11 Ways to Pay for Unplanned Expenses

You can plan and plan for the unexpected, but surprise expenses still pop up out of the blue sometimes. And when they do, it can leave you in a huge financial crunch. Here are a few options you can explore to cover those unplanned bills.

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If you have money socked away in savings for emergencies, now's the time to raid that account. The whole purpose of an emergency fund is to bail you out when unexpected bills arise, so take a withdrawal and then do your best to replenish that account afterward.

ALSO READ: 4 Big Emergency Fund Mistakes You Can't Afford to Make

If you own stocks in a regular brokerage account, you can sell them at any time -- so that's an option to look at when you need money in a pinch. Just keep in mind that if you sell stocks at a profit, you'll be subject to capital gains taxes.

Maybe you have some electronics you recently upgraded, or some furniture you've been thinking of giving away. If you need money, take inventory at home and see how much cash you can get for your stuff.

A personal loan lets you borrow money for any reason, so if you're faced with an unplanned expense, borrowing money may be your best bet. Personal loans tend to offer competitive interest rates, and the better your credit score, the lower your rate is likely to be.

ALSO READ: Best Low Interest Personal Loans for May 2021

A home equity loan lets you borrow against your home. If that option is available to you, you may snag a lower rate than you would with a personal loan. And also, don't be fooled into thinking you can only use a home equity loan for home repairs or improvement. Like a personal loan, a home equity loan can be used for any purpose.

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Like a home equity loan, a home equity line of credit, or HELOC, lets you borrow against your home. The difference is that instead of borrowing a lump sum off the bat, you get access to a line of credit you can draw from as needed. A HELOC could be a good bet if you don't have an emergency fund. That way, you can cover not only your current unplanned bill but future ones as well.

If you're willing to hustle, a second job could be your ticket to covering an unanticipated expense. A few weeks of driving for a rideshare company at night or doing web design from home when you're not at your main job could leave you with enough cash to cover your unplanned bill.

ALSO READ: 9 Side-Hustle Ideas You Haven't Thought Of

Charging unplanned expenses on a credit card is generally not a good idea because you could get stuck paying a ton of interest on that debt. But if you expect to come into some money soon enough -- say you typically get a generous quarterly commission or bonus at work -- then a 0% introductory APR credit card could help solve your problem. If you charge your unplanned bill but pay off your balance before your intro period is up, you'll avoid interest.

The purpose of an IRA is to save for retirement, so it's best to leave your account alone until your career comes to an end. But if you're in a real pickle and you have a Roth IRA, you can withdraw your principal contributions (not your gains) early without penalty. And while taking an early Roth IRA withdrawal to pay a bill isn't ideal, if you have no better option, it's worth considering.

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Just as taking an early Roth IRA withdrawal is not the best idea, so too does borrowing from your 401(k) fall into this category due to the risks involved -- namely, that if you fail to repay that loan on time, it will be treated as an early withdrawal and you'll be penalized on the amount you remove. But if you have no choice, a 401(k) loan could help you cover an expense your paycheck can't handle. And while you'll need to be vigilant about paying it back, at least you'll be repaying yourself.

ALSO READ: The 401(k) Rules You Should Know

Borrowing from a loved one can be awkward. But if you have a close friend or family member who's in a strong enough financial position to lend you some money, then it wouldn't hurt to ask. Just do the right thing and sign an actual loan agreement to protect the person who's doing you a favor.

Unplanned expenses can be a major source of financial stress. If you suddenly have one on your hands, explore these options for covering it. At the same time, though, make an effort to build some cash reserves so the next time something like this happens, you'll have a pile of money in the bank to fall back on.

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