Sometimes life can catch you off-guard with a big financial surprise.  For me it was an unexpected major (read: expensive) repair in order to make my aging Subaru pass inspection. (For those of you new to Pennsylvania, the Commonwealth requires a pretty extensive annual inspection on automobiles.)  For many law students it was a technological breakdown in the computer communications between Penn State and the Education Department that delayed the disbursement of Federal Graduate PLUS Loans, which in turn delayed living expense refunds.

Being caught off-guard without enough money is never a pleasant experience.  You may find yourself making calls to delay bill due dates.  You could face overdraft charges.  You may have to take on credit card debt.  You could have to borrow from family.  You might need to dine on ramen more frequently than is appetizing.

The ideal solution, of course, is to have an emergency fund.  A savings account that you can tap into in situations where you unexpectedly come up short.  If you don’t have an emergency fund…now is the time to start one.  It’ll start small and grow larger over time.  And eventually, what would have been a financial emergency in the past is just an inconvenience that takes money from your emergency fund.  Ideally, your emergency fund should be large enough to fund three to six months of your living expenses.  But the world isn’t ideal, so if you could set aside a minimum of $1,000, that’s at least a decent cushion.

But what do you do until you have your fund established?  That’s when you have to leverage your own financial flexibility.  Maybe that involves family who can help.  Maybe it involves credit cards.  Maybe you have to sell something.  Maybe you just have to fend off your creditors for a short time (don’t ignore them…ask for extensions!).  Only you know where your own financial flexibility lies.  The important thing is that when the unexpected happens, you know what resources you have available to help you handle the situation.

And hopefully we’ll never have to deal with another Grad PLUS Loan disbursement delay!