There’s a reason we’re told to sock away three towards six months of integral living expenses in a savings account — because without an emergency fund, people all risk racking up debt when unplanned bills surprise ours. But what if an expense that is unanticipated up out of the blue and one don’t have any savings to tap? You might think your only choice is to resort to unhealthy credit card debt, but before you do, consider these not so painful alternatives.
1. Borrow against your home
If you have equity in your home, you can use it as an income source. Equity refers towards the portion of the home you actually own, plus you can calculate it by taking the home’s value and subtracting the mortgage balance. A example that is quick A home worth $200,000 which you owe $140,000 provides $60,000 worth of equity, or 30% equity.
Generally, you’ll need at least 20% equity in your home to borrow against it, but if that equity is there, there are a couple of ways you can access funds: a home equity loan or a home equity line of credit, also known as a HELOC. With the first, a lump is borrowed by you sum. With the second, you dependable a line to credit from which you are able to withdraw funds as the need arises, and then you only pay interest on that amount. Both options typically charge a lot less interest than a financing card, plus they’re fairly easy to qualify for, provided you have enough equity to work at.
2. Borrow money from someone you trust
It’s never comfortable to have to ask someone you know for a loan. But if you’re faced with an unavoidable expense and no savings, your may be your bet that is best. Assuming the person you borrow money from is a family that is close or friend, one most likely won’t be charged a whole lot of interest, if any, which will reach it easier to pay back that amount.
3. Sell items you’re willing towards live without
You may not have money in the bank when an bill that is unplanned, but that cann’t mean you don’t own items of value. In the absence of actual money, you can try taking inventory at home and trying to sell things you no longer need, or even are willing to part with. These could include electronics, designer clothing, and even pieces of furniture that aren’t utilized often.
4. Try bartering
There are some expenses no choice is had by you but to pay for with cash. But yourself to incurring debt, try getting a little creative by bartering to cover their cost before you resign.
Imagine a pipe bursts in your home, leaving one with a $600 emergency plumbing bill. You might point out that your plumber’s business website could use updating, and offer to do that work in exchange for wiping out your bill if you’re a web developer. And if you rack up a $400 medical bill but have writing skills, you can ask your doctor’s office to waive that fee in exchange for new content on its blog.
Will bartering continually work? Of course not. But it’s really worth a try.
Racking up financing card debt won’t cost you money just in interest, one also risk hurting your credit score. If you’re without savings and posses a pressing expense to cover, try exploring the above possibilities before whipping out your credit card. At the same time, work on building some cash reserves so that if something similar happens in the future, you’re well prepared.