Is there anything worse than not having enough money to pay your bills? While none of us want to think that it can happen, the simple fact is that if you live long enough you’re going to eventually come to a point where there are more expenses than there is money to go around at the end of the month. At Check City we have a wide range of services to help people get out of this situation but it’s also our goal to help them avoid being faced with that situation again in the future as well.
If you’ve been following the guidelines in our “How to Budget Your Money” posts you should hopefully be working towards having a reserve of three to six months of your income to help cover unexpected expenses. As you work on building the budget that is best for your family there are several “unexpected expenses” that you can be faced with at any given time. In this post we’re going to cover fourteen of the most common expenses that catch people by surprise. These expenses range from unexpected house guests to the unforeseen medical bills, the goal is that by knowing these expenses you can plan for them and work them into your budget and use this as some extra motivation to start saving now.
Unexpected Household Expenses- When you’re renting an apartment, condo, or house everyone tells you that you should buy a house as soon as you can afford it. However, what they don’t tell you is that when things break, it’s all up to you to fix them. If you were fortunate enough to buy a brand new house everything should be covered under a warranty, however if you bought a fixer upper or even an older home it’s going to be up to you to fix everything that goes wrong. There are literally hundreds of things that can go wrong such as a leaky roof, broken water heater, broken air conditioner or furnace, broken windows, broken light fixtures, broken door locks, and the list goes on and on. While you don’t know exactly when any of these items will go out we have found that routine maintenance will definitely make them last longer while give you a status update of sorts so that you have an idea of how long they will last.
Broken Electronics or Appliances- While some electronics and appliances are more of a necessity than others it’s still important to understand that some of these things can fail at any given time without any warning. Some of the most common electronics or appliances that will fail include refrigerator, freezer, dishwasher, washer, dryer and television. If you find yourself in the situation that one of your major appliances the first thing to take into consideration is how big of a NEED is this appliance. Some items like the television have no real need of getting replaced immediately; in fact if your television goes out you could cancel your cable for a few months and help pay for your new set. However, some items are more of an immediate need like a refrigerator or a freezer. Once you’ve decided how urgent of a need it is to replace it, then you can put together a plan for buying a new one. Much like with other household expenses it can be hard to nail down a definite price so that is why we recommend building up a three to six month nest egg because that can be used not only for bills if the need arises but for replacing some of these household expenses.
Computer Repairs- In addition to other electronics around your house, there are so many issues that can go wrong with computers we figure they deserved their own bullet point. Unfortunately, computers are hard to budget for because there are so many different things that can go wrong. In this day and age viruses are so easy to get and hackers seem to stay so far ahead of the trends that even good antivirus software doesn’t guarantee that your computer will stay safe but it’s important to know some of the potential computer related expenses that can arise so that you can prepare for them. One of the most common things to happen to computers is a virus attack, to get these taken care of at local computer shops it can cost anywhere from $100-$500.
Another common component that fails on computers all the time is the hard drive, a new hard drive will cost around $100 if you can install it yourself, and for laptops it can be a bit trickier so it might cost another $100 in labor at your local computer repair shop to get it installed. If your hard drive goes out and you have some files that you ABSOLUTELY need to get off the failed hard drive you are looking at anywhere from $400-$1500 to pay a data recovery service to pull apart your old hard drive and recover the files from it. With that said it is much, much, cheaper to buy an external hard drive and back up your files on a regular basis. With all of these expenses it’s important to point out that a lot of them cost more than an entirely new computer so if you don’t have anything on your computer than you absolutely need, it might be time to just upgrade.
Auto Repairs- One of the most common expenses that catch people off guard is auto repairs. Vehicles can be so unpredictable and oftentimes things seem to go wrong at the absolute worst possible time. In this day and age cars seem to be a necessary evil, unless you live in a larger city that allows for easy bike commuting or has an excellent public transit system, you’re going to need a vehicle. When it comes to vehicle expenses they will range widely depending on the year and mileage of your vehicle but one of the easiest things that you can budget for is routine maintenance such as oil changes. Oil changes are usually one of the best things that you can do to ensure that you’ll avoid some of the larger expenses further on down the road such as replacing the entire engine.
Most places that perform oil changes will offer some sort of “full service” package where they will go through and look over your other fluids such as transmission fluid, power steering etc.. It’s important to understand that they offer this service as a way to upsell you additional services but listen to what they have to say and then make the decision as to whether or not you feel it’s time to replace whatever they are recommending. For example, if you get your oil changed at a shop that also does tire work they’ll usually take a look at your brakes and tell you how much longer you have before you’ll need new brakes so that you can begin budgeting for those expenses.
Natural Disasters- This is a category that can add an additional expense but you won’t know how large of an expense until all is said and done. While some natural disasters can cause devastating additional expenses such as an entire home or vehicle loss the most immediate costs associated with natural disasters are those associated with surviving during and in the days after the natural disaster. The best way to “budget” for these expenses is to start preparing for these events by having a 72 supply of food, water, and even gasoline that you might need during the time after a natural disaster. After these events happen supplies are in high demand and costs will go up, but if you prepare ahead of time you will be able to avoid having to spend any additional money as the immediate result of a natural disaster.
Unexpected House Guests- Everyone remembers the scene from National Lampoons Christmas Vacation when “Cousin Eddy” shows up unannounced, the reason that’s such a classic scene is that almost everyone can relate to it. We’ve all had the experience of having a friend or family member show up unannounced at your house expecting to stay for an undetermined length of time. When this happens it can add some additional expense to your monthly budget, it can increase food costs, additional utilities, and even fuel costs if they need to go extra places. In some cases having friends or family over as guests can be a pleasant experience, and in that case the challenge will be to avoid the temptation of going out to eat every chance you get. Regardless of whether or not you enjoy your unexpected house guests it’s important to keep them in mind as you work on your budget.
Birthdays, Weddings, and Baby Showers- A natural part of being part of society is being attending birthday parties, weddings, and baby showers for friends, family and even acquaintances. While birthdays are fairly easy to budget for because they come around every year, weddings and baby showers can seem to sneak up on you a bit more. Rather than setting aside money for these types of events it can be a lot better to create a stock pile of gifts. If you see that items that would make good gifts are on sale during a month that you seem to have some additional income, stock up on them and store them away. In addition to the gifts themselves, it’s also a good idea to stock up on wrapping supplies when you find them on sale. Doing these simple things will help you avoid the added expense of running out last minute and paying full price for a gift and wrapping supplies.
Unexpected Travel- While unexpected travel isn’t one of the most common expenses that can come up, when it does it can be quite expensive. Whether it’s going out of town for a graduation, bachelor party, destination wedding or a funeral last minute last minute travel is expensive. Flights can be outrageously expensive and driving can put added use on your vehicle. Like with some of the other points, this is something that can be difficult to budget for so it’s best just to focus on building up that three to six month reserve.
Parking and Traffic Tickets- Nothing seems to trigger that “sick to your stomach” feeling more than a run in with law enforcement. Whether it’s the flashing lights in your rear view mirror or walking up to your parked car only to see the yellow ticket under the windshield wiper run ins with law enforcement can leave your bank account empty in some cases. In addition to the initials expense of paying a speeding ticket you will also most likely see an increase in your insurance premiums. The biggest recommendations for avoiding this unnecessary expense is be disciplined, drive the speed limit, keep your vehicle registered and maintained (working lights and signals) , and don’t take the gamble of whether or not the parking enforcement office will catch you that “one time.” By keeping those things in mind you should be able to avoid any of those unnecessary expenses.
Increased Fuel Costs- While this isn’t as large of an expense as some of the others on this list, if you are running a tight budget and have a long commute it will make you adjust your budget quite a bit. Let’s say that you commute about 60 miles a day in a vehicle that gets 15-20 mpg. If fuel costs were to fluctuate .25-.50 which is fairly standard you could be looking at an extra $30-$50 dollars in a month’s time. While to some that may not seem like a huge amount, for others, it’s the difference in getting all the bills paid and not.
Lost or Stolen Credit Cards– Luckily if you find yourself in a situation where you’ve lost your credit cards or had your information stolen, credit card companies are good to work with you and reverse any charges that may appear fraudulent. So while there are few expenses that are directly associated with having your credit cards lost or stolen, being without your credit card at the wrong time of the month can leave you without the necessary funds or means to pay your bills. Ideally you’re not in a situation where you’ll need the fund available on your credit card to pay the bills but if that is the case you should always be aware of additional ways to secure the funds to pay your bills such as securing a short term payday loan. Also, it’s important to know how to pay your bills through alternative means such as mailing in a check ect…
Unexpected Medical Bills- Nobody wants to think about the fact that they can potentially end up at the doctor’s office but things happen and whether it’s just the flu or a trip to the emergency room, doctors’ visits can be expensive. Even if you have insurance a trip to the doctor’s office can still include a copay of anywhere from $20-$60 and emergency room visits can cost even more. While you can’t predict when you’ll get sick or be faced with an injury you can still work some basic medical expenses into your budget. When cold and flu season rolls around take a look at how many visits your family made to the doctor over the past couple years and then start setting aside the amount you would need to cover the average number of visits your family has made to the doctor in the past two or three years. If your work has a flex spending account that is a great way to set aside that part of your budget because you can set it aside pretax.
Funeral Expenses- This seems to be another one of those expenses that nobody likes to think about or admit is a real possibility but the fact of the matter is funerals can cost tens of thousands of dollars by the time you take care of the services, casket, plot, etc.. Most of the time life insurance will help cover this cost but if you don’t have a life insurance policy it’s something that you should start thinking about no matter what your age.
Job Loss- While this isn’t necessarily considered an expense, it is usually even worse because with the loss of a job it means you’ve lost any way of paying your monthly expenses. Job loss is really at the heart of why we recommend building up a savings of three to six months of your monthly expenses so that you can have a way to pay your bills for three to six months after losing your job. One of the best ways to avoid this situation (other than being a good employee) is to never stop looking for a job. No matter how secure your job seems and how well you get along with your bosses the time to start looking for a new job is while you’re employed. The best ways that you can do this are always be grooming your resume, also, continue to network on professional social sites like linked in. By doing those simple things you’ll be ready to hit the ground running if you find yourself unemployed.
By budgeting for some of these common expenses ahead of time you will be able to pay for them out of your three to six month reserve without giving it a second thought rather than desperately thinking to yourself, “I need money TODAY!!” However, if you do find yourself stuck in a situation where you need to pay for something quickly visit a Check City Location near you and they will be able to help you find the best financing option available for your situation.