If you find yourself in a situation where you cant pay all of your bills for the month, or several months, it is important that you have a plan. Some bills really are more important than others. Knowing what to pay first and what to pay next can mean the difference between losing your home or car and getting through a difficult time and then back on your feet.
There are many options that you can take when you need to settle or discharge debt. Just make sure that you prioritize payments to the bills that can’t wait.
Think about your basic needs and make sure to cover these bills first. This includes mortgage or rent, basic utilities such as heat and electricity, child care if you work, food, and other living expenses.
Next on the list are secured loans, such as your car payment. Without a car, you may not be able to get to work or to the grocery store for food, so transportation bills are next in line.
Finally, at the bottom of the list are credit card bills, medical bills, student loans and other kinds of payments. If you can pay them, it is best to do so, but with limited money available, they are the lowest priority. Your credit will absolutely be injured, but you won’t find yourself out on the street without a roof over your head.
Of course, you should cut expenses wherever you can, so that any savings can go toward eliminating that debt. Some of the things that we take for granted as being necessary can often be cut temporarily, such as cable television or regular pest control. Even if you are charged a fee for breaking a contract, that fee is usually much much less than the money you would save by eliminating the service.
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