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Although you may be managing your monthly budget carefully and living within your means, there’s always a chance that an unexpected bill could suddenly crop up. With no wiggle room in your budget, no savings and potentially less-than-perfect credit, you may feel overwhelmed. However, being prepared with a plan will ensure that you won’t stumble into pitfalls that could put you in further financial difficulty for the future.
So, how can you expect the unexpected? Here, the financial experts at Choose Wisely look at five common surprise costs and the best ways to handle them.
1. The car needs repairing
Car repairs can be really disruptive to your day-to-day life. You might need a vehicle for work, school runs or simply to just get around. Although you may not have been squirreling money away for this sort of emergency, there are things you can do to try and lessen the panic that this can bring on.
- Shop around: Your mechanic may be charging you over the odds for the repair, so make sure you ask around other garages to see if you can get a cheaper price that may be more manageable.
- Negotiation: Speaking to your mechanic about the situation might present some opportunity. You could work out a lower price, or even a payment plan.
- Use a credit card: If you already have a credit card then you could use this to help with the cost. Although this will mean you have an increased monthly payment, you’ll have your car back and could buy yourself some time to find extra funds that can be used to clear the outstanding balance.
- Sell the car: Take a moment to think about whether you need the car. Is it a monthly expense that you could do without? Think about where the money for petrol, insurance, tax and upkeep could be better spent. You could look at public transport links and see if that’s a better alternative for you.
2. An appliance has broken down
Some appliances, such as dishwashers or washing machines, aren’t classed as essentials and you could easily pop to the laundrette while you save up for a new one. However, if one that you need to replace quickly such as the fridge or oven breaks down, then you could be left in a bit of a pickle, but what can you do?
- Check the warranty or guarantee: If you’ve not had it for too long, then the manufacturer could be responsible for coming out to repair it, or provide you with a new one for free if it’s deemed as faulty. Contact the manufacturer to see if you’re covered.
- Are you a tenant?: Landlords are responsible for the upkeep and working order of appliances within a furnished home that you rent. Contact your landlord as soon as you can and get them to arrange a repair, but whatever you do, don’t withhold your rent payments as this will get you into trouble.
- Look at renting: If you can’t afford a lump sum payment then you could take a look at renting the appliance. There are companies out there that you can take out arrangements with. Although this will mean an extra monthly payment, you could use it to buy time and save up for a new appliance as well.
3. Finding a new home
There are many reasons why you may need to find a new home – you could need to relocate for a job, you may be going through a break up or you simply need to move due to new additions to the family. So how can you move if your extra cash is tied up in your current deposit?
- Stay with someone: Asking friends who may have a spare room is the first thing you should do. This will give you a chance to think about the situation and form a plan. You could even ask about staying there until you have your deposit back so you can pay for a new place.
- Think about a bad credit loan: If you need a sum of cash and can afford to take on additional monthly repayments then you could look at getting a bad credit loan. These are designed for people with poor credit who may have been turned down elsewhere. Do think carefully before taking on more credit, as you don’t want to end up in a worse position in the future.
- Ask friends to help: Once you’ve found a new place, you may wonder how you’re going to transport your things. Moving services are expensive, then you’ll also need to think about a cleaner (so you can get your deposit back), any repairs or rubbish collections. These can be unnecessary costs and it will work out cheaper to treat your friends to a few drinks and pizzas while they help you to get everything sorted.
4. The winter energy bill
Over the colder months you may have cranked up the heating, warmed up with a few baths and kept the lights on during the darker evenings. If you don’t have an energy tariff that has a set monthly payment then you’re going to get hit with a huge post-winter bill. So, what happens if one of these letters land on your doorstep?
- Don’t ignore it: The first thing to do is stay calm and think of a plan right away. Leaving the payment and ignoring it will only make things worse as it could lead to defaults, CCJs and debt collection agencies – which will all mean that your credit rating is damaged even further.
- Speak to your provider: Contacting the energy company is the best course of action to take. Do it over the phone so you can explain your situation and show that you’re willing to pay any way that you can. You’ll most likely need to have details of your incomings and outgoings and together you can negotiate an extension or even a payment plan.
- Don’t miss new payment dates: If you’re given new payment dates, you must stick to them. Late payments can result in charges that will only make it more expensive to clear.
5. A trip to the vets
If your four-legged friend or winged companion needs a trip to the vets, it can be stressful for everyone involved. Think about the appointment, any procedures and also medication and it’s no surprise that the bills can mount up – but there are things to help if you need it.
- Pet insurance: If you have pet insurance, then you know that each month you’ve been making premium payments and your policy may cover a range of vets bills. Of course, like all insurance, it will have its own terms and may not cover certain procedures or existing medical conditions, but it’s worth speaking to your provider to see if you can get help with the bill.
- Help from charities: Some registered animal charities such as the PDSA, Dogs Trust or Cats Protection can offer financial help to ensure the wellbeing of animals, especially if it’s for something like neutering. You will have to meet certain criteria or live in a specific area, but it’s worth contacting them to see.
- Speak to your vet: Some vets will be open to discussing a payment plan, should the cost be much more than you can afford. Remember, you’ll need to factor this into your monthly budget moving forward, and always make sure the payments are made on time.
*Disclosure – this is a collaborative post