Financial emergencies do and will arise, and there are ways to prepare for them or cure the issue.
It may be the car needs a repair, the boiler went up, or even you may be starting a new job after being out of work and need money to buy proper work clothes.
Kids, grand kids, you think of it, anything can bring about a financial emergency.
Ideally, we should be saving for the proverbial “rainy day”, and have money saved for such emergencies, but many of us do not have such a savings plan. Many people live pay cheque to pay cheque as they say, and some months are longer than others.
So what to do if a financial emergency should arise and we do not have the money to cover it?
Financial Emergencies + No Savings = Borrowing/Debt
The simple fact is, if you are faced with a financial emergency and do not have the money to pay out, you will need to let the financial emergency exist until you have the money, or borrow the money.
Credit Cards: One of the first places people may go or resort to is credit cards, which is fine. They are there and serve a purpose. Credit cards are convenient and accepted just about everywhere. They also allow you to spread the cost of the emergency over months, and even years. The real issue here to try and pay off the credit card by paying more than the monthly minimum payment.
Friends and Family: Borrowing money from friends or family has its risks and while an option, needs to be considered carefully. There also is the option of having a friend or family member be a guarantor for a loan. This can also have its risks.
Taking Out a Loan: It may be that you need a loan to cover the financial emergency, and if you have bad credit, then the options of asking a friend or family member for the money, or having them sign as a guarantor may become the better option.
Depending on the emergency, some companies can offer in-house financing. Such as replacing your boiler and allowing you to pay the costs over a 6 or 12 month period. This can be an option as well.