In today’s economy, many are straddling the financial gulch between financial freedom and financial disaster, just one paycheck away from certain struggle. Going to bed at night knowing you’re one blown engine or one medical emergency away from plummeting to certain financial despair is a struggle beyond compare.
So, what happens when your income drops or your expenses increase and you’re left deciding which bills you should pay first?
While the stress of the situation can elicit panic attacks, it’s important to remain calm and devise a plan to keep your head above water long enough to reach dry land.
There are necessities in life and then there is everything else. When it comes to deciding which bills to pay first, there are a few necessities that should rank at the top of your list.
First and foremost – keep a roof over your head and food on the table. If you aren’t getting the proper nutrition and don’t have a safe place to lay your head at night, your struggles will only multiply.
Beyond that, your next focus should be your utilities, transportation necessities and any court-ordered payments, specifically child support.
Necessary utilities are heat and electric, not satellite television or internet – unless you specifically use the internet to make money. Without transportation, and the necessary insurance, you’ll likely find it difficult to get to work, so rank these near the top of your priority list.
OK, so now you’re probably left with a stack of credit card bills, doctor bills and consumer loans. Let’s take a look at where to go from here.
Any secured loans or debts should rank next. Beyond your home or automobile, secured debts may include debt consolidation loans or other private loans.
What’s left, if any, should go toward your credit cards and any medical bills. While this may be a difficult decision to make, the truth of the matter is that you may have no choice. Remember, you need to make sure you have a roof over your head, food on your table and a way to continue to bring in money.
Beyond prioritizing your bills, look for ways to reduce your expenses and put that money toward paying down your debt. For instance, you may look for ways to cut your food expenses, like eating in and planning a cost-effective menu to make use of leftovers.
If you’re still left unable to pay certain bills, it’s time to communicate with your creditors and seek help. Sometimes, not always, you may be pleasantly surprised by the options available.
For instance, a loan company may allow you to defer a couple of payments by tacking them on to the end of the loan or your credit card company may reduce your monthly payment for a specified term. These options can free up much needed cash and keep you in good standing credit wise.
Difficult times call for difficult decisions – and your finances are no exception. Weather the storm by prioritizing your debts and taking action to get back on track.
Photo Credit: xJason.Rogersx