4 Unexpected Expenses and How to Plan for Them

According to Oscar Wilde, “To expect the unexpected shows a thoroughly modern intellect.”

While we all know that life can throw us its curveballs, when it comes to personal finances, many of us do not plan for the unexpected. Though you may feel that you are on top of your finances – being able to manage regular bills, ongoing expenses, and saving for your next vacation, etc. – when it comes to paying big bills that you were not planning for, how money fit are you? Could you easily come up with the cash in an emergency? How much?

If the answer is “no” or “not very much,” you may want to rethink your monthly budget and adopt the modern mindset Oscar Wilde spoke of! To help you on your way, here are four of the top unexpected expenses and how you can plan for them.

Medical Expenses

For the most part, many of us take our health for granted. In good health, we rarely think about a scenario in which ill-health would impact our lives in general, let alone our financial lives. While many of us plan for minor health-related expenses like check-ups, dental appointments, and medications, we do not plan for more serious, long-term problems. One of the biggest unexpected expenses that any of us will face in our lives involves medical emergencies. Getting hit by a bus or being diagnosed with a serious illness is not something you can really anticipate, but you should plan your finances as if it is! This expense essentially comes in two waves: direct and indirect costs. Hospital fees, surgical procedures, tests, medications, and anything that directly relates to your illness or injury and recovery will be considered a direct cost. When you become sick, though, your medical bills may not be the only way you are financially impacted. Indirect costs such as being off work or having to buy specialized equipment could also burden you financially.

How to plan for Medical Expenses

First off, make sure your medical insurance is up-to-date and covers you for major medical emergencies. The high cost of healthcare in the US could effectively bankrupt you if you do not have adequate coverage. Normally, insurance alone is not enough to prevent financial catastrophe if your injury or illness is severe enough to warrant time off work. To combat this issue, you should ensure you have enough savings in the bank to cover your bills and expenses for at least three months. Finally, if your injury results from an accident, you may be able to claim compensation if the other part is at-fault. Obviously, you cannot count on this as a saving strategy but you should make sure you know your personal injury claim options should the worst happen.

Household Expenses

If you own a house, you will already know that being a homeowner does not come cheap. Between real estate fees, property taxes, homeowner’s insurance, maintenance, and renovation costs, acquiring and maintaining the home of your dreams is costly. Unfortunately, major expenses do not stop rolling in once escrow closes. Many people plan for minor household repairs and perform maintenance on a yearly basis. Sometimes though, that is not nearly enough. A burst pipe, a broken furnace, or structural damage can happen at any time, and generally, major household expenses are emergency expenses. Often, there is no option to wait until you have saved for repair costs. These issues need to be fixed and fast!

How to plan for Household Expenses

Prevention is the better option here, of course. You simply cannot afford to overlook regular maintenance of your property. When found early, many issues can be rectified quickly and cheaply, so spending a little throughout the year to make sure your home is in good shape will save you a lot of financial headaches in the long run. That said, maintenance will not help you avoid every property-related issue, so you need a plan for such occasions. Homeowner insurance is extremely important and can help foot the bill for your property-related repairs. That does not mean you will be off the hook when it comes to saving. After all, not all major property issues are covered by insurance. Think roof repair, air conditioning unit replacement, periodic exterior painting, etc. If you have not heard of the 1% rule, here it is: save 1% of your home’s value each year for annual maintenance. If you really want to make sure you are covered for household emergencies though, you had better make it 2%!

Auto Expenses

Everyone knows cars and their ongoing maintenance can get pricey. Luckily, for the most part, you can anticipate how much you will need to spend on your vehicle depending on its age. Unless you are rotating them regularly, your 60,000-mile tires will only last about 35,000 to 40,000 miles. If you drive 10,000 miles a year, that means you will need to purchase new tires every three to four years. Batteries and engines also have a limited life expectancy. While you might get unlucky (or lucky as the case may be) from time to time, generally, you should plan to save for repairs that are coming your way. What you cannot do, though, is predict when an accident will happen. With the average cost of repairs amounting to over $3,000, finding the money to fix your car after a collision may be somewhat challenging. And if the accident is your fault, it may not just be repair to your own car that you need to consider.

How to plan for Auto Expenses

There is not much more you can do other than get car insurance! Make sure you are getting a good deal and have an insurance policy that covers all eventualities. Shop around online and by phone. Do not assume that just because you have been with your insurance company for years and years or even decades that you are getting the best deal. Many people can easily cut their insurance premium in half by doing some research online and checking with other companies. As an aside, although you can somewhat plan for ongoing repairs, the best way to plan for them is to prevent them. Much like homeownership, vehicle ownership comes with a degree of responsibility to keep your car or truck in good running condition to prevent small issues from becoming bigger problems down the road… literally.

Funeral Expenses

It may sound like an extremely morbid thing to prepare for (and something you have probably not considered), but planning for your funeral is something you should not overlook. Once you are gone, your family will be tasked with planning your funeral, which is a difficult task indeed for grieving loved ones. Not only that, but the average funeral in the US costs around $9,000, meaning if you do not plan for it, your family will need to find the money or go into a lot of debt.

How to plan for Funeral Expenses

Once you start looking into the costs of cremation urns, funeral service fees, and transportation, you will quickly understand why you should save for this huge expense. You do not want to burden your family with the expenses. If you prefer, you can actually plan your funeral ahead of time by paying for certain elements of your funeral now rather than adding funds to a savings pot. Alternatively, you could opt for funeral insurance which would pay out a lump sum to your family in the event of your death. Funeral insurance is more specific than life insurance, and you should read and understand any policy thoroughly before signing up. In the long run, no matter how much you plan, there will always be unexpected events (and unexpected expenses) that come your way. All you can do to mitigate your risk of being dramatically impacted in your personal and household finances is to prepare the best you can. Simply put, ensure you have insurance for eventualities and save as much as you can for expenses not covered by insurance.

About the Author

This Website Is Using Cookies. We use cookies to improve your experience. By continuing, you agree to our cookie use.

Client Credit Report Authorization

You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
  • Obtain and review your credit report, and
  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
  • Banks
  • Counseling Agencies
  • Debt Collectors
  • Landlords
  • Lenders
  • Mortgage Servicers
  • Property Management Companies
  • Public Housing Authorities
  • Social Service Agencies
Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).