Financial emergencies can often lead you to borrow money due to the urgency they demand. In such times, having a reliable plan in place to tackle monetary issues could make your life much easier.
Many people look towards short-term fix loans because they seem like a quick and easy solution at the time. However, these loans often come with high interest rates and hidden fees that could make your financial situation worse.
Luckily for you, there are multiple alternative loans that you could utilise to pay off your unexpected expenses. However, that’s not the only solution to handling an emergency.
With the growth of technology and worldwide connectivity, we now have multiple alternative options that can help us manage an emergency without getting into a cycle of debt.
In this article, we’ll be taking a look at some of these alternatives to help you deal with emergencies without straining your finances.
1. Emergency Savings Fund
One of the most effective ways to avoid financial stress is by having a good emergency fund in place. They are a savings account designed specifically for, as the name would suggest, emergencies.
It is best to start investing in an emergency fund as early as possible because it takes time to accumulate the money. Ideally, you should aim to save enough to cover 3-6 months of living expenses, but any amount is better than none.
Having a reliable financial cushion when you’re faced with a pet medical bill or job loss makes a significant difference. This way, you have some breathing room before you have to start worrying about your finances again.
2. Low-Interest Credit Cards
Having a dedicated credit card for emergencies is another option that could go a long way in helping you handle them. For instance, many credit cards in the UK offer an introductory 0% interest on any purchases for around 6–24 months, depending on the lender.
Additionally, some credit cards also provide balance transfer options, meaning that you could transfer your existing high-interest debt to a new card that has 0% interest.
In the UK, anything below 20% is generally considered a ‘good’ APR. If you can get a credit card that has an APR rate below that, then it’ll become easier for you to pay off your unexpected expenses.
3. Employer Advance
Many companies have a policy that allows their employees to get an advance paycheck. If you’re employed at such a firm, you could utilise this option in an emergency.
These advances typically come without the high interest or fees associated with other loans. The key is to approach your employer transparently and make the repayment terms clear.
Usually, these advances are paid back through automatic deductions from your next paycheck. You could also repay the money earlier than the due date if you can and reduce the overall interest.
4. Sell Unwanted Items
You might have valuable items lying around your house that you no longer need. When your finances are tight and you need to make an urgent payment, selling these items could be a viable option.
These items could involve vintage items, electronics, furniture, clothing, or even sports equipment. You could sell them on online marketplaces like eBay and Craigslist for quick cash without having to get high-interest loans.
In addition to acting as a financial relief for your expenses, this also frees up space in your home by getting rid of unwanted items.
5. Side Hustles
Side hustles have become an increasingly popular method of earning some extra cash on top of your income. The gig economy allows you to make money by providing short-term services to companies or individuals.
Platforms like TaskRabbit, Fiverr, Upwork, and PeoplePerHour have a wide range of side hustles that you could explore. You’ll be able to find freelance work on these websites that match your skill set.
Demand for skills like graphic designing, programming, writing, and SEO digital marketing has grown exponentially in the last decade. If you consistently find gigs through these platforms, you will generate extra cash that could be used for emergencies. Additionally, you could invest the added funds in an emergency savings account.
6. Wise Budgeting
Although it is cliché and not a direct source of emergency cash, reviewing your budgeting practices could improve your overall finances. This happens by cutting down on unnecessary expenses, which could then be used in case you face an emergency.
The cost of living in the UK is fairly high, and your spending habits can typically be tweaked for healthier finances. Using budgeting applications like Monzo and Emma, you could review your spending habits and cut costs in places that aren’t essential
Another effective way to maintain a healthy budget is by following the 50/30/20 budgeting rule. In this rule, 50% of your income goes to essentials, 30% to leisure, and 20% to savings or debt repayments. You’ll see the results of these improvements over time, and they’ll make a significant difference in emergencies.
To Sum Up
When you need urgent cash to pay off an unexpected expense, you don’t necessarily have to rely on high interest loans or traditional loans. There are many ways to go about it.
Out of the dozens of options available to you, we’ve listed a handful that are both affordable and easy to access. They provide you with the money that you need without the risk of high-interest loans.
By exploring these alternatives, you can find a solution that best suits your financial situation and avoid falling into debt traps. The key is to remain proactive and make financial choices that will help you in the long run.
