Take these steps to avoid stress over unexpected expenses you can’t afford to pay.

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If you’re like many people, you’ve probably faced an emergency expense that you couldn’t afford to pay for outright. Maybe your furnace croaked on Christmas Eve or your air conditioner puttered to a stop on the most scorching day of the year.

Maybe your dog swallowed something and needed surgery, resulting in a vet bill that required you to cough up thousands of dollars. Perhaps you stressed over how to pay car repairs for hundreds or thousands of dollars.

If you’ve had unexpected expenses that you struggled to pay or had to put on a credit card, you’re not alone.

Fewer than half of Americans say they would have enough money to cover an unexpected emergency expense of $1,000, according to a 2022 Bankrate survey. About 20 percent surveyed say they’d have to charge the emergency expense to a credit card. Even if you don’t currently have emergency savings, it’s not too late to begin putting yourself in a better position to pay for emergency expenses.

Take these three steps so you’re prepared to handle emergency expenses that could otherwise land you deep in credit card debt or hurt your credit if you can’t pay the bill.

1. Build Emergency Savings

The best way to prepare for unexpected expenses is to build emergency savings. Ideally, you should have enough emergency savings to cover at least three to six months of living expenses. That task may sound daunting, but the key is to start with a small savings goal such as $1,000.

With careful planning, you may be able to save that amount a lot more quickly than you would think. One way to get a jump on building emergency savings is to sell things you no longer use or need via an online marketplace like eBay, Facebook Marketplace, or Craigslist.

How about that lawnmower gathering dust now that you hired someone to mow? Some college students would probably buy that spinal nightmare of a futon bed. List some of those furniture items you moved to the basement when you bought new furnishings.

Don’t let the $1,000 goal intimidate you. Start small, depositing what you can from each paycheck, even if it’s only $50 every couple of weeks. When you have any extra money, deposit it to savings right away before you spend it on something else. Before you know it, you’ll have $1,000 to cover small emergencies.

You’ll also gain confidence that saving $2,000, $3,000 or even tens of thousands is possible once you set your mind to it and focus on saving.

Find out: 4 Ways to Build Emergency Savings Fast

2. Budget for emergencies

It’s impossible to budget for some emergencies, but if you pay attention, you can anticipate certain expenses that may pop up suddenly. For example, if the tires on your car are wearing down and will need to be replaced in six months, compare prices now and start socking away enough money each month so you won’t have to put that expense on a credit card later.

While you’re at it, create a monthly budget that includes saving for both anticipated and unexpected financial emergencies. To get started, download Mint, You Need a Budget (YNAB), or another budgeting app that guides you with the budgeting process and offers tips on saving.

Find out: How to Pay for an Emergency Without an Emergency Fund

3. Keep credit card balances low

If you don’t have emergency savings, the next best option is to charge the unexpected expense to a credit card and pay it off as soon as possible. Having available credit to pay for emergencies is crucial to covering emergency expenses if you don’t have enough emergency savings.

There’s also another good reason to keep credit card balances low or even better, at zero. Your credit utilization score — the percentage of revolving credit you have to your available credit — makes up around 30 percent of your credit score. So, keeping credit utilization under 30 percent is also better for your credit score.

Find out: How to Reduce Credit Card Debt in 5 Steps

Start saving

Start putting money into an emergency savings account, even if all you have to open it is $100. Begin chipping away at credit card debt and stick to a monthly budget that helps you save and pay off debt.

These small, initial steps will motivate you to soon save enough to cover financial emergencies.  Knowing you can cover most unexpected expenses will give you peace of mind. Plus, you’ll feel pretty good about yourself when you achieving those hard-won savings goals.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC