How to Cope With an Unplanned Expense When You're Unemployed

Out of a job? Here's how to tackle an unanticipated bill.

Millions of Americans have lost their jobs in the wake of the coronavirus pandemic, and while living on unemployment benefits is stressful enough in its own right, it's even more problematic when unplanned expenses pop up, like your car breaking down or something going wrong with your home. If you're jobless and are facing a bill you can't put off, here are a few options for tackling it.

1. Tap your emergency fund

Unfortunately, not everyone has an emergency fund, or if you've been out of work for quite some time, you may have exhausted yours already. But if you do have some money in savings, now's the time to use it. Though you may be inclined to hang onto that money for something else, there's no sense in borrowing when you have cash that's already yours.

2. Negotiate

You never know when the person or entity you suddenly owe money to might be willing to work with you due to your jobless status. If you're suddenly facing a surprise bill, try to negotiate. If your car breaks down suddenly, for example, ask your mechanic to cut you a break on the repair, or to at least let you stretch out your payment over time. You never know how much leeway you'll get unless you speak up about the hardships you're facing.

3. Apply for a personal loan

When you need money in a pinch, a personal loan is often a good way to get it. A personal loan lets you borrow for any reason, and interest rates tend to be far more affordable than those charged by credit cards. This especially holds true when you have a good credit score. Furthermore, personal loans tend to close quickly, so you may have your money just days after you apply, letting you pay your sudden expense when you need to. And during the pandemic, you may qualify for a coronavirus hardship loan, which is a special kind of personal loan that lets you borrow a smaller amount but also charges lower interest than a typical personal loan.

4. Fall back on a 0% introductory APR credit card

Credit cards are usually considered a last resort when it comes to borrowing. But if you can't get a personal loan, you can try charging an unplanned expense on a card that comes with a 0% introductory rate. Some of these cards charge 0% interest for more than a year, which gives you a reasonable amount of time to repay a balance that isn't tremendous. Now to be clear, if you don't pay off your balance by the time that intro period wraps up, you'll face what could be a very high interest rate on your debt -- so be careful when going this route.

When you're out of a job, even a minor bill can be devastating when it pops up out of the blue. If you don't have money in savings to pay that expense, try to whittle it down as much as possible by pleading your case, and then borrow as affordably as you can to pay it off in time.