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Unfortunately, this can still happen to people that think that they are budgeting well. Because they are unprepared for financial curveballs. Life is unpredictable and you can be hit with unexpected bills. Such as when your home needs repairs or your car breaks down, for example. If you don’t know how to manage these big bills in the right way. It can soon lead to financial issues. However, if you know how to handle these situations when they arise. You make a few simple changes to your financial habits, you can avoid any tricky situations. These are the best ways to deal with financial curveballs. 

Build Up Your Savings 

If you suddenly have to pay out a lot of money for car or home repairs and you don’t have the cash there to cover the bill. You may find yourself in a tough situation. That’s why it is important that you build up your savings so you are prepared. Ideally, you should have an emergency fund in place that is used only for these kinds of unexpected expenses. This should be kept separate from your normal savings. So you don’t have to dip into those to cover your bills. If you want to start building a cash pot, it’s vital that you write a strict budget.

If your income only just covers all of your spending. As well as you don’t have anything left over, it’s impossible to save. When you find yourself in this situation, you need to go through all of your expenses. To find areas where you can cut back. Simple things like cooking at home more instead of eating out can save a lot of money. Which can all go into savings. Take a look at any subscriptions that you have as well. Because many people sign up to things and forget about them. So they’re paying out every month for services that they don’t really use. 

Look For Interest Free Credit 

Having an emergency fund in place is important. But it takes a while to build up a savings pot and you may be hit with an unexpected expense before you have managed to save enough money. In that case, you should look into your options for interest free credit. The good news is, there are a lot of options for interest free credit. If you need to make repairs on your car or your home. For example, if your car is out of action and you need to replace it. Car dealerships will often give you a 0% or low interest loan for a set period. Although you will have to pay interest on the loan eventually, it still gives you a bit of breathing room.

You can also get interest free credit on major home expenses, like replacing your boiler or buying a new sofa. You will be subject to a credit check before you are given credit. So it’s important that your score is good. Many people don’t know what their credit score is. So make sure to check yours and if it isn’t great, work on improving it as quickly as possible. 

Take Out A Loan 

In some cases, interest free credit isn’t an option. So you may need to take out a loan to cover big expenses. However, you have to be careful because you can easily end up in trouble if you don’t borrow responsibly. It’s important to consider secured loans vs unsecured loans and understand the benefits of each. A secured loan will be taken out against an asset, usually your house.

This gives the lender a level of added security if you are unable to pay back the loan. Which means that they will give you a better interest rate and they will be willing to lend you more. Most banks and building societies will lend up to £100,000. Which can be paid back over a period of 2 to 20 years. But a secured loan can be a risk. Because there is a chance that you will lose your home if you are unable to repay the loan. 

An unsecured loan doesn’t require an asset as collateral. You should be able to get one as long as you have a good credit rating. These tend to be smaller loans with a shorter repayment period, and the interest rates are likely to be higher. However, you don’t risk losing your house if you are unable to make the payments. In most cases, a secured loan is the cheaper option. But you should make a clear plan for how you are going to repay the loan. If you don’t think that you can comfortably afford it, don’t take the risk. 

Use A Credit Card 

Borrowing money on credit cards is always a big risk but there is a right way to do it. If you are unable to get a loan to cover your expenses, credit cards may be your only remaining option. But if you are going to use a credit card, you should always look for interest free introductory deals. You will get an initial period with no interest. So you can pay your expenses without having to pay high interest on the money. However, the interest rate will shoot up as soon as that initial period ends. That’s when things will get expensive. If you are going to use an interest free credit card. It’s vital that you are able to pay off the balance before the interest rate shoots up again. 

You should always try to use savings to cover unexpected expenses. But if that isn’t an option, you may need to resort to borrowing. Just make sure that you borrow responsibly so you don’t end up in financial trouble.