudden needed repairs. Also, just like with cars, these warranties are usually not worth it. If a component were to fail the companies typically try to put a bandaid on the situation instead of fixing it. These warranty companies are not charities, they are in it to make a profit and they can not do that by replacing major home systems.

Dealing With Home Repairs

For major catastrophes you should have homeowners insurance. If you have a mortgage on your home, you will be required to have it.

What you are not required to have though is a low deductible. An average deductible might be 1% of the home value. This is a reasonable deductible to have and should allow you to deal with most problems.

To save money on 12 month premiums, many people choose to have much higher deductibles, as much as 5%. This would be a $15,000 deductible on a $300,000 house. That becomes a much more unmanageable deductible.

So, either keep your deductible low or deposit the amount that you save on your premium into an emergency savings account.

When it comes time to actually fix your home, a reputable home repair service is your friend. If you do not do your own work, ask friends or family for the name of a respectable general contractor for most repairs. For larger repairs like foundation repairs, roof repairs or HVAC system replacements be sure to get references and check out your company with the local chapter of the BBB.

In Conclusion

To deal with all three of these emergencies, there is one thing that is in common. You need money. An emergency savings account is what you need. Establish one as soon as possible and automatically deposit money from your paycheck.

Posted by
James Car

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.