Have a Surprise Expense Your Emergency Fund Can't Cover? Here Are Your 4 Best Options

Life is full of little bumps in the road, so it is inevitable that you are going to face an emergency expense at some time in your life. 

When that happens, only about 68% of adults would have the funds to cover a $400 surprise expense with cash or cash equivalents, according to 2021 data from the Federal Reserve. And, the number of people who could pay cash for something unexpected dwindles the higher the surprise cost becomes.

If you find yourself facing an unexpected purchase without the money in your savings account to pay for it, what exactly should you do? Your options depend on your situation, but here are some possible approaches to coming up with the cash. 

1. Sell items you don't need

One of the best things you can do is to try to raise the money by decluttering items in your household. If you can list unused items on Facebook marketplace, Craigslist, or eBay, you may be able to generate the funds to deal with your emergency without having to borrow and commit yourself to future budget problems as you pay back the debt.

2. Borrow from friends or loved ones

If you cannot raise the money through selling things you don't need, asking loved ones for a little financial help could also be a good option to avoid interest charges. However, there are some big caveats to this. 

You need to make sure you're comfortable asking for this kind of assistance, so you'd only want to approach a close friend or family member who you think would be willing to help. You also want to be absolutely sure you can pay back what you've borrowed -- and quickly -- so you don't put strain on the relationship.

While there are some pitfalls to this approach, it can be faster and easier than pursuing a loan from a lender and allow you to avoid making your emergency even more expensive due to interest. 

3. Use a 0% APR credit card

If you can open a new credit card that offers you a 0% introductory APR on purchases, you may be able to use that card to cover your emergency expenses. If your 0% rate lasts for around 12 to 15 months, which is typical, then you may be able to avoid paying interest on your emergency by paying off the card before interest begins accruing.

There are some risks to this option too. If you don't pay off the card on time, you could get hit with a high interest rate. You will also be committing yourself to the future obligation to make the credit card payments each month, which could add to your financial hardships later. It can also take time to get a credit card and you can't always charge everything, so this may not be an option for everyone.

4. Consider a payday alternative loan 

Finally, you could consider something called a payday alternative loan, which many credit unions offer and which could potentially be a lifeline in situations where you really need money and don't have access to cash or affordable credit. These loans typically allow you to borrow between $200 and $1,000 for a small fee -- well below what a payday lender would charge you. 

By exploring each of these options, you may be able to find the money you need for an emergency without derailing your financial security going forward. Once you get past the current emergency, it's also a good idea to start putting some money into an emergency fund for the next one. It's inevitable that surprise expenses will keep cropping up. You don't want to keep finding yourself in the same stressful situation of being unable to pay for them.