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8 Tips To Handle An Emergency That Costs More Than Your Emergency Fund

8 Tips To Handle An Emergency That Costs More Than Your Emergency Fund

So you’ve been super-frugal, you’ve got your emergency funds in place, you are paying down debt, and suddenly your boiler shuts down again. Even worse, it’s several decades old and beyond repair. Unfortunately, you will need to replace it, but a quick Google search proves that a new boiler is a lot more expensive than the £1000 in your emergency fund. So what do you do? Check out our list of eight tips to help you cover your emergency when the cost exceeds your funds available.

1. Remain Calm

Do not let your emotions get the best of you. Stress and anxiety can seriously cloud your judgment. If you panic, you will likely choose the first solution that appears which may very likely be the most expensive. Keep yourself relaxed, level headed, and put your problem-solving skills to work.

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2. Make Sure This Is a Genuine Emergency

Remember that a real emergency is a situation that affects your safety, heating, plumbing, ability to eat or get to work. We call this the four walls concept, which are the basics needed for survival within your home and your access to work. A broken television is not an emergency. A broken washing machine can be solved with a trip to the launderette. It can be an inconvenience, but not necessarily an emergency.

3. Shop Around

When looking for a repair service, contact as many people as possible. Don’t automatically agree to work with the first person you speak to because you are desperate. You may only need to spend one extra hour making some phone calls to find a better price. Make sure you request the ‘bare-minimum’ fix until you can save up for the full repair. Extra tip, it’s wise to do some pre-research before an emergency arises, that way you already have a shortlist of potential vendors to call. Ask your friends or co-workers whom they call on for heating, plumbing, and car repairs.

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4. Consider A Second-Hand Option

If you need to replace an essential item like your boiler or tires, used items will always be the cheaper option. You can find plenty of sellers online offering used car parts, boilers, or anything else you need.

5. Negotiate

Always ask about discounts or a payment plan that you could cash flow for a few months. When haggling a one-time payment, remember that cash is king. If your emergency cost is £1200, show them your £1000 in cash and tell them it’s all you’ve got. They will likely take it.

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6. Find More Cash

Is there anything you can sell to gather up some more money quickly? A quick rummage around your home will likely turn up items you no longer use, that are still in great condition. Consider selling a few things to make the extra money.

7. Consider A Loan You Can Afford

If you have exhausted all other resources and borrowing seems to be your only option, compare your costs to borrow. Do not take out a loan, if you have no intention to pay it back or mathematically cannot pay it back. There are various types of loans that are available and depending on where you get the loan the amount you repay.

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We strongly recommend using financial comparison sites to see where you can get the best rates. Using popular sites such as ‘Money Supermarket’ and ‘Compare The Market’ will give you guidance on the best bank loan lenders. This will help you determine which company to apply with.

8. Absolute Last Resort

If a bank loan is difficult to obtain because of your credit history, the absolute last resort maybe a payday loan or an installment loan. Payday loans are high-interest credit and should ONLY be used to cover an immediate short-term emergency and not to be squandered because of the high repayment.

Again, with any type of loan you should use authorised comparison sites to see where you can get the best rate. Using payday loans comparison sites like The Lenders List or www.money.co.uk will display authorised lenders and will offer comparison tables based on the different APR’s and circumstances to see which loan fit’s your current status.

Featured photo credit: http://uk.businessinsider.com/ via uk.businessinsider.com

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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