Unexpected expenses, by nature, can come out of nowhere. Your check engine light comes on, and your car demands you put another thousand dollars into keeping it on the road. That cough that just won’t go away turns out to be more serious than you thought. Your air conditioner gives up during the longest heat wave you can remember. No matter what causes these personal catastrophes, they all have one thing in common: They’re expensive.
The best financial advice suggests a rainy day fund for situations like these. However, for many people, that’s just not practical. Just getting to the end of the month can sometimes feel like an emergency. An emergency fund is one of those things it’d be nice to have, but there’s just no room for it after the bills have been paid.
If you feel the pressure of not knowing where your emergency spending could come from, you’re not alone. A Federal Reserve survey found that 47% of Americans would not be able to come up with $400 in an emergency. The way they’d cope with that emergency? They’d borrow.