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Anyone can need emergency funds in their bank account irrespective of their job position and role. Sometimes you need an extra cash infusion, but that shouldn’t include lame expenses like a vacation or buying a piece of furniture. Situations that can make or break a deal in your life are considered necessary.
Here are the emergencies that require immediate access to money:
Loss of job
If you lose your job, there are several things you can do to stay financially stable. First, cut back on expenses. Look for a new job immediately, and apply for unemployment when you’re not working.
If neither of those options works out, consider taking money out of your emergency fund to pay off debt or cover expenses until you find another job.
Medical Bills
If you have an emergency fund, you should be able to take out some money without hurting your budget. If you don’t have one, then this is when the debt snowball becomes even more critical.
Taking out a loan might be unavoidable when you have a medical emergency. But if you have an emergency fund in your back, taking out only what’s necessary can help prevent overspending and debt.
Home Repairs
Home repairs are not emergencies. If you want to repair your roof or add a room, save for it and don’t borrow money from the bank. How can you tell if an issue is an emergency? If it’s something that could lead to severe injury or property damage, then it might be worth considering taking out some funds. For example:
- Roof leaks might cause water damage and mold growth inside the home
- Electrical fire
If you aren’t sure whether or not your problem is potentially life-threatening, look for caution and prevention. Save and think before withdrawing funds from your account.
Car Repairs
If you are in a car accident and need to pay for repairs, your emergency fund is the perfect place to pull money from. This can be a good option if you don’t have collision insurance on your car or don’t have much savings. You might also want to use it if you cannot work because of injuries sustained in the accident and need money for public transport or taxis.
To get extra funds, Intuit suggests, “You may want to get a second job and put everything you make there in the emergency fund after taxes. Another option is to sell items you have. A few dollars here and there add up, and you’ll start to see the balance in the account increase.”
Another good use for an emergency fund when cars break down is a payment plan so that you can continue paying for your vehicle without having it repossessed by lenders. Of course, this method requires planning ahead of time so that you know how much extra cash will be needed each month until repairs are complete!
If you’re looking to take money out of your emergency fund for a non-emergency situation, then you should consider all of these factors. But as long as you can answer yes to three or four of them and have an emergency fund that covers these situations, then it might be okay to dip into it.
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