Setting Priorities: Personal Finance Advice
Unless you live in a rent-free cave somewhere you probably have certain bills that you need to pay each and every month. If you have more than enough money to cover all your expenses then you may not put much thought toward which bills need to be paid before others because everything is covered, but if you find yourself pinching pennies then you may need to do some prioritizing with your bills.
Here is what you need to keep in mind: Ignoring some types of bills will result in annoying calls from a creditor and some horrendous late fees. Ignoring other types of bills will result in getting thrown out of your home or losing your car. The trick is to put certain bills first and then wait on the other ones, but only if you absolutely have to.
Prioritize your bills in this order:
1. Your mortgage or rent
2. Your health insurance payments
3. Your utilities
4. Your car payment
5. Your unsecured loan payments
6. Your credit card payments
The reason why the bills are listed in this order is simple: even if you are having trouble meeting your financial obligations you still need to have a place to live and the ability to seek medical care if necessary. You want to keep your lights on and the heater running and you don’t want your car repossessed. Loans that aren’t secured by some form of collateral and credit cards should be your last priority. Lenders for these type of accounts expect some customers to be late once in a while so they make accommodations – albeit expensive accommodations – for an occasional late payment.
In other words, you aren’t going to lose a credit card account because you’re late on your payment one month. You’ll probably get a higher interest rate and a hefty late fee, but you’ll keep the credit card nonetheless. Miss one car payment and technically your lender can come take your vehicle.
Don’t ever put your credit cards as a first priority, even if the creditors who call you are really aggressive. Don’t skip out on basic needs in order to make an unsecured loan payment. Your basic needs come first, long before a credit card payment . . .
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