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Living paycheck to paycheck, as more and more people have to do today, having the capability to cover unexpected expenses can be catastrophic for some.
Things like emergency home repair, auto repair and medical bills top the list of unexpected expenses. And it is these expenses that can really put a family in financial distress that starts a spiraling tumble towards uncontrollable debt.
Ideally, you should begin thinking about an unexpected expenses strategy as soon as you are on your own and before you start a family. The rule of thumb is that you should have three months of total living expenses in an interest bearing savings account for emergencies. However, five months is actually preferred.
Another thing to look into is benefits offered by your employer. Medical expenses can both put you in debt and create job loss if you find yourself out of work too often due to health issues. Check and see if your employer offers a health and prescription plan and opt in. Most time the employer will pay part of the fees and deduct the balance automatically from your check each pay period. Additionally, check and see if they also offer dental, optical, childcare, life insurance, disability and supplemental life or health insurance (like AFLAC).
Emergency home repairs can and will happen when you least expect or need it. Appliances fail, roofs leak, pipes burst and acts of God abound. Be sure you have the right homeowner’s insurance and that you are protected from the unexpected. Many homeowners insurance companies offer a maintenance plan that will help pay for things that the regular policy may not. Things like electrical, plumbing, roofing and more.
If you have an older home, or invested in a foreclosure this supplemental policy will be very beneficial in the long run. Renters too should invest in renter’s insurance to protect their personal belongings in case of accidental fire or flood. And do not forget that if someone gets hurt on your property you can be held responsible for his or her medical expenses as well. So be sure you have liability included in your homeowner’s policy.
When your primary mode of transportation breaks down, you find yourself between the repair expenses and keeping your job. A standard automobile insurance will not cover regular maintenance or emergency repairs. It only covers expenses involved with an accident. Regular maintenance and care can keep a lot of emergency repairs at bay. But still, there are ones that are unavoidable.
Some companies offer maintenance and emergency programs. But beware of the telemarketers soliciting you for supplemental auto insurance or warranties. Many of these programs have extremely high deductibles that are almost impossible to meet.
Another lesser-known avenue of defense for the unexpected is with your credit card company. Many credit card companies offer supplemental insurance, extended warranties and more.
Some of the best of these cards are:
The Capital One No Hassle Miles Rewards Card offers 24-hour travel & emergency assistance, 24-hour roadside assistance, Extended warranty program, Auto rental insurance – In addition you get the benefits to have the flexibility to redeem your miles for cash, hotels, car rentals, merchandise, charitable donations, gift cards, and more.
The Capital One Platinum VISA Card offers 24-hour travel & emergency assistance, 24-hour roadside assistance, Extended warranty program, additional warranty protection at no charge on items that are purchased with your credit card and already come with a warranty and Travel accident insurance – In addition, you get the benefits of reasonably low interest rates dependent upon which credit level under which you fall. And the Platinum membership affords 40% off savings on special purchases and 10% savings on purchases of merchandise from the Capital One Saving Zone on Yahoo!
And when you have no other choices, if your credit is somewhat good you can apply for a credit card offering a good 0% introductory offer and a reasonably low standard rate for after the expiration of the promotional period. Use the 0% interest period to pay-off that emergency and then stow the card away to use only for other emergencies. Do not carry the card around with you to be a constant temptation to go through with an impulse buy.
The current best of the 0% introductory rate cards include:
The Chase PerfectCard MasterCard offers six months 0% APR for balance transfers and purchases. After this introductory period, the interest and balance transfer rate increases to 10.49% – Additionally, the Chase PerfectCard allows the card holder to earn 6% rebates on fuel purchases for the first sixty days. then three percent afterwards on all fuel purchases and for all other purchases that are not related to fuel, the card holder is given a 1% rebate which can later be applied to the card balance to help pay down debt.
Another great introductory rate card is the HSBC Platinum MasterCard which offers 0% APR on balance transfers and card purchases for the first twelve months. After this twelve month period, the APR increases to 8.99% to 19.80% depending on the eligibility of the card holder. It also has a great cash back program where you can receive 1% cash back on unlimited purchases.