“One should expect that the expected can be prevented, but the unexpected should have been expected.” — Norman Ralph Augustine
When I wrote about the monthly budget worksheet that will help you own your finances, I brought up the idea of expected expenses and variable expenses. One topic I didn’t really tackle is the idea of unexpected expenses. I wanted to get into this today.
My question for you guys is…
How would you deal with an unexpected $1,000 expense?
This is a pretty scary question. Nobody wants to think about getting hit with a random expense, but these things do happen for a variety of reasons (car breaking down, old problem reoccurring, or something completely out of the blue).
How would you deal with this expense? Before you get to share your thoughts, I wanted to throw out some possible solutions.
Use your savings account.
One of the best ways to save money in my opinion is to pay yourself first. So if you’re doing this and saving money consistently, you’ll have the money to cover this expense. You dig into your savings account and use your own money. It’s going to suck when you hand the money over for sure. The good news is that the problem will be handled on the spot.
Take money from your next paycheck.
Depending on how much you make, you can wait until the next time you get paid to cover this expense. This will suck because it’s going to feel like you’re working for free. Once again the good news is that you don’t have to worry about this ever again.
Cover the expense with your credit card.
Many “experts” promote the idea to parents that a student credit card can be used for emergency situations. While this is true, it’s a really messed up situation.
The positive of using a credit card for an emergency is that you’re able to bail yourself out. The negative is that now you’re stuck with this debt. If you don’t come up with the money within the month, you’re going to get hit with interest and possible late fees.
You’re essentially safe for the money, screwed in the long run.
You could always risk your relationship by asking a friend for a loan. This is never fun. You have to hope that a buddy is willing to spot you a decent chunk of change.
At the end of the day, unexpected expenses absolutely suck. It’s almost as annoying as a party getting cancelled. The problem is that we have to deal with what life throws at us.
When trying to manage your money like a stud, how would you deal with an unexpected $1,000 expense?