The data found that the most common unexpected expenses that creep up on Aussie families are car repairs or replacement, followed by holiday or travel costs, and medical bills, with the average person adding around $9000 to their mortgage to fund these costs.
And while you may think this couldn’t happen to you, SocietyOne has found that one in five Australians, or 20 per cent of us, are facing unexpected expenses right now.
So what’s the best way to handle those expenses?
1. Set up an emergency fund
Although this is a precautionary step to take that needs to be done in advance, setting up an emergency fund for unexpected costs is the perfect way to keep yourself out of debt when something out of the blue happens. An emergency fund should have enough money in it to cover around three months of your basic living expenses. This buffer can be all that stand between you and going into debt should you become sick, need to pay for medical bills, unexpectedly lose your job or your car breaks down.
2. Look into payment plans
If your pet needs to undergo emergency surgery after an accident, or you end up in hospital, or perhaps you need to book flights for an important family event. Whatever the case may be, always look into the option of payment plans. Payment plans are an agreement you set up between yourself and the business you owe to pay back funds incrementally over a set amount of time. For example, a weekly payment of $120 for three months. Depending on your situation, this can be a good way to pay for what you need now and pay it off over a moe achievable amount of time, rather than going into credit card debt or taking out a loan.
3. Consider a no-interest loan
In Australia, the No Interest Loans Scheme (NILS®) is designed for people on low incomes who need safe, fair and affordable access to credit. The scheme offers loans of up to $1200 and there are no interest charges or fees.
4. Investigate interest-free credit cards
Spend a little time investigating interest-free credit cards, if you’re absolutely certain you can pay the entire amount off within the interest-free period. For example, some banks offer an interest free purchases on a credit card for 12 months, with just an annual card fee. But remember, only sign up to a credit card if you are certain you can pay it off in time, and you know exactly what fees might be attached to it.
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