Take stress out of surprise bills

Nat Ravaneschi obtained a personal loan to help cover her car repairs and other expenses. Picture: John Donegan

PAIN-FREE:

history, there are alternatives available.”

Mr Jones said people in financial difficulty should avoid putting surprise expenses on their home loans because that debt could stick around for decades.

The research found 65 per cent of households have faced unpleasant financial surprises not covered by insurance or their savings, costing them an estimated $52 billion combined.

Nat Ravaneschi, 39, has dealt with several unexpected expenses, including needing a car after a relationship breakdown, replacing a car’s motor and surgery for her dog.

For her latest purchase, she headed online and secured an $8000 five-year personal loan with SocietyOne, describing it as “a pain-free experience”.

“In my case, I was extremely stressed that I had a large unexpected expense, as I was going through a very messy break-up and had just spent all my little savings on moving house,” she said.

Personal budgeting specialist and Sort My Money founder David Rankin said using credit cards to cover short-term financial surprises could cause overall debt to snowball because of their high interest rates, often more than 20 per cent a year.

“Unexpected expenses are an expected part of life,” he said.

“As soon as you accept that fact, you realise that you need to be making provisions for them. Pay yourself an amount every month into a dedicated account, for example, $800 for a family.”

This account might cover things such as clothes and shoes as well as unexpected expenses, Mr Rankin said.