Avoiding debt is never as easy as it sounds. After a major family cost, like a wedding or the birth of a new baby, you may find yourself in a tight financial spot. Making sure you’re prepared for these costs and taking action to avoid debt is necessary for a better financial future. Below are some ways you can take action to avoid debt after emergencies and events.
Consider Payment Plans
According to Riviera, over 2.5 million students were enrolled in private elementary schools in the U.S. in 2016 alone. Many families depend on payment plans to help alleviate the financial burden of tuition. If you find yourself in a bind after a major family expense, contact your school’s financial team to see if they offer any payment plans. This can help you spread out your payments over time and avoid accumulating debt.
It isn’t just private schools that offer payment plans. Other institutions, such as hospitals and businesses that provide services, may also offer payment plans to help their customers manage the cost of major expenses. Instead of paying for things upfront, sign up for a payment plan with low or no interest to help manage your debt.
Have Dental Insurance
According to Jacaranda Smiles, an estimated 25 to 50% of children need orthodontic care. If you’re strapped on cash, having dental insurance can help you avoid debt. It’s important to review your dental insurance policy and understand what it covers. Most policies cover some of the cost of orthodontic treatment, so make sure you take full advantage of the insurance coverage.
Other options to consider are dental discount plans, which can help you save on the cost of orthodontic care. These plans can lower your out-of-pocket costs for major dental treatments, such as braces, root canals, and wisdom teeth extractions. You can also shop for different orthodontists and dentists that offer deals for first-time customers for extra savings.
Have Home Insurance Available
According to The Local Locksmith Company, 95% of home invasions require some forceful entry, whether breaking a window, picking a lock, or kicking in a door. After a break-in, you’ll likely need to repair the damage done, which can be expensive. Having home insurance coverage in place can help you avoid debt after a break-in or other major home damage.
It’s important to review the policy and understand what is covered. Most home insurance policies cover a variety of damages and losses, such as theft, damage caused by wind and hail, fire, and vandalism. Make sure you are aware of the limits on your policy as well as any deductibles you may need to pay.
Look into Tax Credits and Benefits
If your family costs are related to a medical condition or disability, you may be eligible for tax credits and benefits. The IRS offers a variety of tax credits and deductions to help reduce the financial burden of major medical expenses. You can also look into local programs that provide assistance to families in need. These programs often offer childcare subsidies, health insurance coverage, food stamps, and more. Researching these programs can help you stay financially afloat when you’re facing major family costs. In the event of a new baby, you can also use this 2022 W4 calculator to see how adding a new dependent to the brood will impact your overall take-home pay.
Refinance If Possible
If you have existing debt, such as a car loan or credit card debt, you may be able to refinance the loan at a lower interest rate. This can help reduce your monthly payments and make it easier for you to pay down your debt. You can also consider refinancing your mortgage if you’re in need of some extra cash. Refinancing can help you get access to the equity in your home, allowing you to take out a loan and use your home as collateral. This can be helpful if you need funds for major family costs.
Taking action to avoid debt after a major family cost is essential for a better financial future. Consider payment plans, dental insurance options, home insurance coverage, and government-funded benefits to make sure you are prepared for any emergency expenses or events. By taking proactive steps now, you’ll ensure that your finances remain stable and secure.
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