I’m a big believer that you should have money available in the event of an unexpected financial emergency. Unplanned costs can take many forms. A medical emergency can present thousands of dollars in costs in one visit to the hospital. If your furnace or air conditioner goes out and the system needs to be replaced, you’ll be looking at big costs.
Emergencies don’t always present themselves only in the forms of costs. Cash flow can also present an issue. If your expenses stay the same, but the amount of money you bring in suddenly gets slashed, you can find yourself in trouble.
I believe that having an emergency fund can help address many of these issues, but there may be times where you need to go above and beyond what you have saved for such emergencies. It’s prudent to have a plan in place in the event that you need cash even after your emergency fund has been depleted. Thinking about it now can make things a lot less stressful later.
Cutting expenses is a big option. If your bills go up or your income goes down, look at reducing your cash flow. Things that you may consider necessities may not be once you really find yourself in a crunch. Think about reducing or eliminating your cable bill. Cut your internet speed to the lowest available. Make sure you are paying the least possible for your cell phone plan. Cut or eliminate eating out. All of these things will reduce the amount of money you send out the door each month and can help you pay for that emergency, whatever it is.