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Covering the Costs of a Car Accident When You’re Broke

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As life would have it, you’ve just been involved in a serious accident. To top it all off, you’ve sustained injuries that will certainly keep you out of work for some time. You’re already strapped for cash, so you’re probably freaking out about how you’re going to survive the next couple of months (or years). Before you add tension to an already stressful situation (and prolonging your healing process), you should know that there are ways to manage – even if you’re broke.

Costs of a Car Accident

Not many people consider the true cost of a car accident. Outside of possibly paying an insurance deductible, you could also be responsible for repairs, medical bills, and medical-related expenses (i.e. co-pays or medical supplies). There’s also the added fact that you’re not able to work until you get clearance from your doctor. This leaves you hemorrhaging money that could result in you not being able to pay your regular bills. Ultimately, knowing where to turn in times of a financial crisis such as this is key to your survival.

Hire an Attorney

If you believe the accident wasn’t your fault, you should consult an accident attorney immediately to discuss your case. If there is sufficient evidence that you were not the at-fault party, a trained attorney may be able to use this information to help you get a considerable settlement from the insurance company or by filing a personal injury lawsuit and pleading your case in court. You could get money to cover your medical bills (past and present), medical-related expenses, and the time that you’re out of work if you win your case. This, of course, would take a load off your shoulders (and your pockets).

Dip Into Emergency Savings

An emergency savings account is an account where you set money aside for a rainy day or unforeseen circumstance. Getting into an accident is certainly an ideal time to use those funds. If you have several months’ worth of income saved in the account, you could find peace of mind in knowing that your bills are covered for a little while until you come up with other financial solutions.

File for Disability

If the injuries you’ve sustained are serious enough, you may be able to qualify for temporary or long-term disability coverage. This would provide you with a monthly income that can be used to cover the bills. It can take several weeks to get approved, so be sure to apply as soon as possible. You’ll likely need your medical reports or notes from your doctor to explain your injuries and ideal time in which you can return to work.

Look Into Assistance Programs

There are plenty of programs available for those going through hard times or living on a limited income. They are free to apply for and could provide you with peace of mind. There are programs to help with healthcare, car insurance, food, housing, childcare, and even transportation costs. Check with your local board of social services to find out how to apply for such programs.

Cut Costs

If you’re really struggling financially you’re going to have to get serious about your spending. Cutting back on your costs could help you save several hundred bucks each month. Cut your cable subscription, cancel monthly subscriptions for products and services you don’t need, or cook at home instead of eating out. You should also use methods like waiting 72 hours before making a purchase to ensure it’s something you really need.

Downsize

You may not like this next bit of advice, but if your injuries are long-term or permanent, downsizing may be the only way to survive financially. If you’re already broke or living on a shoestring budget, eventually, you’ll find yourself accumulating more and more debt and causing a plethora of financial trouble for yourself. If necessary, move to a smaller house or more affordable apartment, or consider living with family to give yourself a financial break.

You never thought you’d find yourself dealing with the aftermath of a serious accident, but here you are. Though overcoming this situation requires more than finances, when you’ve got bills piling up and can’t afford the bare necessities, the stress really adds up. As increased stress only intensifies pain and prolongs physical and psychological healing, it is ideal to have solutions to help you cover the costs of the car accident. With such a big stressor lifted, you can focus your energy on your physical and emotional well being.

Making Your Way From Broke to First Time Homebuyer, Here’s How

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If you’re one of the many Americans counting down the days until you’re no longer “throwing money away” for rent, you’re not alone. Buying a home is the largest purchase the average person will make in their lifetime, which is why it’s essential to prepare for such a significant investment. If you’re ready to make your way from broke to a first-time homebuyer, keep reading.

 

Determine your budget

Before you begin dreaming of mini-mansions, you need to know how much house you can comfortably afford with your current income. The word “comfortably” is used purposely here because many real estate agents and mortgage lenders will show you homes at the upper end of your budget, which is great if you want to survive on rice and peanut butter each month. 

Use one of the many free mortgage calculators online to determine how much house you can afford with your monthly housing budget. Again, try to stay on the low side of that number to make sure you have enough money left over each month to save for unexpected home maintenance and repairs.

 

How’s your credit?

Quick — what’s your credit score? If you can’t answer right away, it’s time to run a credit report and find out where you stand. If your credit score is on the low side, now is the time to develop a strategy to raise your score to get you into a home by qualifying for a mortgage with a decent interest rate.

If you have overdue bills, begin working with collections agencies to pay off those outstanding balances and get the “dings” removed from your credit report. Specifically, ask the representative for the balance you need to “pay to delete” the debt collection from your credit report and get it in writing.

Many younger buyers struggle with low credit score simply because they haven’t amassed enough credit. Consider asking a parent to add you as a registered user on one of their cards to help you build credit; only do this if your parent has a solid credit score and history of on-time payments, or you could adversely affect your credit rating. You can also open a credit card with a small line of credit and use it each month to amass a history of revolving payments. Most of all, be patient, as building your credit takes time.

 

Save for your downpayment

If this is the first foray into your first time home buying education, you need to know that you don’t necessarily have to have twenty percent saved for a downpayment. When you use a mortgage calculator, you can also have it show you the amount you’ll need for a downpayment, but this amount will vary depending on your circumstances.

When you’re saving up for your first home, realize that your down payment percentages could be as high as 10 or 20 percent, or as low as 3.5 percent to zero down; it all depends on the type of loan you’re after. If you struggle to save, then a first time homebuyer or FHA loan may be the best option, only requiring 3.5 percent down to purchase. However, if you have no problem saving ten percent, a conventional loan may save you money in the long run. Talk with a mortgage lender to determine the types of loans you’re eligible for, and which one makes the most sense for your financial situation. Remember, this is the largest purchase you’ll make in your lifetime, so be sure to weigh all of your options.

 

Expect the unexpected

If you think everything’s smooth sailing once you sign the paperwork and move into your new home, you’re mistaken. There are several surprises you’ll encounter as a first time homebuyer, including taxes, homeowners association fees, insurance, and maintenance costs. Again, this is why you don’t want to max out your monthly housing budget with your mortgage payment, as things will invariably pop up.

It’s not uncommon for things to go wrong with your home shortly after purchasing, and you’ll quickly find out that even something as minor as having to have a plumber come out for a repair can be costly. So, just in case your furnace decides to quit, or your central air conditioning stops pushing cold air, you have funds set aside each month as a failsafe.

When you research your options, you’ll find that the road to homeownership is straighter than you’d originally imagined, and perhaps even a little shorter. Planning, patience, and persistence will take you from broke to first-time homebuyer.

Building A Monthly Budget: How to Calculate Your Costs

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Budgeting is always the hardest when first starting out. The idea of creating a spreadsheet with a breakdown of every monthly cost and expense is so intimidating that many people put it off for a long time.

All a budget is, in essence, is a well laid out plan. When calculating a budget, what you must do is calculate the difference between your anticipated income and your fixed costs so that you can get an idea of how much you have left for desirable expenses. You don’t have to be an accountant to know how to create a budget plan though, here are some easy tips.

·        Add Up Monthly Fixed Expenses

The first thing that you need to do when making a budget plan is to calculate your monthly fixed expenses. These include costs like rent, car insurance, payments on any auto or title loans, or insurance.

You can use a spreadsheet or budgeting app to keep things organized, and accurately access what your expenses look like each month.

·        Add Up Monthly Variable Expenses

Variable expenses are expenses that change month to month, and they can be a bit of a challenge to add to your budget plan. Calculating these costs is more of a judgment call than anything else, especially if they fluctuate greatly month to month.

Costs like groceries, gasoline, electricity and discretionary spending can vary monthly so setting aside a specific amount can be difficult. However, by averaging and overestimating variable costs like electricity or gasoline, you can write it into the budget without worrying that the actual costs will be more than what you’ve planned for.

Tips to Keep in Mind when Creating a Monthly Budget

Now that you’ve added up all your monthly costs, you know how much money you need to make ends meet. In a monthly budget, you want to compare these expenses to a monthly income. You don’t want to take into account a holiday bonus that you’re expecting in 6 months, because that isn’t affecting your expenses or income this month. For a monthly budget, use your monthly income to calculate any leftover funds after your expenses.

If you have a fixed income, such as a salary, or you are paid hourly with a set schedule, then this is easy. If your income is varied due to a fluctuating workload, then the best you can do is average your earnings.

Once you’ve calculated your excess income, you can figure out what to do with it. Ideally, you added discretionary spending as a line item in the budget, so your excess money shouldn’t just become spending cash. Any excess funds should go towards debt or savings. If you have more excess income than normal one month, feel free to spend it on entertainment or desirable expenses. Now that you’ve created a budget, you can spend money and still feel financially responsible.

Stick to Your Newly Created Monthly Budget

Now that you’ve gone through the work of crafting a monthly budget that works for you, know that you have a financial plan set. Having a monthly budget makes life easier and making a physical one can better help you visualize the numbers and make adjustments without guesswork.

Making a monthly budget is not the hard part though. The difficult aspect is sticking to the budget, tracking expenses, and not making a habit of exceeding your budget. Going out to eat is fun and enjoyable, but if you do it more than you should, your available income for the month will start to eat into any excess funds you have–and possibly exceed them! If you’ve calculated for the entire month though, splurging every now and then shouldn’t throw you off track. And if you do slip up, relax because you can always get right back on track next month! So enjoy your financially responsibility!

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