So you’ve been super-frugal, you’ve got your emergency funds in place, you are paying down debt, and suddenly your boiler shuts down again. Even worse, it’s several decades old and beyond repair. Unfortunately, you will need to replace it, but a quick Google search proves that a new boiler is a lot more expensive than the £1000 in your emergency fund. So what do you do? Check out our list of eight tips to help you cover your emergency when the cost exceeds your funds available.
1. Remain Calm
Do not let your emotions get the best of you. Stress and anxiety can seriously cloud your judgment. If you panic, you will likely choose the first solution that appears which may very likely be the most expensive. Keep yourself relaxed, level headed, and put your problem-solving skills to work.
2. Make Sure This Is a Genuine Emergency
Remember that a real emergency is a situation that affects your safety, heating, plumbing, ability to eat or get to work. We call this the four walls concept, which are the basics needed for survival within your home and your access to work. A broken television is not an emergency. A broken washing machine can be solved with a trip to the launderette. It can be an inconvenience, but not necessarily an emergency.
3. Shop Around
When looking for a repair service, contact as many people as possible. Don’t automatically agree to work with the first person you speak to because you are desperate. You may only need to spend one extra hour making some phone calls to find a better price. Make sure you request the ‘bare-minimum’ fix until you can save up for the full repair. Extra tip, it’s wise to do some pre-research before an emergency arises, that way you already have a shortlist of potential vendors to call. Ask your friends or co-workers whom they call on for heating, plumbing, and car repairs.
4. Consider A Second-Hand Option
If you need to replace an essential item like your boiler or tires, used items will always be the cheaper option. You can find plenty of sellers online offering used car parts, boilers, or anything else you need.
5. Negotiate
Always ask about discounts or a payment plan that you could cash flow for a few months. When haggling a one-time payment, remember that cash is king. If your emergency cost is £1200, show them your £1000 in cash and tell them it’s all you’ve got. They will likely take it.
6. Find More Cash
Is there anything you can sell to gather up some more money quickly? A quick rummage around your home will likely turn up items you no longer use, that are still in great condition. Consider selling a few things to make the extra money.
7. Consider A Loan You Can Afford
If you have exhausted all other resources and borrowing seems to be your only option, compare your costs to borrow. Do not take out a loan, if you have no intention to pay it back or mathematically cannot pay it back. There are various types of loans that are available and depending on where you get the loan the amount you repay.
We strongly recommend using financial comparison sites to see where you can get the best rates. Using popular sites such as ‘Money Supermarket’ and ‘Compare The Market’ will give you guidance on the best bank loan lenders. This will help you determine which company to apply with.
8. Absolute Last Resort
If a bank loan is difficult to obtain because of your credit history, the absolute last resort maybe a payday loan or an installment loan. Payday loans are high-interest credit and should ONLY be used to cover an immediate short-term emergency and not to be squandered because of the high repayment.
Again, with any type of loan you should use authorised comparison sites to see where you can get the best rate. Using payday loans comparison sites like The Lenders List or www.money.co.uk will display authorised lenders and will offer comparison tables based on the different APR’s and circumstances to see which loan fit’s your current status.
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