You just lost your job

“Short-term, emergency savings are perfect for using when a need arises, but should really only be used in true emergencies such as a job loss,” said Jason Speciner, CFP at Financial Planning Fort Collins based in Fort Collins, Col. And while a week or two of “funemployment” may sound appealing at first, that hoard of pelts you collected in Red Dead Redemption 2 won’t go far with the landlord or your creditors.

Common sense dictates you should cut back whatever expenses you can while you’re in between jobs, but depending on how you lost your job, you may not have to rely completely on your savings to keep you afloat.

Collecting unemployment benefits

If you’ve recently lost your job, you may be eligible to collect unemployment benefits through the joint federal-state unemployment insurance program. The particulars of who can collect unemployment varies from state to state, but in general you must meet the following criteria:

• You are unemployed through no fault of your own. (The exact definition of which depends on the state, but if you were perhaps fired for showing up to work inebriated, you shouldn’t count on collecting unemployment).
• You worked a certain amount of time as required by the state to be eligible for unemployment, usually the first four out of the last five calendar quarters prior to the time you file for unemployment. In other words, you will have needed to be working full time for at least a year in most states.

You’ll have to apply for unemployment with your state’s unemployment insurance agency, either in person, over the phone or online. When you do so, make sure you have information such as the dates you worked for the employer, how many hours you worked, and other important details.

Check out this list of links to state unemployment insurance agencies, and also see MagnifyMoney’s detailed guide to filing for unemployment to help ensure you get all of the financial assistance to which you’re entitled.

You just got hit with a huge medical expense

Sometimes an illness or injury can take a greater toll on your financial health than on your body. A recent Kaiser Family Foundation poll found 67% of the country lists unexpected medical bills as their biggest worry when it comes to paying for healthcare, and given the thousands of dollars of debt you can rack up with even a single visit to the hospital, it’s easy to understand why.

“Life happens, and these types of expenses are why financial planners are always adamant about establishing an emergency fund,” said Rick Vazza, CFA at Driven Wealth Management in San Diego, Calif. “Without one, the cost would normally be covered by credit, and if the credit on a large expense can’t be paid off immediately, the interest charges can be significant.”

If your health insurance doesn’t cover enough of the costs to protect you from a bill you can’t afford (or you aren’t fortunate enough to have insurance in the first place), you still have some options before charging that medical bill to a credit card and potentially setting yourself up for years of debt.

How to knock down hospital bills

Getting a hefty bill from the hospital can be enough to send you in a panic, but you should avail yourself of every opportunity to lower the amount you owe before forking over a payment. In general you can:

• Contact the hospital’s billing department and ask about its bill reduction or forgiveness policies — this will depend on the individual hospital, but depending on your income level and the particulares of your situation, you may qualify for a reduced bill.
• Offer to pay the hospital in cash (or using a flexible spending account) — sometimes hospitals and other medical facilities will give you a discount if you’re willing to settle the bill right then and there.
• Charge the bill to a 0% APR credit card — assuming you can qualify for one of these cards, it’s important to remember that the 0% interest only holds for a limited amount of time, so if you’re unable to pay off the money you charge to the card before the time is up, you’ll be stuck making interest payments.

Find out more by consulting our guide on how to get your hospital bill reduced and minimize the drain on your savings.

A major appliance breaks

You don’t want to get in the habit of leaning on your savings to purchase big-ticket items you could do without. But sometimes things fall apart, and if your furnace went on the fritz, you wouldn’t want to wait until your next paycheck to restore heat in your home. You could always charge the repair (or replacement) on a credit card, but make sure you’ll be able to pay off the balance by your next billing cycle if you want to avoid interest payments.

“A good rule of thumb is to dip into the emergency fund whenever the alternative would require carrying a credit card balance to pay for the irregular expense,” said Vazza.

Building a budget for repairs

One way to help soften the blow of dipping into your savings to replace a major appliance is by having a well-planned budget that includes money for such incidentals. Ditch your pen and paper, and try one the many budgeting apps available to help you track your money.

Making a budget means taking a long, hard look at how you spend and save money, which is why it’s often so unpleasant. To begin, you’ll need to determine a few facts such as:

• How much money you take home every month.
• How much you spend every month, both on necessities such as rent or mortgage, and luxuries like eating out, entertainment and shopping.
• How much money you want to save monthly — not only for retirement and long-term financial goals, but also for incidentals such as major appliance repairs.

Learn more about how to use these apps and set up your first budget at MagnifyMoney’s ultimate guide to budgeting.

You need to seize a once-in-a-lifetime opportunity

Dipping into savings to seize an opportunity is more open to interpretation than the other items listed above — is it worth taking money out of your account to invest in your brother-in-law’s dating app idea? But at the end of the day this is your money (and your life), so only you can decide if an opportunity is worth spending the cash.

Consider taking a loan

Depending on the opportunity, you might find a personal loan from a bank can help you cover expenses along with dipping into your savings. Lenders (both traditional banks and online financial institutions) offer plenty of loans to help you out with the associated costs.

Of course, not even the most lenient lenders just hand out sums of money to anyone, and if you find one that does, you should run in the opposite direction — it’s probably a deal too good to be true. Some other things to keep in mind when applying for a loan are:

• Your credit score, which sums up how big of a risk you are to lenders considering giving you a loan. The higher this score, the more dependable you look to lenders which gives you access to better loan terms such as lower interest payments.
• The interest rate charged by lenders. This varies depending on the type of loan — personal loans, which usually aren’t backed by any sort of collateral, tend to charge higher interest rates.
• Is there an origination fee? Some personal loans charge a fee based on a percentage of the total loan amount that must be paid upfront. For example, a $35,000 personal loan with an origination fee of 5% would mean you need to pay a $1,500 origination fee.

Read our guide to find out more about the ins and outs of navigating a personal loan.