6 Situations that Can Drain Your Bank Account: Don’t Let These Happen

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Life is basically a giant obstacle course. It’s loaded with traps that’ll trip you up, if you’re not careful.

The same goes for your financial life. On any given day, a random situation can appear out of nowhere and take some of your money. It’s like being mugged by reality. Something happens — BOOM — and suddenly you have to pull out your credit card or your debit card or your checkbook, ugh.

These kinds of situations are all too common. Here are six of our least favorite ones, along with some smart tips for how to deal with them.

1. Traffic Accident 

Every year in the U.S., there are more than 5 million traffic accidents. Hopefully you won’t be in any of them. But in case of an accident, it’s best to make sure you have reliable insurance. 

However, that doesn’t mean you have to pay top dollar for it! Just make sure you shop around, that’s all we’re saying. A free website called Savvy will help you find the best rates — in just 30 seconds. In fact, it saves people an average of $826/year. And you won’t have to give up any of your coverage.

All you have to do is connect your current insurance, then Savvy will search hundreds of insurers for a better price on the same coverage. It’ll even help you cancel your old policy and get you a refund from your current insurer. Best yet: This is totally free.

If you find a better deal, you can switch right away and don’t have to wait for your next renewal or even your next payment.

2. Sudden Death 

Not to bum you out, but this is the ultimate Unfortunate Situation that might befall you. It happens to everybody someday, right? Ultimately, we’re all just guests here.

If you died, what would happen to your loved ones? Could they afford the mortgage? Handle the cost of child care or college? Could they even pay the bills?

This is where life insurance can give you peace of mind. A life-insurance search engine called LeapLife makes it easy. In less than a minute, LeapLife will match you with personalized quotes from many of the big-time insurance companies (including Pacific Life, Lincoln and Prudential).

And don’t worry about forking over a ton of money. We’ve heard people are getting matched with quotes that are less than what they’d pay for a streaming service (depending on health and other factors). 

If you qualify, you might not even need an in-person exam or medical records. You could complete the process entirely online and get your policy in just minutes. 

Just answer a few questions, choose the quote that works best for your needs and finalize online in minutes. 

3. Job Loss 

In 2020, millions of Americans lost their jobs. Thanks to COVID-19, the unemployment rate skyrocketed.

Being out of work is one of the toughest things that can happen to you. That’s why it’s a good idea to build up an emergency fund that equals three to six months of your salary, in case you unexpectedly lose your job.

How can you do that? Try the 50/30/20 method for budgeting. Take your total after-tax income each month, and divide it in half. That’s your essentials budget (50%). Take the rest, and divide it into personal spending (30%) and financial goals (20%).

Let’s break it down: That’s 50% for things like utilities, groceries, medications, minimum debt payments and other essential spending. Then there’s 30% for fun: Thai takeout, your Netflix subscription, dressing up a skeleton on your lawn for Halloween. 

That leaves 20% for your financial goals, like additional debt-reduction payments (anything above the minimum monthly payment) along with retirement savings and investments. If you’re trying to build an emergency fund, consider cutting from the fun category — and anywhere else you can — to funnel as much money as you can into that emergency fund. A little sacrifice now could be a lifesaver later.  

4. The Bank Fees Downward Spiral 

Bank fees are so aggravating, and overdraft fees are the worst of all. It turns out there’s not enough money in your bank account — so your bank gets its revenge by helping itself to $35 of all that money you don’t have! And then you have even less money than you had before, thanks to your bank. It’s hateful.

You should get a better account — like Aspiration, an online-only account that won’t charge you fees.

Even better? Your account comes with a debit card that gets you up to 10% cash back on your debit purchases. Plus you’ll earn up to 20 times the national average interest on the money you set aside to save.

To open your shiny new Aspiration account, simply connect your existing bank account and transfer over as little as $10. It takes no more than five minutes.

5. Losing Money in Investments 

Losing money in the stock market always stings. Making an unlucky investment choice is tough. It hurts to see the numbers go down.

The stock market has been really volatile over the past year, shooting up and down like a roller coaster. But you have to take the long view here. That’s what investing is all about.

Investing in the market will grow your money over time, so you might as well get started sooner rather than later. Not sure how to get started? You could start small. With an app called Stash, you can get started with as little as $1.*

Stash lets you choose from hundreds of stocks and funds to build your own investment portfolio. It makes it simple by breaking them down into categories based on your personal goals. Plus, you’re investing in fractions of shares, which means you can invest in stocks like Amazon that you wouldn’t normally be able to afford. 

It takes two minutes to sign up, plus Stash will give you a $5 sign-up bonus once you deposit $5 into your account. Subscription plans start at $1 a month.**

6. An Unexpected Emergency Bill 

Maybe your car breaks down. Or maybe it’s something else. Maybe one of the millions of things that can go wrong in your life has suddenly decided: Today’s the day! SURPRISE! 

If you’re anything like me, you’ll put it on your credit card. That’s my go-to move with just about every sudden emergency expense. Every unexpected car repair. Just put it on the card.

The truth is, your credit card company is getting rich by ripping you off with super-high interest rates. But a website called AmOne wants to help. If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.99% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

It takes two minutes to see if you qualify for up to $50,000 online.

Remember that life is basically a giant obstacle course, and sooner or later you’re going to get tripped up by one of these all-too-common situations.

Now you can be ready to dodge the obstacle.

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. His life is definitely an obstacle course.

*For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.



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